0:00 Hey, BDE fans in a first for BDE. I don't think we've done BDE remotely yet, have we? We have. Oh, yeah, that's right. When we had the Russian expert on, we did that. We also did one. I was
0:15 in Nashville, I believe early last summer, I
0:21 think. Yeah, and we tried to have Kirk calling in from Nan Tuckett through the years. One of my favorite texts that I've ever gotten in my life is Kermit. One time was watching a webinar, and
0:37 John was hosting a very distinguished professor of some sort, and they had the Chuck Yates poster behind him, and he just goes, What is that professor fakey who's sitting there looking at it? So,
0:50 anyway, so how's, so you're punching out the house? Almost done. Yeah, yeah, I'm playing a little, um, general contractor, supervisor, tool pusher, company man, however you want to
1:05 analogize it. But yeah, so lots of interesting stuff to talk about. And guess what? We're not starting, we're not starting with oil. In fact, yeah, let's not even it's not even on the run a
1:16 show. It's not on the run a show. So it was firmly and firmly in tedious territory. So let's jump in three mile Island. Yeah, I saw a piece last week, we've talked about the the agreement that
1:33 Microsoft has with constellation to really rehab and restart one of the units at three mile Island for a data center power supply agreement. And what caught my eye in this update was one, just the
1:51 extent of what is going to have to happen before they start to load fuel in. Um, there's a tremendous amount. You know, one of the things was I, they've got just all kinds of scaffolding that
2:04 they've got to a choreograph and, and, and, and do things like it was stripped. I mean, it almost felt like the vacant building in downtown Detroit. You know, that, I mean, you got, you got
2:16 to nothing. You got plants and trees growing up in the, uh, in the old, uh, cooling tower and redwood foundation elements that have to be replaced with more modern materials And one of the
2:28 interesting things to me, but it makes perfect sense is that the core of the control room, which is all analog, they're going to leave, I'm sure with some repair and upgrade, but it's going to
2:40 remain analog because it keeps it more insulated from, uh, cyber attacks, which is pretty interesting. So we've got something that is going to power our next generation data center and AI being
2:53 ultimately controlled and powered by something that's, you know, old. dials and levers. Well, you know, there's probably an element of the Southwest cockpit, you know, 'cause all there's 737s,
3:05 they keep standardized. 'Cause all their pilots forever have been flying on that cockpit and so they leave the same. So I wonder if there's an element of that to it too. But the most interesting,
3:18 I guess thing to watch tomorrow is the first of the NRC's public comment hearings I'm not sure exactly what time that is, but if I can find a streaming, certainly be worth paying attention to
3:33 because that is the parallel element here in terms of the timeline. The refurbishment is really just on a four-year timeline before they get everything put back together and upgraded and ready for
3:49 loading fuel. And that ticket is16 billion There was a quote
3:55 from.
3:56 unaffiliated, or at least the affiliation of the activist group was not named, but he had said that he had witnessed the 79 incident.
4:09 And, you know, that there was going to be quite a bit of, in his words, a protracted, you know, get ready for a protracted and long battle. So I expect he will be speaking at tomorrow's hearing.
4:23 It's going to be and it's going to be interesting because if you think of the players here, we'll see who the administration is going to be who they're dealing with. But you've
4:37 got a Democratic governor in in Shapiro. You've got obviously the environmentalist that are the big constituency of the Democratic Party. And then you got big tech, who's historically been very pro
4:52 Democratic. Maybe there's some cracks this time where you see
4:57 folks like Musk and others supporting Republicans, it's gonna be fascinating to watch. 'Cause if you look in the crystal ball, I think you wind up seeing a backroom deal here that kind of rivals
5:10 the COVID vaccine in terms of what actually happens in terms of pushing this through a speed. And it wouldn't surprise me if at the end of the day, and I hope this doesn't happen, but do we use the
5:25 National Guard on protesters out there? 'Cause this is gonna be as high a profile thing as we've seen, and so it'll really set the tone for what happens here. It's certainly going to be a good
5:41 first test of the thesis that Big Tech is going to make it happen no matter what, because of their political affinity. If this were being led by traditional old line industrials or oil and gas, God
5:54 forbid, then that's a different.
