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I've been seeing this term everywhere, friction-maxing. Have you guys heard of this? It's my life. That's what I do. To be honest, I only heard of it once you told me. That's how friction I am, because I don't even know that there are phrases like this. Stephen? So go buy groceries at the store instead of using Instacart. Go borrow books from the library. Host friends at your house instead of eating out. Use a physical map. Are these things that you're already doing anyway? These are all things that I do regularly. These are all things that I do. Even the physical map? Even physical maps. And people get really mad at me. Like, when I call people on the phone, they're like, Jigar, why do you call people? Why don't you text? And I was like, because I don't text. I call. That's what I do. But we call. As a result, there's no evidence of anything that I've ever said. Pause on the friction-maxing for a second. I think maybe the younger generation has lost the art of. Pleading the fifth and not having a paper trail. I don't know what you guys are hiding. Well, I mean. I am hiding nothing at all because none of it is in emails or text. Exactly. All of it is in the ether. And now that I've said it, it was not recorded and it has moved on. Which is why I also have people over to my house for dinner. To yell at them. And do the other things. Right, no, sorry. Yes. Yes. If I'm going to be mean and nasty, I'm going to do it to your face. I'm not going to, like, do it over text. I'm going to do it over an email. I have a library down the street. We're at the library. I like to go to the store for groceries. I don't use a physical map. But I got lots of friction in my life. But I will never give up the text message. I hate talking on the phone. I talk for a living. But I cannot stand talking on the phone. And so those transcribed messages are a godsend. I also spend less than $300 a year on Amazon. I mean, I just, like, I go to the store and I buy stuff. And I bring it back in my car. I'm an Amazon user. But what I do is, like, overcharge. Sometimes I compile things in my cart. Like, oh, I might need that. And then I, like, make this month-long list in my cart. And then at the end of the month, I go in and say, like, okay, what do I actually really need? And then I whittle it down to a few things that I might really need. And you just described hyperscaler energy shopping in two minutes. This was supposed to be the year clean energy rode the AI wave onto Wall Street. Instead, the wave might be breaking sooner than expected. Companies across the AI industry are seeing sharp stock price drops as investors worry about infrastructure spending. And it's hitting energy companies. Holtec, the nuclear company, SB Energy, and Form Energy have all shelved plans to go public. And Fervo, this year's breakout geothermal listing, is down 70% from its first day of trading. What is happening? Three numbers tell the story. $8.5 trillion. That's how much revenue AI data center owners need to bring in by 2030 to cover their spending, their debt, and a reasonable return. Gartner says they're going to come up nearly $5 trillion short. Then, 5%. That's the level the 10-year treasury yield broke in September, the highest in three years. That makes every dollar of the AI build-out more expensive to borrow, and every pre-revenue energy company harder to value. And finally, 71%. That's the share of Americans who oppose data centers in their communities, according to Gallup. The backlash is stalling projects and forcing investors to rethink how fast the companies serving data centers can grow. So if the AI boom is getting more expensive and less popular, what happens to the energy companies that bet on it? That's coming up on Open Circuit from Latitude Media. Open Circuit is brought to you by Energy Hub, the flexibility platform for the modern grid. More than 230 utilities trust Energy Hub to build and operate virtual power plants, delivering 3.6 gigawatts of flexible capacity. As the resources grow, okay, this is really great. This is amazing. This is a great resource. I can use it. It's really valuable. But here's what I really need to do to make it as good as or better than my existing conventional capacity. Paul Hines is the chief scientist at Energy Hub, where his team develops the algorithms that turn millions of DERs into flexible capacity utilities can stake their grid planning on. My team is working on the algorithms that allow us to meet the utilities' goals for shaping these virtual power plants. Machine learning keeps raising the ceiling on what VPPs can deliver. Energy Hub's platform is trained on. But on years of data from millions of devices, optimized for utility needs across every season and every grid condition. We're working with utilities not to just enable that capacity, but also make it more flexible so that utilities can use it, you know, more times per year for longer events in ways that are valuable to both customer and utility. Later in the show, Paul explains how Energy Hub's platform helps utilities scale VPPs for their unique needs as grid demands evolve. Learn more at energyhub.com. OpenCircuit is supported by Everyday Electric. You might know them by their former name, Renew Home. We are at a pivotal moment. Energy demand is growing faster than the grid was designed for. Everyday Electric believes we need to start at home with savings before jumping to new expensive infrastructure. They already run the country's largest residential VPP, coordinating over six gigawatts of capacity. And now they're expanding partnerships with energy providers and OEMs so that products like thermostats, EVs, and batteries can help households save money. and support the grid. That's home energy as it should be. Learn more at everydayelectric.com. What if you gave your climate donations the same due diligence you gave your investments? That's what Giving Green does. Giving Green researches the strategies and non-profits best positioned to unlock the next big climate breakthrough and sends 100% of every dollar donated to the Giving Green Fund directly to them. Maximize your impact per dollar, no cuts or guesswork. Make your first gift before the new year and it will be matched with your next gift. You'll be matched up to $500. Go to givinggreen.earth/circuit. Welcome to the show. I'm Stephen Lacey, the executive editor of Latitude Media. Caroline Golan is with us. She's the chief growth and policy officer at NRG. Hi, Caroline. Hello, hello. Glad to be back. Jigar Shah is the co-managing partner of Multiplier. Did you have fun in Austin, Jigar, when I saw you at FlexSummit? Did you do any two-stepping? I mean, I crushed it. You and I went to the summer. It was the same dinner. That was a very long table. I, you know, sometimes have a hard time. I did not think that the structure of that dinner was good. I found that I was able to speak with the three people next to me and nobody else. Maybe good for everybody else. I don't know. They did that on purpose. I get it. All right. So it's a big week. Let's get into the public markets, which are seeing shifting headwinds for clean energy companies looking to IPO. We had this combination of high interest rates, skepticism over AI revenues, slower-than-expected development due to local resistance, and worries over the debt load now driving development. It's all making investors wary, and we're seeing this play out across the market. So many