Relentless
00:08:37 · Chris Wright
We have a lot of solar still coming on, and if you pair it with batteries and a meaningful amount of storage, it can help with demand load peaks, at least in the summertime. Not very helpful in the wintertime in northern states. So ultimately, the only way forward with the American dream and reindustrialization of our country is to build massive amounts of dispatchable, meaning it works whether the wind is blowing or the sun is shining or the temperature is ideal. It works in all conditions. Cause electricity is different than filling up car, your gas tank. You can do that when you want. You can find the cheap gasoline and load it in. An electricity grid, at every moment, we have to match supply and demand. And so the critical thing for an electricity grid is its deliverability at peak demand time. As we're talking right here today in a nice pleasant afternoon, mild weather across the country, we have hundreds of gigawatts of spare capacity. That's more data centers that we're going to build in the next five or ten years because we don't have enough money to build more than that in the next five years. Hundreds of gigawatts. But we can't put all those data centers if we had them online today because when it gets really hot in the summer, when it gets really cold in the winter, everything else is going to draw so much power. It's just the excess capacity at peak demand. That's what delivers. Do you want to understand our grid? Don't look at the average numbers of electricity different sources generate. They're irrelevant. What matters is those hours of peak demand time. And I'll give one example and then I'll stop talking. We had a very cold weather system called Fern the last week of January this year. 22 Eastern United States really had their electricity and heating systems tested to the limit. Ragged edge of blackout in many states. Fortunately, common sense operating policies, we allowed people to turn on backup generators, we waived emission rules, run all your plants all out, a little more emissions to keep the lights on and people alive and plants running. That shouldn't be a hard trade off to make but it has not been made in the past. As I mentioned already, we stopped the closure of 17 gigawatts of coal plants. Had we not done that, hundreds of Americans likely would have frozen in late January this year. That's a chilling thought to me.
00:10:56 · Chris Wright
But to give one example, in New England, January 27 in the evening was their peak demand time. We zoom in and we look at that few hours. Where did that electricity come from? 2% of their electricity came from wind, solar, and batteries combined. 2%. So if you look average over the year, well, a lot more, but that doesn't matter. Are you there at peak demand time? 3% came from burning trash and wood. 50% more than wind, solar, and batteries combined. We got a little less than 10% from imported hydro from Canada, but really what kept the lights on in New England is what keeps the lights on across the country, which is nuclear power that was rock steady throughout the whole storm, natural gas and coal plants ramped up to increase their output and meet that peak demand time. Now New England's got a crazy problem and that they thought they hated fossil fuels for a while even though their economies entirely run on them and they have blocked natural gas new pipelines from getting to New England. So at peak demand time, New England's actual number one source of electricity was burning oil. Crazy. Much more expensive, dirtier burn, higher greenhouse gas burn as well if that's your thing. But that's because they have to have dual fuel plants because when it gets really cold, the natural gas capacity they have mostly goes to home heating and they burn a whole bunch of oil. We had to get emergency barges up there and trucks and do everything to keep the lights on. But keeping the American electricity guy reliable is maybe my most critical job I have. Maybe our nuclear weapon stockpile is number one, electricity grid is number two. But to this future you're talking about, yes, we have to not just barely scrape by today, we need to grow it again. But we can do that.
00:12:39 · Scott Nolan
[00:12:39] S2: I think to your point on the carbon emissions piece of burning oil, I think people don't understand the... Like, it's it's underappreciated what the physics is, and it's... If you have a very long chain hydrocarbon, the way you can envision it, just to elaborate on this, you've got a long string of carbons down the middle, and you've got a pair of hydrogens for every carbon. In the limit case, it's two to one. And then you look at natural gas, methane, and it's four to one. And so that's how you get four times the energy... Well, four four carbon hydrogen bonds versus two, and therefore, half the carbon emissions per unit of energy. So that's how The US has actually brought down carbon emissions for people who care about carbon emissions over the last few years by expanding natural gas production. And so that has been the story, I think. Compute has ramped, as electricity production requirements have ramped, natural gas has been the story. It's been fueled by fracking and by turbines. And so now I think the big question is, where do we get all the turbines over the next few years? Will there be shortages? What happens if there are? Do we cannibalize some turbines that are currently at power plants? Do we swap in solar batteries? Are there things we can do that create portfolios of energy? And then what's the transition to five years out? And as we do these upgrades on nuclear, as we keep the plants on, as we do restarts, as we upgrade other things, okay. Can we do that all in time fast enough, and can we bring the nuclear on fast enough, new nuclear, to power the growth? You look at the grid today, and I think it's about 4,000 terawatt hours per year of consumption in The US. The growth projected by end of decade for data centers alone is about 1,000 terawatt hours. So we've got to grow 25% plus by end of decade. That's going to be really hard. The only way you do it is what we have available today, and you just go into as aggressive production as you possibly can, in most cases behind the meter, is what I think. But a lot to unpack there, but I think it's gonna be a complicated story the next few years, and it's gonna take everything. And to put additional numbers to some of Secretary Wright's bounding on, like, okay, we had hundreds of gigawatts free, and data centers are expensive.
