Deploy24, Plenary 3: Clean Energy Outlook

This is amazing. Thank you guys for being here. I know that we made you brave the traffic first thing in the morning, Neil. Sorry about that. No worries. Look, obviously what's on everyone's mind is we're going through a transition, right? And so when you go through a transition, people get a little nervous. And when people get a little nervous, then big things don't happen anymore. So you used to work for Senator Mitch McConnell. You've been on the Hill before. You've been in these secret meetings that people are having all day, every day, trying to figure out what the next Congress's agenda is going to be. What should people be nervous about? What should they be excited about? What are they probably hyperventilating over that they shouldn't be? You know, it's funny. We're obviously in a political period of transition. We've got a new administration coming in, and there's a lot of people speculating about what the new administration and what Congress's agenda will be. And I honestly think that policymakers on both sides of the aisle have not fully wrapped their brains around what is coming. That those of us who have had responsibility for oversight of the grid have been recognizing for some time now, which is that after two decades of flat demand for electricity, we're about to see an incredible surge in demand being driven by AI and data centers to support AI, and cloud computing, and quantum computing, and vehicle electrification, building electrification, semiconductor manufacturing, a reshoring of U.S. domestic manufacturing, crypto and Bitcoin mining. All of these are incredibly energy-intense endeavors. And so I think particularly when it comes to AI, where there is a national security imperative for us to win the AI race, and that power is going to be essential to winning that AI race, I actually think it's going to totally upend energy policy. And the conventional wisdom that Republicans are for fossil fuels, and Democrats are for green energy, and you know that that is the way of the world, I actually think that's going to get flipped on its head. In order to win the AI race for national security purposes, while maintaining reliability and affordability, we're going to need every available electron, and we're also going to need every available megawatt. We're going to figure out energy efficiency, demand response, virtual power plants, how can we grid enhancing technologies, how can we get greater optimization from our current grid. All of this will be essential to winning the AI race while simultaneously bringing down the cost of electricity for consumers. So I'm actually excited about these secret conversations that are taking place because I think that it's going to take sophistication and nimbleness to meet this challenge, and I have confidence that we'll come together to do it. So in summary, you're saying that we had so much winning the last four years. We've had so much winning. I'm an American, I'm a patriot. We've had so much winning for the entire 47 years of my life. And so, I mean, give us an insight though into the reconciliation process. So it's interesting, you know, we had the leadership come out and say that they were going to use two reconciliation vehicles. The first to kind of tackle energy, which maybe includes some leasing and permitting. It'll be interesting to see how that survives the birdbath. The budget reconciliation process in the Senate is very complicated, and the parliamentarian has great sway over what can and can't be considered under reconciliation, but that'll be the first vehicle. And then the second vehicle, which I think a lot of folks in this room are more interested in, is the tax package. And that is one where I think the priority will be on extending the Tax Cuts and Jobs Act, and there will be some question about how the incentives from the Inflation Reduction Act will be contemplated in that package. And if the current thinking holds, that looks to be the second vehicle. And if we look back on past precedent, the TCGA was passed in December of 2017, so I'm thinking that second reconciliation vehicle that would carry any kind of tax policy is probably fourth quarter of 2025. Anything to add there, Heather? Well, in terms of the demand part of it, I think Neils is spot-on on the shift from talking about the demand, and I guess I kind of call to action here in this audience to recognize that yes, not only is there going to be a demand for a lot of energy, but communicating that and how you're solving the problem, what you're part of. So it's not like there's gonna be a big demand and it's been flat for a while, we're all gonna handle it. I don't know that lawmakers really understand how big this is and how much energy we're gonna need to compete effectively globally. If you think about like the arms race and staying on top of that amount of money and energy during the Cold War, we were putting into it, like take that same mentality for those of us who are around in the Cold War, and then like amplify that, right? That's what we're dealing with. With that kind of mentality and bringing that sense of urgency to members of Congress, I think that's how you should approach them. I think on the on the second part of the reconciliation and tax piece, it's going to be a challenge. We've got a lot of spending and we don't know how is the money effectively being used. And making the case that while these tax credits that expire at the end of next year from the Trump one are incredibly important, have done a great stimulus, there is value also what's coming out of the IRA in terms of technology feeding into that arms race, that energy race. And so do we have to pick? Yes. Do we have to prioritize? Yes. But let's make sure