companies that are serving or in close proximity to AI are seeing big hits in their stock prices. And at the same time, we have Anthropic, which has a planned $1.5 trillion IPO that's sucking up all the attention away from other companies that are planning to go public. So as a result, there are a bunch of companies in this space that were expected to benefit from all this activity. They're delaying IPOs, they're reportedly getting signals from investors that their appetites have diminished. And the list is Holtec, Nuclear Company, SB Energy, and Form Energy. So what is going on here? Caroline, what's your read on how the narrative in the market has shifted? Yeah. I mean, I think it's pretty straightforward, but it's interesting that it's happening right now. And I will be interested to see if it changes. If it shifts after midterms. I think that the market gave the AI race a really, really long leash. Maybe a longer leash than it should have, right? And they were investing and they were valuing based on potential. And they were really comfortable with companies being fairly well leveraged, you know? And now the politics have kicked up. Capital costs have gotten higher. It turns out it's hard to build power plants, takes longer than you think. And some of them are burning out and people are breaking things left and right. And so you have to be able to demonstrate an actual return and you have to be able to demonstrate more than just, I think, early stage progress to get the wins that I think people were able to get maybe a year, year and a half ago, you know, based on an LOI, or based on, you know, some type of potential partnership. I just think, I think the leash has gotten tighter and I think, I think it should, frankly, you know. Unfortunately, I'm not sure that the companies that are driving the demand here are being as judicious with the way they're placing capital. So we'll see. But I am interested how the midterms will change. I think. We're waiting to see if the politics will get worse, it'll get better. And I personally don't think they've changed irrespective of whether there's a blue wave or not. But. Yeah. Yeah. Jigar, what's at the other end of that leash tugging? Is it interest rates? Is it earnings to spend ratio? Is it, you know, companies, pre-revenue companies having a harder time in the market? Like what do you think it is? Well, it's all of those things. Right. I mean, for those of us who have been on this open circuit journey. I think we have told everybody to short these stocks for like, over a year, and folks were like, you're an idiot. Why would you do that? Are you talking about energy stocks or the data center? Well, I think it depends, right? Each one of the names has a different story, right? But I just think that for a long time, people were like, oh no, Jigar, it's going to be so easy to run data centers off-grid. I mean, there's still dumb people out there who think that they can run data centers off-grid, right? And so those people who sold technology into those projects are still trying to convince people that you can run data centers off-grid. I still don't think we've won that argument. But if those stock prices went up, and now all of those projects are delayed, like crazy delayed. It's like not just six months delayed, it's a year delayed. And now they're trucking in natural gas to those projects because the pipelines are delayed. And now when you think about just how laughable it is, I feel like I'm literally watching a Charlie Brown show with a football, and people are like, oh, that was not predictable at all. I don't think that anyone thought that we could see that coming, right? So now that it's happened, they're like, what should we do with the stock price? Well, obviously, if the compute's not online, well, then you can't make money off of it. That's how this works, right? You can lie to yourself as much as you want, but at some point, if the compute is not generating tokens, and you're not getting revenue for those tokens, then there are consequences to that, right? And so that's what's happening on those sets of stocks. Then when you think about the Fervos of the world, look, I'm not going to badmouth Fervo or anybody else. The whole thing that I wanted Fervo to do was to raise $2.2 billion. They succeeded at doing that. Now they've got four years to prove whether they can use that $2.2 billion to make sure that all of their technology works, and it can be replicated, to five more projects, and all these other things. I don't care what their stock price does, because they've already raised $2.2 billion, and now they're going to have a chance to succeed. I can't say the same thing for some of the other names. If you look at a lot of the other geothermal names, they didn't go out and go public. They don't have $2.2 billion. They have maybe $200 million. So we'll see when they run out of cash and whether the markets are open and are willing to give them more runway when they run out of cash. When you go to the Holtec side of things, Holtec has not yet turned on Palisades. Although it's supposed to be turning on any day now, and I'm hopeful, and I'm super excited for when that occurs. And then you're going to have to build a 300-megawatt reactor there. They've filed for two new Holtec 300s at that site. And we'll see where that goes, but I think that there was some trepidation when the week was that they were going to go public that folks were going to buy into the story that the hyperscalers were going to pay 15 cents a kilowatt hour for all that power. And so, you know, we'll see where the contracts land. Yeah, I mean, I think on Fervo, I don't think the lower valuation is something to freak out about. I mean, I think that across the entire industry, stocks are down, and that's largely because you have to show more durable checkpoints. On construction and on meeting your milestones, and I don't think that's a bad thing. I look at Fervo, and I'm like, okay, if you can do what you said you were going to do, I think that will probably drive more investment in the company. But I think there was a race and an excitement. And I think the other thing that's happening here is that we had a flood of new entrants on the nuclear side, right? And there was a lot of political support still, as well as on the nuclear side. And I just think that it was a little bit of the dog that caught the car, you know, on the big AI build-out. And so there was a lot of interest, and we've talked about this before. And then there was a bit of a course correction because there's also a bit of sanity going on now, right? And I think you see this all the time in markets. I just don't think you see it with such demoniacal, demonstrative impact of capital that's on the line, right? Everyone gets spun up about something. You get smaller companies that get pulled along for the ride. Oh, you have a deal with one of the five companies that's 50% of the overall market right now? Okay, you're good to go. But now there's just a little more sanity on it, and there should be. I mean, I think there's a lot of nuance in some of the stuff around like SpaceX and Amazon and everything that's going on there. But, and anthropologically, I think there's a lot of nuance in that. I think there's a lot of nuance in that. But generally speaking, I think lower valuation is a result of three things. Market prices are low across the country. So there's that. Hitting your construction timeline is, people are slipping because of politics and because of supply chain, which we all knew, but no one could guarantee, right? And so there's that. And the last one is, is that like I actually, we don't talk about this as much, but, you know, there's some, there's some, there's some, there's some general skepticism that the demand for the chips that are sitting on barges in ports. Yeah, in warehouses. You're right. In warehouses at Amazon. And it's there. And I think that, that like, the narrative has always been, well, they're sitting there because there isn't enough power. But I think there is some recognition that power is part of it, but also demand is, is potentially not the hockey stick that everyone, everyone's at. And so this is a course correction. And I actually, I think sort of, I'm glad to see it because if it didn't happen, then I think we do run the risk of some like massive crash in volatility. Yeah. Yeah. And I would add one to that last point, which is if you look at Anthropix S1, the bulk of their revenue relies on two customers. 