00:14:52 · Scott Nolan, Ty Morse
The rough rule of thumb is for a one gigawatt data center, just for a very, very traditional data center, it'd be about $10,000,000,000 so about $10 per watt. For the new advanced ones, it's $40 $50 $60 sometimes. And so you're talking about, to even harness 100 gigs, you're talking about trillions of dollars. And so at some point, do run into capital constraints of how much we can actually deploy. Rewind a couple years, you look at a company like Anthropic and their growth and how much money they can make on a gigawatt, it's maybe $25,000,000,000 I think, something in that ballpark, just for round numbers. And we're talking, Okay, we want to go from tens of billions of revenue. Now we want to go to hundreds of billions at these growth rates, which are demand driven. And you're now talking about, Okay, we need to go find tens of gigawatts. Where are we going to find them? And I think the story over the last five to ten years has been people finding those isolated pockets of supply of energy. Lots of companies have been doing this. First, they were doing it in Bitcoin, then they're doing it in data centers. And that's mostly been gobbled up. And so question is, where do we get it? It's gonna be all new production. And I think that's the challenge for for the industry over the next five years. [00:16:07] S0: For just turning on enough power over the next five years, what does that actually require? Like, is that just gonna be us turning on a whole bunch of nat gas plants? Does the next five years actually look like?
00:16:18 · Chris Wright
[00:16:18] S1: So gas will certainly be the dominant source. I mean it's just by far the cheapest, fastest way to produce new firm, meaning 20 fourseven generation. As Scott said, we've lowered greenhouse gas emissions in this country not because of subsidies or government policies. Dominant amount of it has just been natural gas has outcompeted coal in the power stack. It's just gas plants are cheaper to build and they're cheaper to operate They're more flexible. They can turn up and down faster. Now don't get me wrong, love coal. It has been the largest source of global electricity since the data started in 1900 and it will be the largest source of electricity globally when I die. That's a long ways away. Natural gas is number two and in rich countries it's usually the reverse. Natural gas is number one and then coal or nuclear will be number two and the other will be number three and those three things are what run modern power grids. But on the natural gas side in The United States, gas turbines as Scott mentioned, they've gotten tight supply. So people say, Oh, if you sign up now you can't get one for five or six years. Well that's true if you get in line now but the deliveries in the next five or six years of turbines that are already ordered and already under construction is probably close to if not over a 100 gigawatts. So there's a massive amount in construction. And of course it's not just turbines, there's gas reciprocating engines that are used to produce, think diesel generators that now can run on natural gas. We are going to see gigawatts and then tens of gigawatts of reciprocating engines that burn natural gas to generate electricity. I used to have those at my former company. We're also seeing fuel cells, which is another way to take natural gas and turn it into electricity. Fuel cells, something that's been talked about for years, that's finally scaling up and hitting scale. I think we will certainly in the next five years we will see multiple gigawatts of new electric generation from fuel cells which also take natural gas as their input fuel. The one thing I should say just so people cannot worry about this one is this supply of natural gas, the fuel itself is no problem whatsoever.
00:18:32 · Chris Wright
Today in The United States' biggest oil field, the Permian Basin in West Texas and Southeast New Mexico, oil production is curtailed a little bit because we don't have enough capacity to take all the associated gas. When you produce oil, you always produce natural gas too. Just the shortage of pipeline capacity to move natural gas out of the Permian Basin, so it's like 2%, 2.5% of US natural gas production, that shortage is enough to produce about 15 to 20 gigawatts of electricity. Just the gas we can't find a home for. So gas is cheap. It's wildly abundant. If you want to go to a different location you may need to build a pipeline or some transmission thing. But The United States has an amazing abundance of natural gas. People often think that the cost of electric generation, it's about the fuel. We want fusion because it's water and it's really cheap fuel. Well, there's not a lot of tritium in water. But Scott knows in the nuclear space you've got to have that affordable reliable fuel but mostly the price of electricity is dictated by the price of the machine. It's not the price of gas that determines gas generated electricity. It's the price of the machine that turns that gas into electricity or the machine that turns that coal into electricity or turns that uranium into electricity or turns that deuterium and tritium into electricity or turns that wind and sun into electricity. It's the cost of the machines that matter. The problem, again, with the intermittence is they don't produce a product anyone will buy. They produce electricity. Some of the time, we're not sure when. So to make them real machines, it's just enormously expensive to build giant amounts of storage to last a few days where you can have cold spells or hot, you know, lit darkness or high pressure masses where the wind doesn't blow.