5:57 I guess sentiment and political dynamic, you know, the, the four year rehab,
6:04 probably take the over on that for a lot of reasons. I mean, the facility had the incident 45 years ago. In fact, the reactor that had the partial meltdown in 1979 is still 45 years later,
6:19 apparently undergoing ongoing decommissioning activities, which surprised me a little bit But that
6:30 was kind of quite telling. I think the NRC whole, we've talked about it before too, let's see how much of the inertia that has been part and partial over the last 40 to 50 years of trying to get
6:44 anything done on time and on budget related to building a new nuclear in the US. Let's see if that is a catalyst for really changing that You know, I do think that what happens on over here. faith
6:56 is going to be at least
6:60 an indication of just where this might go. I think one subtle point in the press release that I noticed that's kind of part of it is they are changing the name. It will no longer be known as Three
7:15 Mile Island. It will be crane, energy, plaza, or something to the effect, the former CEO of Constellation So
7:26 my first thought was -
7:28 My first thought was that it is a gym crane, but he's not busy with other things. That is. All right. So I did not listen to the Veritan podcast with Peter Lake. So kind of give me the 101 on it
7:44 because from your email it sounded like it was pretty good Yeah, the headline and I'm paraphrasing, I'm sure, or the
7:54 title was. um, without power, nothing matters. And so Peter Lake, who is now in private practice as a consultant with his firm as Cardinal Rose, Peter Lake at the time of Yuri was chairman of
8:13 the Texas Water Development Board. And so when the whole debacle that unfolded in the midst of Yuri with ERCOT, P-U-C-T, Texas Legislature, you know, the tragedy that was Yuri, particularly in
8:29 the cost of human lives. And he did clarify something that you've talked about before that we were within a very short time timeline of a total grid collapse. And I think I recall he said it was
8:44 like four minutes and 37 seconds, which had that happened. Best case is that, you would have had the entire state or the entire grid, literally without power for a number of weeks and probably
9:02 longer. And so the domino effect, the direct effect on, you know, Texas ratepayers and power consumers would have been catastrophic, but Texas is the seventh largest economy in the world. And
9:14 then if you think of the connections, particularly from the energy and chemical complex without power, you're not running pumps, you're not running thermal units, you're not running processors,
9:23 and certainly you can't fill up vehicles, not to mention the kind of life and death aspects of power support itself and healthcare, etc. It was really close to catastrophe. But the main, I think
9:39 the main theme or the main
9:45 outcome was, you know, Peter is a guy who walked into this appointed by Governor Abbott and had to be convinced multiple times, said, look, I don't have any, I have zero power subject matter
9:60 expertise. And what the governor recognized right in the middle of that crisis is I've got to have some somebody with completely fresh and
10:12 unbiased eyes take the lead here And essentially what it, what the effort did was a line three really historically misaligned and kind of cross threaded constituents, that being the public utility
10:29 commission of Texas. And he took on the role of chairman of the PUCT in that role. He also took a board seat on ERCOT. And the legislature got in line. And so kind of the bottom line is here, the
10:43 build out in the expansion of the grid, particularly as it relates to generation, had been characterized. The objectives have been characterized, the priorities have been characterized. in the
10:54 acronym CARE, which is Clean First, Affordable Second, Reliable Third, Energy, and totally flipped it around to race. Reliability is, if not singular, it is immovable as a first priority. And
11:10 so you got the legislature, ERCOT and the PUCT quickly and completely aligned. And so the legislature in particular got moving very quickly on funding many things that had been bogged down. He
11:25 talked about one transmission line that had been stalled for a number of years from the Rio Grande Valley to get some renewable power up to San Antonio. And really,
11:38 the subordination and reliability as we built out in a pretty rapid acceleration or addition of renewables on the grid,
11:50 We got through the crisis and it was. a wake-up call to say, you know, we've got to make sure that grid stability and grid reliability are paramount because nothing else matters beyond that. And
12:03 you've got to be designed for that. There's a lot ahead of the PUCT and ERCOT with respect to the things that we've been talking about. And, you know, we start adding demand pressure on the grid,
12:21 which is nowhere near optimized, but it's in much, much better shape. We haven't come close to that. The
12:30 grid collapse scenario that we saw in Erie.
12:34 But at the same time, when you're talking about adding the magnitude of the slugs of demand over a short period of time related to high performance computing and AI, you know, there are things that
12:46 are going to come up in peak load situations.
