E7: The Case For All the Other Energy Sources

25:59Those are the four dimensions of energy benefit. Thanks for listening so far. Hang on. We'll be right back after a quick word from our sponsors. Affordability, reliability, versatility, and scalability. In Alex's framework, fossil fuels and nuclear do well, but he doesn't give as much love to renewables. My takeaway from talking to Alex and Mark, and frankly, to a lot of the other energy realists that we've spoken to throughout the season, is that fossil fuels have been overly villainized and aren't going anywhere anytime soon. Which is a good thing. They're incredible for humanity, but they're not the long-term solution.

26:35And fossil fuels villainization has been a good catalyst to accelerate the electronescence or the energy transition by speeding up the development of the energy sources that might be. Renewable energy sources like hydro, geothermal, wind, and particularly solar receive a lot more public support and excitement. They let humanity pull energy from the elements like water, wind, and sun, which won't run out until the sun dies in 7 or 8 billion years. Recall that combined, renewables make up about 12 % of total energy consumption today and about 30 % of global electricity consumption. The share of electricity has grown by 10 % since 2010.

27:13Renewables are growing quickly as they come down the learning curve and benefit from both government subsidies and market push for more clean energy. We'll tackle all three of them now, geothermal, wind, and solar, starting with geothermal, which may be the least understood energy source with the highest ceiling. Eli Dorado, a self-described economist and regulatory hacker living in Washington, D.C., and a senior research fellow at the Center for Growth and Opportunity at Utah State University, doesn't have a particular horse in the race. He's written about energy superabundance and writes on this website, my fondest wish is that GDP per capita would reach$200 ,000 by 2050.

27:52And Eli thinks geothermal has a lot of potential. Traditionally, geothermal has been located at sites where boiling water is close to the surface. So like the first geothermal plant is in Italy at this place called Valle del Diavolo, I think. So Valley of the devil, where like literally like it looks like hell because the boiling water, you can see boiling water on the ground. That's obviously like a pretty niche source. Like as you say, like California has this field called the geysers that is the biggest geothermal field in the world and provides, I don't know, maybe a gigawatt. But it's like that kind of stuff is like pretty niche.

28:30The real opportunity is to take all of the progress that we've had in the last 15 years in the shale fields, you know, with fracking, with drilling, and just be like, okay, we're getting really good at this. You know, drilling costs have gone way down. We can make these geothermal formations anywhere we want. Like there's heat everywhere if you're able to drill deeply enough. And then the other thing that you need to produce geothermal steam is you need a formation, a rock formation that transfers enough heat to the water. Rock is actually not very good at transferring heat. It's pretty slow. So you need a lot of surface area, high surface area to volume ratio, which means either a lot of fractures or like a radiator style design or some other way of collecting heat.

29:16And so we can construct these, the argument is, at depth. If we can do that anywhere, then that means we have geothermal anywhere. It is a massive resource. It is bigger even than nuclear in terms of total thermodynamically available energy on the planet. And if we can get sort of a replay of the gains that we got in the shale fields, but we can get it with geothermal, you know, you could have terawatts of geothermal energy in the United States in the next couple decades. So it's a very, very big opportunity. Geothermal is early relative to other sources. It powers 23 % of Iceland's energy consumption, but across the globe, its current generation capacity of 16 gigawatts is so small that our world data still includes it in the other renewables category.

30:10But as Eli pointed out, applying the drilling and fracking advances developed in shale fields over the last 15 years might help crack it open. Julia, it's been a really amazing thing for our country. What's going on there? I mean, fracking was very controversial to start. People kind of freaked out, right? You're like putting these fluids into the ground and all of a sudden we have all this new natural gas. But it is the reason that carbon emissions have come down in the U.S. over the last 20, 30 years. The other thing I'll say about fracking is it's an example of something where people in the oil and gas industry decided to try something new.

30:45Let's try this new technique. And they were using these fluids initially that were used to open up the rock that had And some chemicals in it that maybe weren't the best to be using, but they quickly iterated and moved towards something that is essentially water and sand. So not actually harmful from an environmental perspective. And, you know, made a lot of progress here. And again, it's been one of the reasons that we've been able to bring our carbon emissions down. And there's a lot more natural gas now that we are using across the country. Yeah. A couple of things that I love there. One, just energy abundance through innovation.

31:19And then two, there's the history of technology as innovations happening in one field being applied to another. And now we're seeing that happen in geothermal. Recently, a startup called Firvo hit a milestone when it completed a 30-day test, which is the industry standard in geothermal, in which it drilled down to 7 ,700 feet and then turned to drill another 3 ,250 feet horizontally. Techniques lifted directly from the shale fields. Internal temperatures reached roughly 375 degrees Fahrenheit. height. Once they and others prove that it works using grant and venture dollars, they can move over to project financing and scale up just like nuclear.

31:56I'll actually make a plug here for an excellent book called The Absent Superpower, The Shale Revolution and a World Without America. So the Peter Zahan book, he also wrote The Accidental Superpower about why the US is just so well endowed with resources and benefits so much from that. But this one talks a lot about how the shale revolution, which is basically fracking in the US over the last 20 years or so, allowed us to become energy independent, which therefore allowed us to become just independent in general. We weren't relying on international markets for energy, which is just obviously so core to everything we do.

32:33You can imagine that that allows us to pick and choose how we want to engage with the rest of the world. We don't have to be, for example, showing up in the Middle East to make sure we get the oil we need because we don't have any other options and having that be a source of tension. So a great read if anyone wants to read more about the shale revolution. We need to put up an Amazon referral link and start getting some revenue from all these plugs. But that's amazing and it brings up such a good point, which is why we want, you know, one of the reasons we want energy abundance, and we'll talk about that a lot on episode 10.