2%, right? And if you look at AI, no, two main customers. Yeah. I forgot the percentage of revenue, but they're heavily dependent on two big customers. Right. And then if you look at the bulk of AI revenues across the industry, you have a very small number of companies that represent the bulk of AI spend. And so it's extremely concentrated and there's not really the proof yet that this is, you know, this is durable in terms of revenue across a wide spectrum of industries, so. Yeah. And it may get there, but I just don't think it was going to get there in three years. Like that's the thing is that, you know, everyone's like, ah, the world is going to change. Caroline, this time was supposed to be different. Yeah. What was the last time? I mean, this, I can't, what was the last time? Well, the last time was like telecom fiber and the time before that was something else. Like I'm just saying that like every news article was like, we read all that history and this time is different because this is such a game changing technology and it's going to put everyone out of a job in four weeks. Well, it is a game changing technology, but I just think that it also requires, and I'm going to say something, maybe a little controversial, it requires, it requires a literacy around the technology and a use case around the technology that wasn't prebuilt before it disrupted, right? So there's that coming from the corporate side. It's like, you actually have to take time to figure out where this is going to be best used. And that can slow integration in a way that maybe I don't think people anticipated. Yeah. And I would push back on that a little bit, Jigar. I mean, I think there's a question about how companies can fill this revenue gap, but there's demand for the computing inside these data centers. I mean, it's not like the railroads, these small companies in the railroad era that just like built railroads to nowhere. These are the most highly capitalized companies in the world that are building data centers to meet actual demand. So there's, you know, definitely a different dynamic. I mean, potato, potato, right? I mean, all I'm saying is that like on this side of the fence, you've got people who want to build only 1000 megawatt data centers, right? Which are literally building the city of Cincinnati in every single place, right? And then on this side, you have people that want to build five megawatt data centers at substations. Utilities are saying, here's where we have excess capacity. We would love for you to fill it because then like we could reduce costs for everybody. And the data center companies are saying, we hate you. We would like to build the city of Cincinnati in every place and make your life a living hell. So if, if it was so hard to build a data center, if it was so hard for them to get compute, why wouldn't they work with the utility companies and say, yeah, we'll take those five megawatt sites and actually put like compute in all those long lines so that we can actually increase utilization. And maybe they are. Nvidia made that big announcement this week and Crusoe made a big announcement on their five megawatt unit, et cetera. But I'm just saying we are in a situation right now where it is very obvious that on the one hand, tokens are going up in price to your point, because we're short compute. And on the other hand, there are people saying, here's some really great solutions. And the folks who are buying it are saying, no, we know better than you. We are so much smarter than you. And the stock market isn't buying that they actually are. - I mean, they've also sunk billions of dollars into what they thought was better, right? And so they don't have the balance sheet to pivot. - Without any knowledge whatsoever by which to say that it's better, right? Just with their pure masculine energy. - Masculine. - So I don't care. Like they could lose half their stock. their stock price and I would cheer because I'm so sick and tired of them. But you should care. Because, like, if they do— Why should I care about the masculine energy? Because then the whole market comes down. Well, so let's get— I'm fine with the feminine energy coming back. This is why I still love you. Let it loose. Let it loose. But there is, like, nuance. But there is nuance. So, like, you look at SpaceX, right? Still revenues, positive, still lots of deployment in AI. Market price is down. Stock price is down. They reduced their CapEx. They're the first company to actually reduce CapEx. They restated and reduced their CapEx, right? But that shows discipline, does it not? Or no? I mean, that shows that they're finally starting to listen to the non-masculine energy. Like, I just think that at some point you have to look at the data and say, like, for these companies who are the most profitable companies in history to have negative cash flows, at some point you're like, what are you doing, man? Like, seriously. Like, Meta just announced that they went into negative cash flows. Right? I mean, even Tesla, you know, the only reason they made money, really, this last quarter was because they had a one-time increase in tariff refunds of $700 million. Yeah, but their revenue has slowed as well. Yeah. Their revenue has slowed. But it's across the board. Like, it is across the board in the energy space. Yeah. Cash flow revenue is down. Who's most exposed? I mean, so, obviously, the neoclouds are the ones that are taking the biggest hit. Like, who else do you think is most exposed here right now? On which side of the aisle? On the data center infrastructure side. I think, I mean, I tend to agree with Jigar on this. I think the development companies that went all in on the gigafactories are probably most exposed. Interesting. And then what about the energy side? Well, on the energy side, anyone who didn't take a DOE loan, probably. Why is that? Why is that? Well. It was a joke. Well, kind of not a joke. I mean, I think everyone's exposed. I mean, look at PJM. Look at ERCOT. Look at, I mean, market prices are down. Places that were sure bets are paused. Right? I mean, everyone's exposed. I think the companies, and I think what you're seeing is that everyone is saying, okay, like, how do we affect discipline then? Right? We all got a little crazy. We all went to the party. We all drank the A. I Kool-Aid. But I think a lot of energy companies, and, you know, I talk to a lot of the supplier community, and even sort of like, you