12:54 You know, the demand response post-Yuri had been pretty good. So, Erikaat sends out these conservation notices, and they've gotten pretty good demand response. However, he cited one from, I
13:07 believe, the summer of '22 where two conservation notices went out in the same week. In the first one, they had great response and never got close to having, you know, a rolling blackout
13:22 situation or a load shed situation. But they got a second one in that same week and the demand response was virtually zero as he described. So as we think about adding this type of demand that is
13:39 coming at us pretty quickly from high performance computing and AI, the
13:46 conflicts of interest on the grid between residential and commercial, interruptable power. large flexible load are going to be really interesting to see. So if it starts happening frequently
13:58 because the grid has not been optimized, you know, we continue to to outrun our storage capability with respect to adding renewable generation or non-dispatchable generation, you know, how is that
14:11 all going to going to play out? So there's a lot more kind of base load pressure that's coming that is going to make things, you know, really, really tight in the
14:25 peak demand or crisis type of situations. But ERCOT is in much, much better shape, P-U-C-T is in much, much better shape. And what I also found stunning is that he said he's gotten no inbounds
14:38 from all the other regional grids. And, you know, Texas got its act together very quickly in response to a crisis, but the, you know, kind of the model or the lessons learned have not not really
14:52 been adopted or adapted outside. Yeah, 'cause I mean, you and I talk about this all the time. Urcott for, you know, all its problems and stuff is really just truly a leading indicator. You know,
15:04 it's going to go through it and everybody else is going to go through it as well. The one thing I will say that I'm mildly encouraged by since the last time we've really talked a lot about Urcott is
15:16 I had Neil Dykman on Chuck Yates needs a job and we talked a lot about solar, but we also talked grid technology and it kind of harkened me back to the late '90s when oil fell to12 a barrel and I
15:31 went from being an oil and gas banker to a power technology banker and I was basically running around and finding anything having to do with hydrocarbons and
15:41 the internet. And there was a lot of cool stuff back there, particularly software-wise We at Stevens invested in a company called Silicon Energy. And I really thought that was going to be the
15:53 biggest company on the planet. It was an energy management software, basically let you do a lot of cool stuff. One of the great use cases is Neiman Marcus bought it and they actually figured out if
16:07 you pumped oxygen into the store, sales went up 5. You know, and so anyway, and what it was interesting talking to Neil, 'cause Neil said a lot of the technology that, you know, I liked in
16:21 silicon energy. He said,
16:25 we're doing it now, finally. It's taken 25 years later, but we're finally getting there. So if you had a progressive or cop board that respected kind of science, but at the same time was willing
16:39 to push, I think there are a lot of cool things you could do with the grid today I think it's a cultural and mind shift issue. That's why when you sent that email, I'm gonna go back and listen to
16:49 this 'cause it would be cool if our cock could be kind
16:56 of a leader on this front. Yeah, and the other, I think the other principle or philosophy is we need to let the markets work in terms of the right
17:12 distribution of generation resources
17:17 pointed to the fact that Texas since on quote unquote an ocean of natural gas, for example, nuclear is obviously
17:27 in the mindset, but he did say, look, and my characterization is you kind of run up to the moat of the NRC at the federal level and there's just, there's no ability, I think, to affect the type
17:43 of sweeping chains that we've been talking about at the NRC that's going to have to come. know, politically and from the federal level. But it's clearly a
17:55 much more progressive mindset and a much more balanced mindset. You know, great job of getting the three constituents fully aligned or as fully aligned as they've ever been over the last 15 to 20
18:10 years You know, now I think there are two of the PUCT that sit on the ERCOT board. And so, you know, these are not trivial decisions that the Texas legislature, for example, has to make in terms
18:26 of funding major grid additions like that AEP line that I talked about coming from the Rio Grande Valley up to San Antonio. Well, when Bill White became mayor of Houston, the first thing he did was
18:40 get the street guys, the telecommunication guys, the water and sewage guys. all in one room, and he said, Hey guys, overlay your plans. 'Cause when we tear up the street, we're doing it once.