33:07But one is that when you control your energy, you control your destiny. It just becomes one other kind of chip that you take off the table that you don't need to negotiate with. And so that's amazing with fracking. And we'd love to see it happen with nuclear, solar, fusion, and geothermal. I hope FURBO succeeds. Quick aside on FURBO, by the way, has the most stacked early stage cap table in startup history. There are five angels who participated in the Series A. And you've got Bill Gates, Jack Ma, Richard Branson, Jeff Bezos, and Masayoshi Son himself. Holy shit. What a lineup. All right. So now you have your target list for Ontario's Series A.

33:45I'm ready. Give me a call, Masa. Do geothermal fans think that it has a shot at producing most of the world's energy, like Casey believes solar can and Brett believes that nuclear can? They don't. And the reason it can't is it's heat. Now, geothermal doesn't really get super hot, right? So super hot geothermal is considered like 400 degrees steam at the surface, right? So you get to like 500 degrees C temperatures in the rock, and then you produce like 400 degrees C at the surface. That's about as hot as you're going to get. So if you want something hotter, you need nuclear, you need hydrogen, you need natural gas, something like that.

34:23But there's a lot of applications that need 400 degrees C or less. And for those, you know, including electricity generation, you can do it at that temperature or lower if you get creative with the turbines. I love this point. It's obvious when you think about it, but important to spell out, not every source of energy is good for every use. It's estimated geothermal energy has the potential to meet 3 to 5 percent of global demand by 2050, and that by 2100, it will be possible to meet 10 percent of global demand with geothermal power. Take all of these estimates with a grain of salt, but they're useful for ballpark numbers.

35:00Geothermal could be great for a lot of things, especially as companies like Fervo figure out deep geothermal. And they, and potentially traditional oil and gas, gets involved in scaling it. I hope we see geothermal heating greenhouses and homes like it does in Iceland, and eventually reduce the need for coal as we drill deep enough. Angelica told us she thinks we can get to 10 % geothermal, and I'm rooting for that. But oil and gas and geothermal won't power the whole world, so we need to keep drilling. Or exploring other sources. Whatever. Next up is wind, and I gotta say, wind is the energy source that excites me the least.

35:39It's intermittent and less predictable than the sun. It kills birds when it's on land and whales when it's offshore. It takes a ton of resources to build and introduces a high maintenance burden. Wind farms are kind of eyesores from miles away, and wind farms require an absolute shitload of land to build. You can move them offshore, where the wind is more reliable and fewer people have to look at them, but then there are all sorts of other challenges with installation, connection, maintenance. You need to run undersea cables to connect to the grid, and then saltwater and rough seas increase wear and tear.

36:14I get the beauty of the idea of just pulling power from the wind, but in practice, I just don't get it. And I might be alone here, right? It is, what, 4%, 3 % of the total energy consumption in the world comes from wind. That's great. It's been coming down the cost curves, all of that. I just don't get it. And it was harder than I expected, or I'll say it was hard to find a champion for wind to come on and talk to us. I can name 25 people who champion nuclear on Twitter, a ton of people who support solar, but I couldn't think of one big wind advocate off the top of my head. Luckily, we found Angelica Ong, who has spent a lot of time researching and reporting on wind.

36:54She's a bigger fan of nuclear now, but we asked her to play the role of wind person, and she was kind enough to accept. She gives us the history and recent stumbles of wind. So the modern gigawatt scale wind turbine was actually not the product of any kind of the R &D process of a big company or even the government or anything like that. It actually started as a project in a Danish school, a progressive school called the Tvind School. And the school, which was very progressive, they wanted to develop a source of energy to show the world that you don't need industrialized sources of energy like nuclear or fossil fuels.

37:38And they did end up creating this modern design, a wind turbine called Tvencraft in the mid 70s. And it's really amazing. If you go to Jutland in Denmark, you can actually still go and see this now. It's very tiny, but it's still spinning. And you look at the shape. It has that modern trifoil shape of a wind turbine. And since that initial breakthrough, the Danes have really been the driving force towards developing this technology. And now one of the biggest modern OEM turbine makers, Vestas, is from Denmark. And the history of the development of the wind turbines is they started off on land and they basically got bigger and bigger with time.

38:29Basically, as soon as you figure out how to make a wind turbine bigger, you did it. Because the amount of power produced is proportional, not to the size of the turbine, but the size of the swept area of the blades. So if you can imagine, just a small extension of the blades will result in a much bigger swept area, and thus power produced. And as people started getting really good at putting these turbines on land, around the turn of the century, around the early 2000s, people got the idea they could actually put them into the ocean. And at first, this was seen as an absolutely insane idea. The ocean conditions are super, super challenging.

39:15Not just the installation is challenging, but you will not be able to service this turbine in a normal way, and it's exposed to the elements. But somehow they made it happen, and they managed again. The same kind of process happened. The turbines got bigger and bigger, and the developers also started putting them farther and farther away, deeper into the ocean. This is a crazy process that is still ongoing. Turbines are getting bigger with almost every project. And for a while, this was seen as a great success because the advantages of going offshore is that unlike being onshore, there's far less nimbyism-related issues.