know, the smaller IPP space are all recognizing, we'd like to be here for 30, 50 more years, you know? So how much of our balance sheet are we willing to leverage to do this? And I think a lot of investors are saying, please don't leverage a lot of your balance sheet to do that. And I was drinking NA beer, to be clear. Not Kool-Aid. I was not drinking Kool-Aid. Like, you know, I just think that this was so obvious in coming, right? And all of the people who are like, I'm going to take old ship engines and power a data center with it. I'm going to rip off, you know, like, these engines off of old airplanes sitting in the desert in Phoenix and run data centers off of it. Good riddance to all of them. But they're still doing that, aren't they? Like, I don't know. I don't think that's totally gone away. Yeah, they are. But good riddance to their investors. Good riddance to everybody who thought that, like, basically destroying the planet to be able to power AI data centers faster by two seconds was a good idea. Like, I hope they all lose their shirt. Well, folks, that's it. No, but I'm just saying, like, look, I mean, there could have been, I get the fact that people were talking too much about climate change, right? And then the Trump administration came in and said, all of you guys were talking. We're not talking about climate change too much, right? But it's not like the IPCC didn't just come out and say that, you know, we're definitely way past 1.5 degrees. Now we're at 2.8 probably. We're going to have to look at geoengineering. And then on this side, the guy's like, oh, let me take the dirtiest possible power plant and figure out how to run a data center off grid in the middle of Utah. And now they've got to, like, truck in natural gas because the pipeline didn't come in on time. And, like, I'm sorry. I'm not crying. I'm not crying for you. Earlier, we met Paul Hines, Energy Hub's chief scientist. His team develops the machine learning that orchestrates 3.6 gigawatts of virtual power plants. When you see a utility using algorithms that we wrote on the whiteboard running 250 megawatt events, I think that's pretty amazing. Utilities need capacity they can deploy now, and they're finding it in virtual power plants, which are precise and configurable. I've got customers that have time of use rates. We need to make sure we respect that. I need to pre-cool during these hours. Maybe there's some hours that have a lot of solar power, so let's make sure that we soak up as much of that solar as we can. But I need to really manage my peak during this other period of time. And so figuring out how do we take all those goals and then come up with schedules for all the resources, whether it's batteries, thermostats, electric vehicles. Energy Hub maps that evolution through a four-level maturity curve. Level one looks like traditional demand response. At levels three and four, a VPP is a real-time resource that can meet many different needs on the system. It's actually better than a power plant because you're able to solve problems in the distribution network, which is where a lot of the cost is right now. You're able to solve problems in an automated way, whereas power plants actually are fairly slow to respond to issues. It's the future of how the grid operates, and we just need to connect them in the right ways, give them the right algorithms, and make that happen. Energy Hub's GridAware DERMS is a flexibility platform trusted by 230 utilities across North America. OpenCircuit is brought to you by Everyday Electric. After years proving the market was ready, they're delivering a new kind of VPP. So how does it work? Starting with features built into the products people already own and use. Things like smart thermostats, electric vehicles, and home batteries adjust automatically based on everyday routines, helping lower bills and add capacity. People can get meaningful savings and earn rewards from the grid. And this contributes to a reliable, resilient system that lowers costs for everyone across the grid. That is Everyday Electric's vision. It's the next great addition to your program portfolio. You can learn more at everydayelectric.com. What if you gave your climate donations the same due diligence you give your investments? Giving Green researches the strategies and nonprofits best positioned to unlock the next climate breakthrough. Climate impact is difficult to quantify, but Giving Green's research suggests a donation to one of their top climate nonprofits is roughly 10 times more effective than a high-quality carbon offset. And the Giving Green Fund sends 100% of every dollar straight to them. Maximized impact per dollar, no cuts or guesswork. Make a first gift before the new year, and it will be matched up to $500. Go to givinggreen.earth.com to claim it. Um, I want to talk about some of the delayed IPOs, but, uh, and so many of these companies are just looking at the market and saying, this isn't the right time, but there's a whole range of companies that are, that are benefiting from the development, you know, hundreds of billions of dollars in development are getting frozen, but there's still a lot of development happening. And that's really good for companies like Voltus, which is seeing gigawatt scale demand now for VPPs. It's great for the battery suppliers are just in a crazy amount of batteries, the electronics component suppliers that are developing the electrical architecture. This is still a really good market for a lot of the midsize companies along this industry. Yeah. I mean, I completely agree with that. We're being more disciplined. And frankly, so I think that a lot of the companies that have hesitated to go public, I think there is also nuance there. I mean, some of them are hesitating to go public because they realize they can't meet the scrutiny that exists today that didn't exist a year ago. That's not necessarily a bad thing for the market, right? And I think some of them are not going public because there is a general sort of damned if you do, damned if you don't, if you're attached to specific hyperscaler load in this moment, right? And so I think that the former is good. I think the latter could play itself, people are banking on it playing itself out within the next couple of months. And I'm not sure that that's going to happen. Yeah, I think when you look at the Voltus type deals, right, this is a no regrets approach, right? Because if the AI data center load growth doesn't show up, using the grid that we already have more efficiently doesn't lose money, right? Like, being able to flex load with the same level of dexterity that we flex supply still makes the whole grid operate better, right? And so, like, that's a no-regrets approach. And so, yes, the ideas that are no-regrets approach is like battery storage or like load flex and all that stuff. Yeah, they should keep going, like, regardless of what happens because it just makes everything run better. Right? But my point is, is that when you look at the filings at NIPSCO in Indiana this week, and they're now trying to rate base $3,500 a KW, right? To put that in perspective, To put that in perspective, that's $400,000 a megawatt year for the capacity. The PJM at the rate cap is at $140,000 a megawatt year. So they are overpaying for gas by 3x, right? And for what purpose? That's going to get rate-based for 30 years, right? And if the AI data center load doesn't show up, then what, Microsoft or somebody else pays for 80% of