18:55 And you gotta go in and fix the pipes and the telecommunication and the cable lines and all that. 'Cause Houston used to be a muck with, they'd tear it up to fix a water line. And then six months
19:07 later, I have to tear it up to do a telecommunications line, et cetera. So it sounds like there's some of that thinking. Was this Maynard chat? Yeah, well, it was mainly in a couple of others
19:19 on the Veritson team, and I'm sure I didn't do it near justice, it is worth an hour of your time to
19:27 listen and watch this particular podcast. Says Peter Lyke will provide the link, Peter Lyke. Yeah. All right, so what are the num-nuts doing with bricks? Well, there's a bricks summit. I don't
19:44 know if that's the official term this week in Kazan, Russia.
19:49 And a couple of things, I didn't realize that BRICS had now grown to 10 countries beyond the Brazil, Russia, India, and South Africa. You've added five more Egypt, Ethiopia, Iran, Saudi, and
20:07 UAE. And really the message has been, we're looking to basically provide an alternative to the West in terms of world leadership. And I concluded from all this, is that
20:30 in Chinese President Xi made some, I guess thinly veiled, but pretty pointed if you read between the lines comments about
20:41 the global South. And I think as far as Russia and China are concerned, particularly China, looking at what we're doing in the West, which for a number of years has been fairly climate-distracted.
20:56 And the things that we're doing that, you know, you have to step back and take a look, okay, what are we really doing to our energy and supply chain security, for example? We just talked about
21:06 ERCOT and some of the, you know,
21:10 ready fire aim
21:12 type of decisions that we've made in terms of adding generation, but, you know, clearly looking to attract a large portion of the unaffiliated with the West in terms of leadership group of the
21:26 Global South. And I also think it has a bit more of a self-interested or a selfish motivation because if you look at the Global South, there's a lot of raw material resource there, not that China
21:37 doesn't already have a pretty significant, if not dominant,
21:44 control. position of both raw materials and process materials, the notion that, you know, India, for example, has got an increased alternative to having to conform to things like,
22:02 we talked about it recently, India of pushing to join the IEA, for example. And the IEA, as we know, has been very much split into two factions. One is, it's historical
22:17 energy data and policy and global analysis in that regard, but has also become much more of an advocacy group for renewables and net zero. And so, India's got a much more difficult balancing act if
22:34 it's going to go kind of the alignment with the West is the way I look at it. And what Bricks is saying, you know, our priorities are our own security, our own well-being, our own access to
22:49 energy and raw materials. And so
22:55 we're over here in the West, distracted by a lot of things related to ESG and climate. And I just think it's a bit of a power play that they're indicating to change the leadership a bit more from
23:11 what it's historically been, Western powers to this new, new Brexit alliance. And I mean, given our Navy, I don't think at the end of the day, they're gonna get a lot of traction with this. I
23:26 kind of see the more dangerous thing. Say what you want about Richard Nixon. I mean, about as shrewd a person as we've had in World Affairs, and he was always big on, you gotta play China and
23:41 rush off each other. You can't let those two collaborate. And so the worrisome thing here,
23:50 at least from my point of view, is you've got Russia and China working together. You've got North Korea now collaborating with the Russians and potentially sending troops into Ukraine. I mean,
24:05 allowing our enemies to all come together and work together is not gonna be good even if it's kind of
24:16 what I think's ultimately gonna be kind of an ill-fated alliance of bricks. But
24:25 yeah, we definitely don't want those guys getting along. Yeah, and kind of the subplot or the theme that we just talked about with Erkoth, the crisis brought about a rapid reprioritization, the
24:41 thing that really matters, which is reliability.
24:45 and access and affordability. I think that from just a
24:52 higher economic view is really what this is about, because you've got countries migrating to that alliance that is more Eastern led, more led by authoritarian superpowers that provides a much less
25:10 confused
25:13 policy-making, confused policy-making landscape that's not encumbered by things that we've chosen to make front and center in the way we think of banking policy, namely
25:25 not zero in climate. Yeah, it'll be, 'cause I mean - And I gotta believe, cynically, that they're happy to see us continue to be distracted by that in the West. Yeah, 'cause I mean, the one
25:38 thing I do think we need to be planning for and thoughtful for problem as he is, Putin's old, and rumors have been out about his health and all. So there will be a, in our lifetime, there will be
25:55 a post-Putin Russia
25:59 sooner rather than later, and I need to, we need to at least be thinking of that chessboard on that happening. See a couple of years past average Russian male life expectancy Yeah, I mean, he's
26:14 70s, right? Yeah, he's early 70s.