40:02There aren't as many people to complain about the presence of the turbine. And the other advantage is that out there in the ocean, the winds are more steady. So you get a higher capacity factor. Of course, it depends on the location, but I'd reckon that onshore wind turbine, the capacity factor is going to be more like maybe under 20%. But out there in the ocean, you're going to get a capacity factor that is more like 40 % and maybe even higher as you get even bigger turbines that are further out into the ocean. So for a while, they've done what seemed impossible. And over the years, the costs have come down on a steady trajectory.

40:50And the industry just kept planning to go bigger, go deeper, use different kinds of foundations. And for a while, it really looked like a linear progression where costs are just coming down. But everything changed when the Russian-Ukraine war broke out. And all of a sudden, the condition that enabled the industry to advance were reversed. They were counting on very, very steady commodity prices. We've had this cycle of commodity prices that delivered very steady cost decreases. But then all of a sudden, the prices of their key commodities all went up 40, 50 percent. Then, of course, the other thing that is like almost like a lifeblood for the development of inexpensive renewable projects is its cheap interest rates.

41:44That stopped being a thing. So all of a sudden, this revealed a lot of strains that were already existing within the industry. with a rapid increase in turbine size, the supply chains were really strained to the point where they're starting to creak and crack. So basically, when you pencil it out, it seemed really attractive to go from a 10 megawatt turbine to a 15 megawatt turbine. But when you start to install the thing, you realize, oh my gosh, we don't have enough vessels of that size. Or these foundations are just so much more expensive to construct because they have to hold a bigger load.

42:30All these relationships of cost increases that are not linear started to reveal themselves. In Angelica's telling, things seem bleak for wind, particularly offshore wind. Wind has been a public success story. It's right there on the chart next to solar showing energy sources that just keep getting cheaper over time. But higher commodity prices and interest rates, these exogenous issues, have opened up cracks in the story. And then issues from within the industry itself, namely that huge offshore turbines need a lot more maintenance than expected, and then finally taking stock prices or stead stock prices down 50 % on the year.

43:09We asked Angelica if there were bright spots, and her answer was pretty shocking. What's interesting is nobody's disagreeing about the message, but people are split on what to do about it. So on Twitter, when they see a headline like, you know, Orsted stop crashing or a big question mark or supply chain for the latest turbines, they think, well, bravo, it's a time for us to stop with this offshore wind nonsense and do something like nuclear that we know works. But the wind people on LinkedIn, they actually don't think that this is a problem for them as much as this is a problem for everybody. Let me explain that a little bit.

43:55They think, wow, our industry isn't profitable. So what are the governments of the world going to do about that? because they'll actually say, we wouldn't want offshore wind to become a luxury product. We wouldn't want these projects not to be built, which might happen if we stay unprofitable. And in some cases, they'll simply say very boldly, we need more support. We need more subsidies. Chop, chop. And I think in renewables, they have enough social license that the offshore wind people feel like they can do that. and governments would comply. And if you think about it, I don't know if they're going to turn out to be right in the US, but in Europe, certainly, there's a huge amount of offshore wind in the goals because they're such a bulk source of renewable power.

44:52There's no way that Europe can reach the goals, the very ambitious goals it has set for itself without offshore wind. Therefore, I think industry is correct in detecting that they have an enormous amount of leverage. Make our business work for us or kiss your goals goodbye. Wow. That is, pardon my Danish, fucking crazy. Make our business work for us or kiss your goals goodbye. What Angelica is saying is that because the EU has climate goals to uphold, the wind industry believes that the government must subsidize them despite upside-down economics if they want to hit those goals. It feels like the tail wagging the dog and is the same kind of backward thinking that led Germany to shut down its nuclear and turn back on coal.

45:41Bad incentives, bad outcomes. The ideological pursuit is getting in the way of the real goal, to increase human flourishing. Wind is a useful resource in very windy places, especially those that don't get a ton of sun. Denmark, the birthplace of wind turbines, gets more than half of its electricity from wind. Uruguay gets about 40 % of its electricity from wind now, after droughts in 97 and 2007 caused blackouts thanks to the country's reliance on hydropower. Larger economies like Ireland, the UK, and Germany get 35, 24, and 20 % of their electricity from wind, respectively. When the wind blows and turbines don't break down ahead of schedule, wind energy can be very cheap.

46:24By levelized cost of energy, onshore wind is the cheapest source of energy at$0.03 per kilowatt hour as of 2021, according to the International Renewable Energy Agency, compared to$0.05 for the next cheapest, solar and hydropower. But levelized cost of energy has a number of issues, including, one, it doesn't account for intermittency or reliability, or the backup storage solutions like natural gas peaker plans and batteries required to ensure a stable energy supply. Two, it excludes a lot of external costs like environmental impact and health effects from pollution, negative externalities, which, to be fair, is a problem for a lot of measures of costs of different things.

47:04Three, it ignores system integration costs like transmission and distribution infrastructure, which can be more expensive if the energy source is located far from people, like wind often is. Four, it makes assumptions on lifespan and maintenance, which, as Angelica told us, seems to be a particularly big challenge for offshore wind turbines. And five, it doesn't give consideration to location factors such as land costs and local environmental regulations, which can significantly increase the cost of energy generation. I could go on, but you get the point. LCOE is kind of ballpark useful, but breaks down if you rely on it too much.

47:40That said, Angelica believes that while offshore wind is a bit of a disaster, onshore wind is actually slept on and something to sprinkle into the mix. I actually think onshore wind is really slept on. Offshore wind became much sexier because there's just much more potential to spread out into the ocean when you don't have problems with nimbyism and you get a better capacity factor. So it became much cooler than onshore. But the good thing about onshore is, damn, it's affordable. Because they've stopped progressing with the size of the platforms for the onshore wind. A lot of that has to do with simply transportation.