their capacity payment for a turbine that doesn't run? I mean, what kind of, like, this is the height of insanity in terms of how people think about what we should do as we move towards a decarbonized grid. I don't think the PJM cap or the market is reflective of what it costs to build new gas, though. So, I mean. Okay, but then give me a number, right? Because four years earlier, Nipsco and their IRP put in $1,100 a KW for that same exact, same exact gas plant. Same thing's true for Duke. Duke's at $3,000 a KW now. They were at $850 a KW four years ago, right? At what point do you say, huh, maybe the old way that we were doing things is not the right way to do it in the future, right? I just think that, like, the reason people are so pissed off, right, and you look at poll number after poll number and how governors have to be anti-utility to even get elected these days, is because I just think that people are just sort of, like, vibing it right now. And I was like, there is math that you can do around what the easiest way is to be able to meet this moment. And for you to do the exact opposite should get the vitriol that I'm spewing. So you've laid out some buckets of reasons there, Caroline. Like, do you want to apply that to any of the companies? I mean, so SP Energy seems like the kind of company that's facing. This is a renewable developer that is now doing integrated data center development, these mega campuses. They reportedly got pushback on the $50 billion valuation they were seeking. Form Energy felt like the market was not going to support its price goal. How would you bucketize some of these different companies? Yeah, I mean, so part of. I think some of the other nuance that's going on here is that similar to the cost of building new natural gas, the cost of raising capital and the cost of meeting projections from a year ago today went up by 25%. Across the board, right? So if you were preparing an IPO, say a year ago, to go public this year, what's actually going to bake the cake is higher than it was. And it's gone up dramatically. So, and I think if you haven't within that year shown demonstrative checkpoints in your advancement, then like you're sort of caught in between these two bookends and that means that you're not going to be able to do it. And that would make me question whether to go public or not, right? I just, I think that there are a lot of factors here that are, and not all of them are working at the same time on every single company, on every single issue, right? And so I do think the, you know, you can be a phenomenal technology and you can be, still have very successful development and perhaps need to be a little more successful and more conservative in the way you think about going public or what you need to show. And I'm not sure that that's a bad thing. Do I think because people are waiting to go public that that means they're going to go bankrupt? No, not at all. I just think that it means they're going to have to show more due diligence on what they've done and they just have to be able to show a little more feasibility in their construction. And that's okay. I mean, the reality is that is the scrutiny we held this market to for decades. And then we lost it for a little while. And, you know, I've said this before on the podcast. Like we, there were times at Google where I was like, we are kind of making and breaking things just on LOIs. And I'm not sure that's the right way to invest, you know? So I think we are, we are returning to the level of scrutiny that was there. The other thing, of course, that's happening across all of this is, you know, IRA dollars disappeared. And so if you've been planning this for years, right? And then you, you've got all these different, you know, forces working against you. And I just think it's a higher level of scrutiny. I don't think it means this industry is going away. I don't think it means it's a bad investment. I don't think it means these technologies won't win out. I just think they're having to be a little more conservative. And perhaps them being more conservative is going to force the, you know, the overall, what were you drinking? I was drinking Kool-Aid. I don't know. You were drinking- Non-alcoholic beer later. N.A. beer. I had like, I think- Non-alcoholic beer? To Carolyn's point- Oh, I was thinking like PBRs. I mean, to Carolyn's point, I think some of these companies have not hit their milestones, right? Like, I love Form Energy, but they do not have a very large project up and running at scale that's collecting data. It's just what it is. And I'm not bad-mouthing them. I don't, I'm not saying that they're going to- No, I think they're great. Fail. Yeah. But they need to have one of those up and running. And the one at GRE is not yet up and running, right? And so, but I also think that a lot, a lot of the investors in Vervo stock, you know, should know what they're getting themselves into, right? I mean, it is a new way of making geothermal. I think it is well-studied, and DOE and others have put a lot of money into it, but now they have to get all of their techniques right, right? And so if you don't want that risk profile, you shouldn't own the stock, right? Like, it's not a guarantee. They haven't had profitable quarters for the last, you know, five years before they went public. Like, they represented themselves exactly the way they should represent themselves, which, I think is fine. On the nuclear front, same thing, right? Like, look, I love me Xenergy, but they still haven't built their first reactor yet, right? I mean, they've got a partnership with Dow. They've got a couple of other partnerships with Amazon. They're trying to get stuff done, right? And so, you know, like, they're public. It's going to be a very volatile stock because they haven't built their first reactor that's commercial, that's NRC approved, right? Kairos obviously has taken a different route where they've got a partnership with Google, but they haven't gone public and they've been trying to raise money from private sources, different direction on their part. And I wouldn't say that, again, I don't, I think that the more conservative nature is not reflective of an overall erosion and power demand. I think it's more reflective of a very excited investment community that woke up to the realities of building a nuclear plant. I think it's more reflective of a very excited investment community. And frankly, the bar of durability sort of slipped for a little while. And we've talked about some of those companies and Jigar had to apologize to them for what he said afterwards. Did I? I think you did. But you know, that bar slipped. Depends on who we're talking about. That bar slipped. Now the bar is going back up. I don't think that that's a bad thing. Yeah, that all feels right to me. Jigar, part of what you do with Multiplier is to help companies think about their exit strategy. What are you telling companies about the path forward? Well, last year I told them the market is fully open and if you want to go into the public markets you have a short window by which to do it, right? And that window is closed? I think that window is on pause for sure. You never know whether something's closed or open until you look through the rearview mirror. But right now it certainly looks paused. And I think it depends on the company and what the characteristics are. But I do think that as Carolyn suggested we still need more power on the grid, right? And so for