26:19 Yeah, and I mean, rumors that,
26:23 rumors that he had, you know, some sort of cancer or something So
26:33 Putin is, where is he, he was born in, he was born in 52.
26:43 So what's that? Well, 72. 72, so, yeah. It's been the longest serving Russian leader since just a Stalin, so.
26:57 All righty, so
27:01 let's close it down with the Doomburg piece. I thought it was really good. And this is really good. Yeah, very much related. Why don't you kick us off here? So Doomburg wrote a piece talking
27:16 about Taiwan. And as we all know, 23 of the world's semiconductors, 90 of the really advanced ones are made in Taiwan. That's why it's so important. At one point in their history, I believe half
27:34 of all their electricity was generated by nuclear, political elements have come in, And they've shut, in effect, have moved to shut down nuclear power in Taiwan. And so they're kind of faced with
27:52 needing hydrocarbons. They don't have the Permian Basin sitting on the island anywhere. And so, you know, they're importing natural gas and coal to make this happen. And that just makes them
28:06 incredibly vulnerable, right? Because China doesn't have to invade. China can literally just not let the tankers show up with coal and or LNG and starve the island, starve the island out. And so
28:23 it's interesting reading through because that's, you know, you look at future pressure points in the world and clearly Taiwan is going to be one of those Every indication out of Z and China is we
28:39 want it back.
28:41 It's interesting watching how energy is playing a major role in there and the desire to get rid of nukes on a political front is really just putting those guys in a bad spot when it comes to their
28:54 enemy I mean they're on a really steep downward slope of decommissioning of their nuclear facilities and they're now kind of 91 dependent from a power generation standpoint on colon natural gas and
29:08 just to scope it here on the natural gas side they import. The equivalent of or consume the equivalent of 265 BC of a day And so it's not a trivial thing for a heavily import dependent country like
29:25 Taiwan and island country. One of the kind of eyebrow raising elements of the whole thing is this notion at the energy ministry level of offshoring power generation. to places like the Philippines
29:42 and Japan and running a submarine cable back to Taiwan, a high voltage series of cables,
29:52 I guess. I just did a little chat GPT playing around after I read the piece. What's the longest high voltage submarine line in the world? It's one that came online back in 22, 23 between Denmark
30:07 and the UK. It's called the Viking Link And it's about a 14 gigalot submarine line. Some of it is on surface. I don't know exactly. But that line is just under 500 miles, 475 miles long. So I
30:24 did further kind of GWIS on, OK, let's say we put the power in Japan at the southernmost tip of the main island and to Taipei City, which is on the northern tip of Taiwan, You're looking at over
30:39 700 miles. And if you did the same type of configuration with the northernmost part of the Philippines to the southernmost metropolitan area or industrial area on Taiwan, it's well over 300 miles.
30:58 And the other aspect of that is you've got a subsurface or an ocean floor that is certainly in an area that's a lot more tectonically active and is, I would say, witness to a lot more activity and
31:16 presence from navies like the Chinese Navy, the North Korean Navy and even the Russian Navy. And so this offshoring or let's push the generation to other countries and pull it back seems very much
31:35 like what we have tried to do with some of our emissions accounting. And it got me to thinking, given their criticality as supplier of the world's semiconductors, are their customers, have they
31:52 put some kind of pressure on them to at least have the optics of net zero, which then lead to actual changes in the energy system that make it, in my view, a lot more vulnerable. Because we know
32:06 that the Chinese Navy, for example, has had very active exercises in the straights and is demonstrating, by example, their ability to effectively blockade. And the other thought around that is,
32:20 if you did have high-voltage capels, or could you mess with those? Yeah, this has been really interesting from my political take. I mean, I grew up Reagan's America. Free trade is a great thing
32:36 and all And you know, you get through a pandemic. where you can't get toilet paper and you realize, okay, we do need some manufacturing capability. This is that on steroids, right? This is
32:50 huge. 90 of our advanced chips are there. I mean, we need to be building chips
32:58 in the United States where they're secure within our borders. And then again, less than be learned for us on energy policy. I mean, we're blessed with so many resources here, but if we
33:13 unilaterally decide to just not use them, then oops, we could be at the whims of our enemies. So. Yeah, I mean, it's just, it's
33:29 a risk concentration in a critical element of all we've been talking about in terms of technology,
33:39 HPC and AI, the semiconductor, part of that will semiconductors are used and much, much beyond that. But to have two thirds of the world supply of the base semiconductor concentrated in an
33:54 increasingly vulnerable
33:59 literal island, and then compounded by the fact that you are essentially pursuing a path that looks a lot like Europe's particularly Germany's in the UK's by, you know, wearing or placing a
34:16 priority on your carbon accounting over energy security and availability, because they have, you know, the grid has gotten much, much more stressed. In the last couple of years, they've had a
34:27 much higher frequency of grid incidents, and brownouts, blackouts with more impact, more widespread impact. So if you continue to take down your base load reliable. clean power in the form of
34:40 nuclear,
34:43 I think it stands to reason that there's going to be more of that
34:50 more of that telltale within the grid, because I don't believe that global semiconductor demand, particularly for the more complex stuff, which again, they control or produce 90 of that, the
35:03 higher, more sophisticated use.