48:22You can't haul such big wind turbine components on the roads. So, for instance, the four megawatt turbines, they've been standardized for a long time now. Vestas makes them and they just keep getting better and better at making them. And here you see the, it's almost a little bit analogous to the SMR argument because they're small and they've gotten so good at making them that the one platform that they really cut down on the cost that way. And to the extent that you have a lot of land, if you're a country with a lot of land, and you can just sprinkle them with onshore turbines, I think that's a tremendous way to decarbonize.

49:11And like I said, of course, you have to manage that intermittency and you probably will have to have a lot of gas burning plants as a source of backup. But you're going to be able to use that cheap wind to shake down on your use of gas. I think as with a lot of renewables, you can't make blanket arguments about what's good and what's bad. It's like, where are you? Are we facing a climate emergency or not? And if you do believe that we are facing an existential threat for all the human beings and other creatures on this planet, then maybe you have to take it out somewhere. And I think onshore turbines, if they're cheap and you have the land for it, are not a bad option at all.

49:58I'm picking up a theme here. Both Eli and Angelica pointed out that geothermal and wind, respectively, can be a useful piece of the overall energy mix for the use cases and in locations where they make economic sense. Neither is a candidate to power all of humanity's growing energy needs, and that's fine. Coming into the energy conversation from the outside, one of the things that kind of surprised me but also didn't because humans are humans is just how tribal supporters of different sources of energy can be. Nadia Asbruhav wrote an excellent piece mapping out the tribes of climate that gives a good overview of the landscape.

50:33We'll link to it in the resources guide. The right way to think of each source is as part of the mix, each contributing where it makes the most economic sense. To not fall so madly in love with anyone that you let it blind you to reality. Angelica is a great model here. Offshore wind was my first love in energy. And when I started covering it, I truly, it's like everything I do in life, if I'm going to be any good at it at all to any degree, I have to be in love with it. And I was fully in love with Austro Wind. I thought the turbines were engineering marvels. I've always thought of the ocean as a very romantic place.

51:12And the idea of doing great things out there in the ocean that will bring prosperity and stability to my country was tremendously stirring. But I also remember the first time when I was checking how each of the projects were performing and it was like zero, zero, zero, zero. And I panicked and I actually called up a very senior guy in the industry, head of AIPAC, and I was like, what happened? What's going on with the projects? Why are they not producing any electricity. And he told me, Angelica, take a look on Windy, the app. It's below four meters a second right now. And those turbines don't produce anything at that wind rate.

52:04So I wanted to expose that very, very embarrassing detail about myself as a way of reminding people that it's possible for somebody to become, to cover a subject as a reporter to the degree where they can just call up the head of AIPAC of one of the big companies in this subject and not know that intermittency is just that brutal. When the wind isn't blowing, it doesn't produce. That was when I realized that offshore wind, wind in general, is going to be a very more of a secondary solution for Taiwan's energy crisis. And we really do have an energy crisis. It's not just a decarbonization crisis, although of course we're trying to cut down on our carbon.

52:53It's an overall energy crunch. Some days actually, the state-run utility companies have to make calls to factories and ask them, can you not run your machines this late afternoon because we're really tight. No factory owner ever wants to get that call. They don't care if they're compensated three, four, five times the cost of the energy they forgo. They want their lines to be working. They want their staff not to have to idle. So for me, this is already a power crunch issue. And the problem with offshore wind is that due to the intermittency, it's not going to help with the power crunch because you can never rely on it.

53:38You'll always need 100 % gas backup just in case the wind isn't blowing. So to me, that reduces their role to that of a fuel saver. Whenever the wind is blowing, you don't have to burn that gas. Therefore, you're saving fuel. Is that valuable? Yes. Yes, it's tremendously valuable to the extent that you can get the price of offshore wind down, it can be a very good thing. But especially for island grid, isolated grid like Taiwan, where you can't do the number one thing that people like to do to manage intermittency, which is to send it somewhere else that can use the power, amount of variable electricity producer on the grid shouldn't go above 20 % for an isolated grid like Taiwan.

54:24So that's solar plus wind. And we're getting up there and we're already starting to have to make a lot of expensive grid upgrades because of that. That's when it almost induced a little bit of a mini existential crisis because this was something that I was very devoted to. And it very naturally led to, I had already been very curious about nuclear energy. And the more I found out about it, the more I really asked myself, why aren't we using this already? As we move on from wind, there are a couple of things to take away from what Angelica just said. At a high level, it's great to be passionate about understanding and supporting an energy source.

55:05But you should also be willing to look at the facts and change your mind when the facts call for it. The goal isn't to generate more wind, per se, or more solar, or even more nuclear. it's to deliver energy where it's needed as cheaply and reliably as possible to support human flourishing. The second thing, that variable electricity shouldn't contribute more than 20 % to the grid, at least for an isolated island like Taiwan, is an important nuanced point that merits a detour out of energy sources and into the infrastructure through which electricity runs once it's produced, the grid. We had the chance to talk to Meredith Engwin, known as the Grandma of the Grid, and author of the book Shorting the Grid to learn about how our electricity grid works, what makes it so fragile, and how she thinks about the energy mix and the context of delivering it to end users.