those folks like if Voltus is able to meet this Google contract in the next 12 months which I suspect they can then they'll be given a chance to quadruple that contract again, right? Or 10x that contract again because we are short capacity. Every one of the hyperscalers is short 10,000 megawatts of capacity. Right? Like, you know, contracts they signed are not coming through us. They're going to go on time and are getting indefinitely delayed. And so they need capacity and Voltus is one of the solutions for that capacity. But they're doing deals like one commercial customer at a time. And so a lot of the hyperscalers are nervous and are saying how many of those commercial customers exist? Can you really get 10,000 megawatts of flexibility or only 1,000 megawatts? They got to prove themselves, right? So they now have the chance to do that, right? And so I think that's true across the board. Whether it's residential battery suppliers, whether it's thermostat people like Everyday Electric now, or whether it's other folks, everyone is going to get their chance to prove themselves. All of the nuclear companies that got grant funding from the U.S. military for five army bases also will have a chance to prove themselves and they're going to get paid cash to build those reactors. And now they're going to have to deliver or not deliver. And, you know, it's in their hands. I think one of the other aspects here that I don't have an answer to and I actually think about, maybe we can bring it back on another show, is that, you know, in the past two years you've also seen the movement and the consolidation of the nuclear industry with the private equity platforms, right? And so that has presented a different approach to the way that some of the deal-making happens, right? And the way that we think about debt, the way we think about, you know, consolidating these supply issues, right? And I don't know how much that has changed the way that even smaller companies think about their trajectory. You know, like if I am, you know, a mid-size development company, is my goal exit? Is my goal to get onto one of these platforms? You know, it's a very different space than we were in a handful of years ago. I mean, you know, between KKR and BlackRock and BlackRock, I mean, now they're consolidating these huge development platforms and they're picking the different pieces. And I think it's probably the way a lot of it gets done moving forward. And so now there's another path to it, right? And you can go public and then go there. You could not, right? And so I think that there is, I mean, you saw this Invenergy, you know, $3 billion stake in Invenergy from private equity, right? Invenergy is not public. They didn't go public. They did that instead. I think that there's, there are more paths towards profitability. And I think that there should be more scrutiny on going public considering how much the market is determined by a handful of companies right now. Well, I mean, you know, Charles Schwab has that ad campaign that they have now that's called Filthy Comfortable. I don't know. Have you seen this? I don't watch television. And, you know, that's what that represents, right? But what is it? Tell us the ad. Well, like, there's a bunch of people who are like, you know, I'm very filthy comfortable, right? And it's basically like, if you try to go public or you try to have these big exits, then, you know, you're trying to become filthy rich. If you go to private equity, like, no one becomes rich. That's not how private equity works, right? They become rich. They become rich, right. That's right. You work for them. You get a decent salary and decent bonuses and a bunch of promises that they never keep on the back end. And, you know, there's a bunch of people who are like, well, I'm not And, you know, and that's what it is, right? But you get unlimited capital by which to do your core business, right? And that's fun. And it's useful because you get to do a lot of great stuff, right? But you never become filthy rich. You get filthy comfortable. Yeah, but on the flip side, if your stock is dropping and your investors are pissed, similar handcuffs, you know? Yeah. Oh, I'm not suggesting otherwise, but I'm simply saying that that's what a lot of people are deciding between what to do with their platform. Because, you know, like a lot of the private equity guys also, like to them, these are all ones and zeros on a page. It's not clear that they actually really even care about these businesses that are underlying there, right? When you look at like what's happened to the renewable natural gas space and a lot of the consolidation there, right? And so, you know, I think that one of the big challenges that we have is on the one hand, we're talking about technologies and areas that are not necessarily that follow the law of capitalism, right? They save customers money. The customers want to sign contracts. They deliver solutions, et cetera. And then on the other hand, we're talking about technologies that are on that bridge to bankability. They have not yet proven themselves and they are in need of a lot of capital to be able to get to the other side and be able to prove that it works and then they can get their costs down and they can be mass manufactured and all of those things, right? And the question that we're asking ourselves, is now that the IRA is effectively dead and, you know, the loan programs office is not really leaning into more difficult names, like what is the right pathway for these folks to succeed? Vervo has taken the public offering pathway, right? Others tried to copy them. We're talking about private equity, but I'm not sure that private equity is going to give a lot of money to companies that lose money systematically and, you know, need another five years to prove whether they're going to be successful. No. And so you said something that we haven't really brought in, which I think is interesting that we haven't brought in, which is that, you know, all of these companies started, and we'll put the IRA money on the side for a second. So whether you're, you know, clean tech or not, but all of these companies started with a general belief in open markets and innovation, the opportunity in this country, to succeed in sort of a capitalist system. And within the past year and a half, we've become more populous as a country than we've probably been in a hundred years. And so that, when I call my friends in this space and I say, what's the biggest challenge? Politics. Yep. It doesn't matter if you're Constellation or if you're Vervo or if you're Tesla. I mean, it's politics. And I do think if that hadn't emerged, I question whether the discipline in the market and the conservatism would have transpired. So in many ways, and you know, we can see the silver lining here, is that like democracy is working in some way in course correcting. And so I just think that we, those of us who work in the business of power, even though we've always known on the, on the renewable side or the clean energy side, that it's all about regulatory and policy alignment. I think generally the power industry underestimated the strength of the populist pushback. I don't think the clean tech space ever thought that building a power plant would mean that you are synonymous with the evil overlords of AI, right? And I think that's a big part of the power industry. And I think that that emergence is probably a far more weighted variable in this than, than we're