we're making the right decisions and that information is not all out there yet. So in the past, you know, trade associations and advocacy groups have played a big role. Groups like EEI or now the American Clean Power Trade Association. You know, how how do you see those dynamics playing out in this in this process? Many folks are, you know, sort of members of their trade association and they sort of say, okay I'm a member, it'll all be fine now. You know, how do you, you know, think that as a Republican that sort of worked in clean energy for many years, you know, what do you think these companies should do to put themselves in the best situation during this process? Trade associations typically are bipartisan, right? They work on both sides of the aisle. So, you know, thankfully they, the changes in Washington, they're able to adjust. They're likely going to bring on additional expertise or access for Republicans. We've got an administration, we're not seeing the same administration come in. This isn't like Trump won, the same, the band's back together and they're all going back to EPA and DOE and in the White House. We've got a new set of players. So you're going to want to, they're going to want to bring in people and expertise that have access to those players as well. But, you know, there's there's a lot of demand for the trade associations time as well. And oftentimes what happens is, you know, trying to find an equilibrium for everybody, things tend to get watered down in some time, in some ways. So, I guess my, they're, while they're highly effective as trade associations, I think you as a member really need to lean in on your priorities. And if you're not going to get your priority focused on, you've got to think about bringing on your own government relations team. And I've been having a lot of conversations with companies like, don't, all your eggs in one basket may not serve you well. So be on the lookout for that and advising your, that your higher-ups will be thinking about that and asking people on your team if you are the higher-up. So we already talked a little bit about how macro trends are, you know, really impacting where you guys see things going. But, you know, I think there's also a recognition that these politicians may not yet be fully up to speed on all the macro trends and their full impacts. How does one, you know, get them fully up to speed? I mean, is it through the news media? Is it through a certain person's Twitter feed? Is it, you know, how do we actually get that education process that you're suggesting, you know, is coming that will, you know, maybe allow some of these tax credits and loan programs and that kind of stuff to be viewed as solutions to that? Yeah, look, I think it's all of the above. And I think it's going to take clear articulation from our national leaders, from the White House to Congress to governors. So I spoke about the need to win the AI race. I think the American people need to fully understand why it's significant. I think to the point that consumers, ratepayers, voters feel that AI is a tool to enable high school kids to cheat on papers or to make goofy cat videos. If that's the case, Americans are not going to tolerate having additional infrastructure built in their communities or potentially have their utility bills go up to meet that challenge. But if they clearly understand the global security implications of winning the AI race, then I think you can have a clearer conversation about what it will take from an energy policy perspective to win the AI race and why it's worth it. And so I think that's going to need clear direction from the highest levels in our government and society. And so there, when it comes to specifics around some of the incentives associated with the IRA, because I believe, one, we will need every available electron to meet this challenge. And two, I am in favor of bringing down the cost of utility bills. I feel like utility bills are a tax and I'm in favor of lowering taxes and bringing down those bills. I want to see a dollar-for-dollar analysis of what value these incentives in the IRA are providing. And I think I can credibly make the case that actually rescinding some of these IRA incentives will raise the cost of electricity. And so I think that kind of thoughtful, deliberative, non-political, just rote analysis and education is going to be what it will take to navigate the situation. Heather, just, you know, playing off of that a little bit, when you think about the liftoff reports that we've come out with at the Department of Energy, the deployed dialogues that are here, where the public sector and the private sector are talking about that from a fact base, right, the latest nuclear liftoff report shows that by adding clean, firm power generation, it's 37% cheaper to operate the grid. When you think about those kinds of esoteric facts, right, but the public sector, as Neil's suggesting, I think needs to be a part of that, needs to understand that. The private sector needs to explain themselves, otherwise their technologies don't get to scale up. You know, over these next four years, how do you expect that conversation to happen, and how, you know, how should folks think about their investment into that conversation? I would highly recommend getting away from, you know, we can succeed during an administration that's led by Democrats and not one under Republicans. And I know there's a lot of talk about President Trump being a climate denier, not really valuing reducing emissions, but let's get away from emissions and talk about the demand that we need. Let's talk about one of the first things he said was, I'm going to cut your energy prices in half. And then he started talking about, second thing, he started talking