35:09 The de-risking of building manufacturing capability in the US will proceed on an evolutionary scale, but what if something happens on more of a revolutionary timeline? I don't know what that looks
35:25 like. There's a lot of geopolitical analysis that I'm not qualified to do or comment on, but it was It was just a very thought provoking piece in a very. important part, important part of the
35:38 world supply chain with a lot of, of, of very
35:45 concerning political dynamics. When, quite frankly, the world has, has placed most of its attention and deservedly so on, you know, what's going on in the Middle East and the Ukraine. But I
35:55 just thought it was a, a bit of a wake up to pay if there's, you know, there's a growing situation in Taiwan and Taiwan's pretty important to the economy Yeah, and it's definitely going to be an
36:07 issue that whoever the next president of the United States is, is dealing with on a real time basis. So Yeah.
36:16 Well, what's the World Series prediction?
36:21 I saw it. It's lose. Yeah, to that point, I saw a meme of the US map and it said World Series fans or
36:34 you know which which. which team do you want to win the World Series? And there was one concentrated blue or red for the Yankees on the East Coast. I think it was literally just the state of New
36:45 York. And in Southern California, it was just the LA area, the LA Dodgers. And then they had a caricature of,
36:55 you know, send the meteor. Right.
36:59 And that was
37:01 the rest. So maybe, you know, we haven't done a finger in the week, but maybe we'll give the finger of the week to Brian Cashman for going on. I forget whose podcast he went on or what TV
37:11 interview he went on. All he did was gripe about the Astros and cheating. So I'll take the opportunity to revisit the fact that the letter that they
37:27 had pride from their cold dead hands, that the commissioner issued on September the 14th
37:35 2017, that was kept under lock and key for a very long time. So for all of 2015 and half of 2016 seasons, they were found in quote unquote material violation of using video replay and technology to
37:57 relay science in real time. And at that time, you know, before anything broke in 2019, at that time, a six figure fine of the sports most valuable and most
38:12 famous or notorious franchise, you know, the Yankees and a handful of other national franchises are the Golden Goose, you know, keeping that under wraps, I can tell you had they been had that
38:24 been public at the time that that all came down. And it really syncs up well with Carlos Beltran coming over to the Astros and saying in terms of this whole. system, you guys are, you guys are
38:37 behind the league, behind the times. Right. So shades of gray of weather, you know, the severity of it, but the kind of the self-righteousness of, of Cashman, which has been pretty consistent
38:51 out of him is, is
38:55 amusing, if not aggravating. That being said, I do have a great Brian Cashman story that I love So he started off as an accountant for the Yankees, right? I mean, he's an entry-level accountant,
39:08 and he notices that Ricky Henderson has not cashed a bonus check. I think it was a100, 000 bonus check, six months old. So he tracks Ricky down, and he's like, Hey, Ricky, I notice you haven't
39:22 cashed that check yet. Did you lose it? Do we need to cut you another check? And Ricky said, Brian, I'm just waiting for interest rates to go uplaughs
39:35 that's good. Well, good luck with the house. I'm glad you brought out the finger of the week. So yeah, there we go. It's going. It's going fine. We got everything lined up. All right, cool.
39:46 Get the house done. We'll see you next week.