55:55I feel that people are going around with the renewables saying, that's all we need. We're going to have 100 % renewables. And the answer is, there's no one thing that should be 100 % on the grid. And that's my opinion. I mean, it just shouldn't be. I guess one of the things that bothers me is that the prices go up as renewables get on the grid. And this is because of the redundancy. You can't shut down that plant because the sun isn't always shining. You've got to have it around. And if you're going to have it around, and this gets to be a lot of controversy, if you want that plant to stay around, you have to pay it enough to stay in business.

56:39This is the kind of stuff I was talking about when I ran through the drawbacks of using levelized cost of energy or LCOE. Because wind and solar aren't reliable, backup plants, typically natural gas and sometimes coal plants, get two forms of payment. One is the energy payment per kilowatt hour. It's what you'd expect. Deliver energy and get paid. Easy enough. The second is capacity payment. Backup plants get paid just to stay online and at the ready, whether or not they end up getting called on. That cost ultimately gets paid by the end consumer in the form of higher electricity prices. The grid is a complicated beast.

57:16How does it work, roughly? It moves electricity from its source to end users. Electricity accounts for roughly 20 % of global final energy consumption, according to Enerdata, up 3 % since 2010. A large portion of the economy still runs on fossil fuels that haven't been converted to electricity. Think things like gas in your car. But the push to decarbonize is really a two-front battle, sources and uses. We've been focusing on the sources side, like nuclear, fossil fuels, wind, geothermal, solar. But the other side is best defined by the race to electrify more and more of our economy. Electric vehicles are exciting because they can run on electricity, which can be produced by clean sources like nuclear and solar.

57:59Impulse Labs is trying to electrify home appliances like stoves and move them away from gas. Heat pumps use electricity instead of oil to provide heat, etc. In some cases, there are efficiency gains in moving to electric powered things, but the real decarbonization gains come from moving to electricity and then using clean sources to generate that electricity. All of which ultimately means that we're going to put a lot more strain on the grid, Which is why, to understand the different energy sources, you need to understand the grid. Here's Meredith to explain. I think the basics that you need to know is the grid is very different from a tomato.

58:39You say, oh goodness, she's a genius. No, what I mean by that is the electrons or the current or the electricity, you can't tell one electron from another. So when you go to the store, for example, and you buy a tomato, you look at a tomato and you could trace it back if you were so inclined to the farm that it was raised on or the greenhouse. But you can't trace back the electrons. They're just there. OK. And so that makes the whole thing very difficult to understand because, you know, you say, well, we're not using Vermont Yankee power. Well, yeah, when Vermont Yankee was putting power on the local grid, we were all using it because there's no way to differentiate Vermont Yankee power from any of the other power.

59:28You can't really trace electricity the way you can trace other things. And then the other thing about it is electricity always has to be in balance. What I mean is the amount produced and the amount consumed have to be in balance. that it has to be the same amount produced as consumed. So once again, going back to that tomato, there's not somebody out in the field eating the tomatoes as soon as they come up. They can be stored. They can be moved. But meanwhile, the electricity, I just wish I could take everybody to a balancing authority dispatch center where all these people are keeping track of what they predicted for the amount that's going to be used yesterday, what power plants they asked to come on at various times when they made that prediction.

1:00:19You know, you look at what you predicted for the amount that would be used and what you had asked to get online to meet that amount, and then this changes. I mean, more is being used, less is coming online, more is coming online. For example, wind turbines might be coming online more than you expected them to be. And so these people are balancing it because look at when people said, oh, we were four minutes away from losing the grid in Texas in February 21. What that meant was that it was out of balance, that the amount of demand was higher than the amount of supply, which causes the frequency to drop, which can damage the equipment.

1:01:04And so you have to do something about it. And so what they did was they turned off some of the demand. They just clicked off and some people, some areas couldn't get electricity anymore. And then the frequency went back online. If they hadn't done that, if they kept it, let it go as it was, within four minutes, equipment would be being damaged or shutting itself off and the whole grid would be falling apart. People don't know this. They think it's all, you know, you just turn on the light and everything's fine. And yeah, if everybody's doing their job and the predictions are right and there aren't any crises, it's going to be fine.

1:01:43The challenging part about intermittent renewables like solar and wind is that they make it harder for the predictions to be right. That means needing to call on backup plants to come online quickly when the sun doesn't shine or the wind doesn't blow. And it means increased risk of having to turn off demand or of the whole grid falling apart. It's a consideration that needs to be kept in mind when thinking about the right energy mix. That said, there are really smart people who have weighed that in their calculus and came out thinking that solar is basically all we're going to need. Yeah, solar is a really interesting one because all of my techno-capitalist instincts scream, this is it.

1:02:21I love the chart of solar's cost declines and installation increases. I love the idea of just trusting the curves. Just bet on solar to keep getting cheaper and cheaper and power more and more of our electricity. Whereas geothermal and wind clearly fit into the, this can be a part of our future energy mix bucket, solar is one whose fans believe that it could do a lot more than that. Some, like blogger and economist and fellow Turpentine podcast host at Econ 102, Noah Smith, think that solar has won and that we don't need nuclear at all. We asked him to give us a brief history of why solar is doing so well.

1:02:57So the first thing that happened with solar panels was that the government funded a whole lot of research into how to make solar panels better. And for many years, people who were skeptics of solar said, we need a new, more efficient types of solar panels, like perovskites. There are materials that can make solar panels more efficient out there. We need those. It turned out we did not. Simple Silicon, you know, did the trick. And there were lots and lots of ways that we could make those panels more efficient. So you see, up until the mid-2000s, you see massive improvements in the technological efficiency of solar.