giving it a credit for. I agree with that assessment entirely. Let's, let's hit one more angle to this, which is the IPPs. So NRG, Vistra, Talon, Constellation are all down on the year. I think there's a combination of things happening here. It's been great. It's cut-side joint. It's cut-side joint. Power prices in Texas, making it hard to build new power that, you know, these companies are also seen as AI derivative companies. Like what is the market telling us about IPPs right now, Caroline? I mean, market prices are soft. Yeah. You know, the most, most of the investor bases in the IPP space, I think are, are generally split. There, there, there's some investors, and this is broadly, this isn't, I'm not just speaking for NRG. I think there's, there are investors who, who want the IPPs to go after, you know, the golden ticket. But I think a lot of investors are like, no, we don't want you to. We want you to just stay steady eddies. So you can, I mean, the IPP space, for what it's worth, has been sort of a plug and play investment community for decades, right? And you ride the weather. Prices are up, you make money. Prices are down, you don't make money. Now there's this new layer of like signing a bilateral and, and getting durable cash that way. Okay. How much of your balance sheet are you willing to leverage? Consto's deal with Google was a direct signal that, you know, which is a great deal. I'm very supportive of it. But like, it was a direct signal that those uprates were not going to clear the market. They weren't going to clear the market. And so they needed an offtake to do it. But that, and, but that's true for all of these technologies. Right, right. Exactly. Exactly. But if you are an industry that is 90% merchant and market, that's what your stock is going to be down. I mean, prices are low in Texas. The, the cap in PJM, is lower than it would need to be for a lot of the IPPs to develop anything new. We have to separate some of this stuff, right? Like I think, um, if you're talking about new assets, right? The IPPs, broadly speaking, were started by, let's say, AES back in the 80s, and they were using PERPA to, you know, to bring on technologies. Yes. Like if you're building new natural gas right now, new nuclear uprates, like none of those things pencil without a long-term offtake agreement from a hyperscaler that's guaranteeing you a return on investment at a price that pencils, right? So I think that makes total sense. That's the story, right? I don't think there's anything particularly interesting. It's not, it's not the whole story, right? So then if you look at Texas, I'd say that, I mean, you tell me, but I don't think that the vast majority of batteries were deployed by the traditional IPPs. No. I think there were a lot of new companies that had a new business model with new metrics around, Well, I think the business model was, I think the business model was there was a six-year window to capitalize on. And if you look at returns in ERCOT for storage, it's decreasing, right? Because essentially it's going to run out of its ability to chase the margin between, from peak, right? And that's a natural occurrence with technology like storage, unless you start pairing it and start integrating it and blending it in different ways, right? But no, that's absolutely right. And so prices are down and prices are soft. The other thing though, in ERCOT and PJM is that it's interesting. I was actually talking about this with a friend the other day, which is that there's like PJM is looking at ERCOT and going, man, that's the way we should have done it. There's no capacity market there. The capacity market is what's killing us. And then ERCOT's looking at PJM and, you know, would never admit this, but there's a number of entities within ERCOT are going like, without a capacity signal, we're going to erode plants. Like power plants are going to go offline, right? If prices continue to drop, that's just economics, right? And so there's this interesting interplay between the two. Neither of them I think have it right. And I think the truth is, and Jigar, you've said it a lot, it is time to have a very different view of what market structures need to look like moving forward. And I don't think there is a perfect market out there. And I think that I will say it now, but I think there will be legislation in Texas next year that asks this, like, is the market today, you know, what we need going forward? And I'm hopeful that there are people with interesting views. All right. So let's speculate to end here. What are your wildcards going forward? So. I think we can see data center resistance as a wildcard. I don't think anybody two years ago saw just how powerful the resistance would become. Right now, a lot of people are sitting here freaking out about the cybersecurity threats of agents. Banks now have agents swimming around in their systems making transactions. They don't know which ones are malicious. You have people who don't know much about hacking now able to use open weight models to send teams of hackers out. You know, I don't know. I don't know how this is going to affect markets, but you can see a world in which AI companies like take a hit if there's this massive cyber event that wreaks havoc on like the financial system. So this has like downstream consequences. I'm kind of curious about what's in the back of your mind. What are the crazy things that could happen that actually might not be that crazy at all? Jigger buys a tweet vest. That's the crazy thing about it. Yes. A buckaroo jacket. A buckaroo jacket. A buckaroo jacket. You go. But I'm staying away from the cowboy boots. You go. Like if you think of all the wild scenarios. You're not a cowboy boots. That people are worried about right now. Do any of them feel like they are material enough? Here's the truth on some of this. Like this, this whole like agent thing or I actually, and I will leave my personal opinions out of this. I actually think what you will see happen if something like that happens is the narrative that the only thing that can tackle AI terrorism is AI. Ah, so it makes the, the AI labs more powerful. Yes. And concentrated. Yeah. Yes. Yeah. I buy that. So I don't know. I don't know that that does anything to, I mean, it does more for political unrest. I think the wild card is going to be the narrative around China being months behind us goes away and they're no longer months. They are ahead of us. Yeah. Yeah. And, and then, and the question becomes, well, do you need to host all this infrastructure to benefit from the integration into the economy? And, and I think that is not the wild card. I think that is the card. That plays out within the next year, year and a half. Yeah. Yeah. And at some point the systems are so powerful, like being months behind, does it really even matter? Like that they're going to be a so capable. Right. Or there's just so much differentiation and optionality in which type of framework or large language model you choose. Yeah. Yeah. All right, Jigar, what's your wild scenario? I mean, I think I go back to Carolyn's point on politics, right? I mean, part of the reason why the markets are so uneasy is because. Because they don't understand who the sheriff is in town, right? So whether it's on the AI side or whether it's on all of these CFTC oil trades that, you know, didn't get prosecuted. I mean, today people no longer believe that Brent, right? The oil price at Brent actually represents the