about AI and competing with China around the world. That's an energy demand. So energy is top of mind for this administration, which means opportunity, and how are you solving the problem? How are you part of that solution? I think it's incredibly important and going in with like, you know, this is my idea. Pivoting a little bit with your messaging, you're not changing your business, but even pivoting the words that you use in those meetings. Expect to go in and talk to people in the White House. Expect to go talk to people on both sides of the aisle on Capitol Hill. Demand it, quite honestly, and how your solution is oriented. I say the other pieces, and I know we're federally focused and talking about that, but don't forget, governors did not have to take a vote on IRA, right, which was a political vehicle. So governors are the CEOs of their states. They're seeing all this amazing infrastructure, and they're seeing the energy demand, dealing with the ratepayers on a, you know, nearly one-on-one basis because they're running into them at events. They want to help solve the problem, so don't overlook that very important state representation as well. Yeah, I saw the governor of Nebraska had an event yesterday here. So, you know, Neil, talk a little bit more about that. You know, who are the right messengers for these companies, right? You know, many of them are obviously working in Republican-led states or, you know, House districts, etc. You know, how do you think about that? Yeah, look, Heather just made an excellent point. The reason the IRA was partisan isn't because of the underlying substance of the package. It's because of the legislative vehicle that was used to enact it. Now, this is very wonky technical Washington stuff, but the reality is the IRA was enacted via budget reconciliation, which is a legislative tool designed to circumvent the minority party in the Senate and overcome the 60-vote threshold of the filibuster. And because it is an inherently partisan legislative tool, every member of the opposition party votes against it, regardless of the underlying substance. I actually think if the provisions in the IRA, which were, let's be clear, all carrot and no stick, had they been considered via regular order, I think you would have had considerable Republican support. If, say, for instance, we combined the IRA tax incentives with legislative permitting reform and maybe wrapped it into the bipartisan infrastructure bill, you might have got 20, 25 Republican senators that would have supported it. So, the underlying provisions themselves are not partisan. It's the process by which they were enacted. So, I think the key, and Heather nailed it, is to go to these states, to go to governors, to state legislators, to public utility officials, to corporate leaders in these communities, to consumer groups that are benefiting from these policies, and make sure that their voices are heard so their members of Congress in the House and the Senate understand that they're gaining real value from these incentives. I think that's important. So, Heather, you know, last question here. I think we have 212 active loan applications seeking, you know, $4 billion of proceeds, right? Everything from electric utility companies to nuclear power to carbon sequestration, etc. Some of them obviously have not closed yet, and so they're here, and so what should their excitement level be going into the next administration? How should they feel about, you know, the process? Yeah, I think this is a dual-edged sword here. I think there's going to be an initial, like, pause. Any new administration is going to want to say, wait a minute, I want to get a lay of the land about where we are. After all, the Loan Program Office has grown significantly. We've been so fortunate to have someone like you at the helm of it, who really understands the investments, but you're with another administration, right? So, but that doesn't mean that once that pause is there, it's going to remain. I think what I was just saying earlier about making the case and being solutions-oriented, still stay engaged, do not throw your hands up. Continue to engage is a critical part of that. The incoming, likely Secretary, I think it's interesting how he's in natural gas, he's in nuclear, he's in geothermal. This is, it's seemingly, I don't know him, but he seems like a curious guy, right? Who has a lot of interest. So, we want to see the Loan Program Office continue. Organizations like CREST and my partners are going to continue to advocate for the important work that you're doing. Any last words, Neil? Grid Deployment Office, also very, very important. I think because of all the challenges the grid will face in the coming years, I'd love to see continued bipartisan focus in the grid office. So, it sounds like in summary, you guys think that the solutions that all of these folks have been toiling away on for 10, 20 years, their time has come. Like, they actually need to be deployed at scale to maintain electricity abundance, energy abundance in our country, to be able to unlock all this economic growth. Look, when I first came to Washington as a junior staffer, I worked on the Energy Policy Act of 2003, which wound up becoming EPAC-05. That's the last time that we've actually had significant energy policy enacted in this country. In the subsequent two decades, major changes in energy have come through either omnibus appropriations bills or through changes in the tax code. So, it should come as no surprise that the world has changed 20 times over over the last two decades, that we need to upgrade our energy policy to meet the new challenges that the country, the world, the markets, security are all facing. And I think now is the moment. Thank you. Thank you.