1:03:33And that was mostly driven by government funded research, mostly in the United States. And then you see the switch over where solar panels don't get cheap yet, but they get cheap enough that people start to install more of them. And then your learning curve takes over because factories or private companies are scaling up. They're, they're leveraging economies of scale and they're also learning by doing they're learning, you know, they're like, Oh, we could do this instead. And that blah, blah, blah. And so then you see that. And so solar panels got insanely cheap. And, and, um, there were, there were some other factors too, you know, um, around like 2010 or 2011, you saw China massively subsidized solar panels.

1:04:08And then you see like this little dip where it's, it's going down, down, down, and then it like dips a little more, but then that stops after like a year or something when they stopped those subsidies. But primarily the factor behind solar panel cost decrease was just learning curve. and so then then you get all the harder stuff which is called balance of system costs so you have to buy the land for the solar power and then you have to get some people to install it and maintain it and blah blah blah and then you have to recycle the thing after its life So we're seeing cost improvements in almost all those things except land acquisition.

1:04:41that's the the one thing that you don't see you don't really see cost improvements in but then you see cost improvements in installation like uh so if you look at balance of system costs they've been declining at a much gentler slope than the manufacturing but basically panels are dirt cheap panels are a commodity you can get solar panels for free now it's like too cheap to meter right but but the the installation costs have been going down and the maintenance costs um but not super fast, like pretty steadily. And then the land cost is still the big cost. And going forward, that is going to be the main continued barrier to just making an economy based on solar.

1:05:19It all comes back to learning curves. We'll come back to land costs shortly, but solar's learning curves have been nothing short of spectacular. It's exponential rates of improvement like this that inspire the founders we spoke to on episode four who want to manufacture SMRs to bring them down their own learning curves. Like you said, there are people who've seen that experts keep undershooting solar estimates and then have come to the realization that they should just trust the curve. That's what Casey Hammer is doing at Terraform Industries, which is like the solar version of what Isaiah is doing at Valor Atomics, a company that we talked about in depth on episode five.

1:05:53What Terraform is doing is basically asking the question, how do we build a synthetic hydrocarbon supply chain? Because with hydrocarbons, we have this kind of twin fundamental problems. They're too cheap. They're too wonderful. They're too amazing for overcoming global poverty. At the same time, there's not enough of them. They're scarce. So what we're trying to do at Terraform is, I mean, it's not even all that hard. But what we are doing is finding a way of converting solar energy, which is, as previously mentioned, kind of essentially unlimited on the scope and scale of what humans currently consume in terms of energy, and then turn that into a synthetic hydrocarbon product, which is backwards compatible, which is essentially unlimited in its availability, which does not use fossil carbon.

1:06:31So you can use as much of it as you want, and it doesn't increase the amount of carbon in the atmosphere. The carbon is obtained from the atmosphere much the same way that plants do. It's just much more productive. And I think this is a really neat thing. If we can get the costs down low enough, if we can compete with drilling, then we can displace drilling. And we can displace drilling essentially at the speed that we can ramp up solar production and decrease solar costs, which is staggering. It's like 10 % to 15 % cost reduction per year, 30 % to 50 % production increase per year, which is about as fast as any hardware manufacturing scale up has ever occurred ever.

1:07:01which is super exciting. So we're pulling in that direction. I think Casey is one of the smartest people I've ever met. He worked at NASA's Jet Propulsion Lab, writes one of my favorite blogs, and in his free time helped read the ancient scrolls as part of the Vesuvius challenge. He's betting his whole company on solar, and as you heard earlier, thinks that solar can provide 99 % of the world's energy needs. His thesis is very much a trust the current thesis? Okay. So first of all, I'm not necessarily the best person to give a history of solar or even a current state, but the good news is from my perspective that no matter what I say, even if it was correct, it'll be wrong in a year's time anyway, because the industry is still changing extremely quickly.

1:07:39So one of the important things to highlight here is that, you know, for the last 10 or 15 or 20 years, you know, all the kind of adults in the room have been insisting that, you know, solar is going to flatline this year. The cost is no more cost improvements are possible. You know, we've tapped it out completely and every single year it's gotten cheaper. Every single year they've deployed more. Every single year, the so-called experts have been wrong for reasons that are actually pretty obvious in hindsight. But nonetheless, no one is updating on this and they're just assuming, no, this is the year that solar will flatline.

1:08:05But actually, if anything, this is the year where solar has really taken off, which is kind of insane. So there's this fabulous chart you can find of the retrospective predictions of solar deployment. And now the chart is really tall because it kind of blew off the top of the chart by about a factor of 10. So as of this year, opinions vary, but we think we're on track for between 450 and 480 gigawatts of solar deployed worldwide, which is a very large number. To put that in perspective, a one megawatt solar array consumes roughly five acres of land. You could think of an area, a few football fields in size, and humanity is currently deploying those at a rate of about one per minute.

1:08:38Now we're talking, we're getting somewhere. Last year, we did about 260 gigawatts, the year before about 180. So the year-on-year growth is 30, 40, 50%. Actually, I think this year versus last year will be almost 100 % year-on-year growth, which is, again, we're moving in the right direction. This is what we're talking about. So if we think about a doubling time, how long does it take for the total deployments to double? I think when I started Terraform, that was closer to three years, and now it's less than two years. This is moving in the right direction. Just to put that in perspective, in order to completely displace hydrocarbons worldwide, we'll need about another factor of 1 ,000 in cumulative growth.