cost of oil, right? Just think about what that means when you have an actual metric that you're basing billions. Billions of dollars of contracts against. And you're like, I don't even know what that number means anymore, right? And so when you think about like all of these things, it leads you to this populist approach, which I don't think people have fathomed what the pathway is to AOC becoming president. Well, it's not even AOC. I mean, like if you have. Yeah, yeah, I think that's reasonable. Vance and Warren and AOC sort of all. If you're all saying the same thing, like what does that mean, right? And I, I, but I don't know. I do think a lot of the moratorium concerns are really more about a pause because I think governors are getting wise to the fact like, oh, this is a negotiation. This is more than just maybe tax. This is more like, what do I, what do I want out of this? I mean, this is certainly what Jennifer Granholm has been saying. But I would suggest to you, it's a little bit different than that. I hear you. But I think this is more about, you know, do we need large data centers? Yeah, that's my thing on the like, is it worth it? Is the infrastructure worth it? Right. Yeah. I mean, the companies are saying, yes, they do. Right. But the companies are lying through their teeth. These models have so many parameters. Right. But these models are so much bigger. There's so many parameters. They're not. Yes, they are. They're not. Oh, my God. EPOC AI has. Yes, they are. EPOC AI has debunked it and said basically that, that because all of the data is now behind anti-fetching approaches, they're never going to get to the weighted models that they need to use four gigawatts of compute. The current models that they're training right now still are less than one gigawatt. We're going to have to pause on that one and hold. I will, because I don't necessarily agree with that, but I think the question, is still, can you become a leader in the next version of the global economy, integrating AI, without hosting all the damn data centers? And I think a year ago, we told everyone, you can't. And I just don't know if that's true. Well, you're, but you said something differently earlier, Carolyn, which I think is worth talking about, which is that. We're still talking. Still talking? All right. That ultimately, this is about integration of the tool. Right. Right? It's really like what Red Hat did to Linux, right? Linux was powerful, but no one knew how to use it. And Red Hat figured out how to make it usable for people, right? And so, like, I mean, yes, the models matter, but what matters more is this, like, layer where people can help train people around how to really unlock productivity. And to me, that layer of value creation doesn't require 1,000 megawatt data centers. And the reason it matters to me is, just to be clear, is not about whether I win this argument. It's about, if you're a populist, right, and you have a building that needs a million dollars worth of upgrades, putting a 500 kilowatt data center in the basement of that building and getting them to pay for the million dollars of upgrades is pretty easy. It's a pretty easy trade. And I think you're going to see that all day long. Okay, so what you're really arguing is that it's all going to happen. It's just going to happen in a more edge infrastructure. Because that's where the trade comes, right? Because that's where the negotiation can be. That's where you can actually get something out. And the communities aren't getting anything out of the bigger ones. Yeah, we just talked about the delta between transmission and distribution. There are so many buildings right now that are office buildings that are, 50% empty. They have 3,000 amps of unused service, right? So you can put a data center there. And what the mayors want in return is that they meet their energy efficiency standards and the water efficiency standards. And they get upgraded, right? Because a lot of these buildings are in disrepair. I just think that there's a level of political efficiency here that people are not seeing because they're just so obsessed with, you know, the energy efficiency standards. They're just so obsessed with, you know, the energy efficiency standards. with going bigger and bigger and bigger. I totally agree. And I think this is where China has a leg up. They actually have a strategy to make AI useful throughout the economy, throughout provinces, so that local leaders figure out how to adopt it inside government, make it useful for people. So does the Middle East, frankly. Yeah. And I absolutely think that that is a huge advantage for China and for the Middle East. But I think you can, I think you still need a lot of these centralized data centers for the kind of training that we're talking about. Like, I don't know how many. I don't know the exact translation between the trillions and trillions and trillions of parameters and the amount of gigawatts you need. That, to me, is still a very open question. But, like, these models are getting absolutely enormous. And, like, there is going to be a need for these large megacampuses. We just can't deny that. Which we have 36 of them already, to be clear. Yeah. So are you suggesting we need another 36 of these large campuses? No. I mean, I don't really know. Right? I don't know. You should know because it's destroying the stock market. Well, if Stephen knew, he would not be hosting this podcast. Yeah, exactly. I'd be an operations officer at OpenAI or something No, but there are a lot of operations officers in OpenAI and they don't get listened to either because I've talked to many of them and they agree that inference can be small The reason I bring this up, Stephen, is not to be pedantic about it but just because the fact that this is whatever it is like a trillion dollars of infrastructure per year and no one has the answers to this most basic question means that people are investing capital without understanding very basic things that they should know I just really think that investment and developers underestimated how hard it is to build large centralized power plants And everything goes from there Everything just goes from there And whether they pivot, and maybe they should or whether they just lose a ton of money beating their head against the wall We'll see But I think at the end of the day it was just people thought that if they had a contract for turbines then the turbines would get built That is such a good place to close it and I think that is what is driving this market correction People are figuring out just how difficult this stuff is So, well said A fun conversation Caroline Golan, so good to see you Always a treat Thank you, Stephen Vigor, great to see you Your sweater just made my day Made me feel cozy New England Thank you Well, you know, it is a fantastic fall Good to see you both Such a joy seeing you Open Circuit is produced by Latitude Media The show is edited by me, Sean Marquand, and Anne Bailey Provide production support You can find all of our episodes anywhere you get your podcasts Apple, Spotify, elsewhere Transcripts are at LatitudeMedia.com And while you're there, check out our newsletters We're covering all the stuff that we talk about on this show And of course, if you like to watch podcasts go to Latitude Media's YouTube channel and you can subscribe and see Open Circuit and Catalyst And we hope to see you there Thanks so much for being here I'm Stephen Lacey We'll catch you next week