1:09:11And 1 ,000 is about two to the power of 10. So it's 10 doublings. And if a doubling occurs every three years, then that will take 30 years. If it happens every two years, it'll take 20 years. And so 20 versus 30 years is 10 additional years of carbon emission into the atmosphere, which is roughly 400, 500 gigatons of carbon, which is a lot. It makes a big difference. It's probably equivalent to half a degree or thereabouts of cumulative warming over a long period of time. And half a degree makes a really big difference in how many people ultimately get killed and seriously hurt. So I'm all on board with like, let's accelerate here.

1:09:42The really exciting thing about solar manufacturing and deployment is that, and I should say like roughly a quarter of solar deployment is occurring just within China. There should be a wake up call for the rest of us, but there's dozens of companies that are producing solar panels. They're producing solar cells, panels, and arrays, and kind of there's different steps. And if you look at the leaderboard of these companies over time, even though like cumulative global production is growing, you know, 30, 40 % per year, these companies are kind of switching places quite a lot. Like it's very volatile.

1:10:10Enormous investments are constantly being made in increasing production, building new factories, new technology, rolling out new building and so on. But the process from signing a piece of paper to having the factory in full production is longer than the critical timescale of the durability of a particular lead in this industry. So it's very hard to predict who will be in the lead in, say, five years time. But that's also super exciting, right? Because it means if you're an entrepreneur or an investor and you're like, well, I think if we find the right team who's aggressive enough, if they can just maintain a 5 % or 10 % lead over the next best company, they could start from nothing today and they could be the global leader in five years.

1:10:43Right. So I think that's super exciting. And so it's very hard to say who will be the major manufacturer in five or 10 years, or even which exact technology they will use. But I think it is possible to say in the aggregate roughly how much power will be produced at that point. Super exciting. Anyway, I'm getting fired up. Noah thinks that China's big advantage, even more than its manufacturing capability, is that its government can just take the land that it wants and put solar panels on them. What we've seen in China is that they have no land acquisition costs because they just say... guess who owns this land the communist party and then so then this is a solar farm now it was your parents home but now it's a solar farm and so then they just do that and so you're seeing china install solar at breakneck paces this is not about subsidizing panels panels are already dirt cheap this is not about cheap installation labor that china's labor is not especially cheap anymore this is about land in china they can just put it wherever they want america is installing solar power at a fast and accelerating rate, but nothing near where China is.

1:11:44And Europe is installing more too. And as you would expect, the main problem is that we have a much, much more laborious process of land acquisition, right? Of course, that's going to hit everything else. That's going to hit coal and gas and nuclear too. Probably gas the least because gas is really small because no one puts a giant security perimeter around a gas boiler. Until one day some dipshit decides to blow one up and then maybe we'll have security perimeters on every gas boiler, just like we have to take off our shoes because of that one guy who thought he could make a bomb with his shoe worst terrorist of all time and so anyway land is is still that that's the biggest barrier to solar power here is land we're slowly solving it you know there's lots of workarounds like building on government land the government owns like more than half the land in the american west we can build stuff there on government land we can build next to highways where you already have sort of the right of way there's a lot of things you can do and ultimately you know it comes down to a NIMBY problem to build solar, but that's going to hit pretty much all energy sources as well.

1:12:44And so we're just, you know, we're solving that. But all the other costs got real cheap. And so that's the main story of solar. I could not agree more with Noah on Richard Reid. I've actually whipped out a spreadsheet and tried to calculate the human life equivalents lost taking shoes off in airport security lines. The worst. But his point on land costs is really interesting too and much more relevant. Everything about solar has gotten really, really cheap, except for the land. And we have ways to get around that issue, too, with enough will and government support. Land use is something that comes up a lot when people talk about scaling up solar.

1:13:20Follow me the NIMBY here, but I personally don't want to see, you know, mile after mile covered with solar panels if we have some alternatives that are much more space efficient. The idea of painting the earth with rows and rows of solar panels, which need to be maintained and replaced, seems infeasible and undesirable, even if we did figure out how to actually get the land. And I think in a place like the U.S., where we're just so property rights oriented, it's going to be pretty hard to do. We asked Casey about land use, particularly in the context of producing enough solar energy to replace oil and gas, and he put it into context for us.

1:13:54Yeah, so in terms of overall land use, it's kind of instructive to think about what the land was before we got here and what it is now and where it will be in the future. And so, for example, in the United States, huge quantities of land are used routinely for agriculture, for forestry, for grazing, and actually primarily for growing corn and soy to feed animals, like cows primarily. And then also a little bit for biofuels. I mean, a little bit for biofuels, I mean, you know, tens of millions of acres. And the important thing to realize is that solar electricity, or even solar electricity being converted into chemical forms of energy, such as what we're doing at Terraform Industries, is about 1000 times more productive per unit area than biofuels or growing food to feed cows or whatever.

1:14:35So you could quite easily imagine a future in the not too distant, maybe in 10 or 15 years time where solar electricity is used to produce both natural gas, gasoline and other hydrocarbon products that we use to fuel our economy and also synthetic starches and fats and proteins that we use to feed our animals so that we don't have to spend 50 % of the total surface area of the United States on a monoculture of corn and soy with crop dusting of chemicals and stuff on it. And so anything in that direction is a step in the right direction because every marginal percent of land that we can return to kind of forest or open plains in the United States as it was certainly in pre-Columbian times, but maybe even before humans came to the continent in the first place is an enormous advantage.

1:15:17And then of course, the second thing about solar, which is particularly convenient in the United States, is that you don't need to have arable land to put solar down. In fact, most of the places where solar is being developed, like crazy all over the world right now is land that is regarded as kind of economically useless there's not really much being done with it for reference something like 35 percent of earth's surface area is essentially uninhabited desert or mountainous waste and we don't think about that very much unless you spend a lot of time with geologists because you just don't go there sometimes you see it out the window of a plane for five seconds but you know if you've ever driven across nevada it takes a long time and the nice thing about putting solar down on that land is first of all, the impact of putting solar down on that land is actually pretty low.

1:15:56Arguably, it improves the land. It increases its ability to retain water. It reduces the temperature on the surface of the ground. It increases the ability of plants and animals and so on to survive in this incredibly harsh environment. It's certainly less impactful than putting another factory outlet or building roads or urbanizing or farming or irrigating or even having a dirt bike circuit there, frankly. It does less damage to put a solar array out. And then, of course, if you decide in 20 or 30 years that you don't want to put the solar ray there anymore, it's relatively trivial to pull it out and dump it somewhere and return that land to its pre-existing terrible condition as it was before.

1:16:30Another issue that you hear come up over and over again, the main issue really, is intermittency. The sun does not always shine. It shines more than we need sometimes and not at all during other times. The way we handle this today is by pairing renewables with natural gas peaker plants. They're called peaker because they come online quickly to meet peaks and demand. And that adds to solar's costs and means that solar isn't really carbon free. But Noah thinks that that's pretty much fine. So gas peaker plants are fine. They're small, they're expensive. They're not expensive, but they are expensive because they idle most of the time.

1:17:08But they're fine. You know, you don't need much. You don't need much of it. It's just a little like additional from the standpoint of we must eliminate carbon entirely we must have zero carbon in our entire economy well that's never going to happen except in people's models right um what's going to happen is we'll eliminate 90 of carbon and pull the rest out of the air with direct air capture or 85 or something like that that's what's actually going to happen um people don't want to don't want to believe that yet but that's you know the idea of a hundred percent decarbonized economy will not happen so gas beaker plants are actually fine because they they don't actually put out that much carbon so from a climate gas beaker plants aren't going to kill our planet right?

1:17:43So they're fine. You know, they're fine. By the way, one technological disadvantage of nuclear in terms of a complement to solar is that you can't use nuclear as a peaker plant. Nuclear takes a long time to turn on and off currently, right? The current kind of nuclear that we use takes a long time to turn on and off because I could go on a rant about how the way we build nuclear plants is like very dumb in Stone Age and someday someone needs to invent a better way, and they will, but they haven't yet. We'll come back to intermittency in a minute to discuss how batteries and solar might lessen the bottlenecks on the grid, but this idea that the way we design nuclear plants today is very Stone Age is one that both Noah and Casey brought up.

1:18:24They both like the idea of nuclear, but see issues with nuclear plants as they currently exist. They literally both use the phrase Stone Age. At the end of the day, if you are boiling water to make energy, you can make heat however you want. You can make it with nuclear power, you can make it with coal, you can make it with gas. But at the end of the day, you're still boiling water. It's like Stone Age, like Oog, make water hot, boil water, turn turbine, right? Noah has a similar gripe with steam turning turbines and with a lot of other things. We'll let him tell you and then bring us back to intermittency.

1:18:54And so the fact that we're building these nuclear plants, that nuclear power relies on like a dampened chain reaction is kind of an L for nuclear power. Because in the 1940s, that's the best we could think of, right? Well, it's not the 1940s anymore. We're smarter now. We have chat GPT. We can think of something. We could think of something better than this. And, and there are ideas for how to do things better than this. And they just need more research. We need more research funding for something better than like, you know, dampened chain reaction that boils water into steam and turns a turbine.

1:19:29Come on guys. Anyway, but I guess the point here is nuclear plants you can't turn on and off easily. And so that makes it, you can't use it as a peaker plant. So you either use nuclear or you use solar plus a peaker plant, solar plus a battery, solar plus pumped hydro, you know, all these other things. But peaker plants aren't going to kill us. They're just, they're a little expensive because they don't get used most of the time. It's a gas plant you don't use most of the time and that doesn't amortize well, but it's not big. So solar plus peaker is still pretty cheap because the peaker plant's not particularly big.

1:20:02And so, so that's fine unless you're, you know, a crusading, unless you're one of the people like splashing paint on paintings because you want to like get zero carbon energy. Now I hate my dad, you know, unless you're one of those doofuses, then you realize that like, we just need to decarbonize most of the way as soon as we can and figure out the rest later. That's the smart way to do things. And so peaker plants are not scaring me. So intermittency, there's actually two intermittency problems. So when people talk about intermittency, they conflate two different things. The first intermittency problem is night.

1:20:33Storms are actually just fancy night, like a really dark cloud. So when it's cloudy, solar plants still work. People are like, it only works when the sun is shining. No, it doesn't. The sun shines through clouds. That's why you can still see outside. The sun still shines. But sometimes you get a storm that's so dark, it really does block the solar panel, right? A thunderstorm rolling across the plains of nebraska and it's really dark and then it blocks most of your solar but that's just fancy night that's just an unplanned night but if you have a battery that can store solar you know battery storage there's also the idea that batteries leak a lot and i actually thought this for a long time before i looked at the amounts and it's like what over a year you're leaking like 15 of your energy that's not much that's really not much over a whole year so batteries to store up power for like night also worked for storms very well.

1:21:24So the other intermittency problem is seasonal storage, right? Winter. You know, you've got your little planet and it's tilted and then you're angled away from the sun. The sun has to hit you at a shallow angle. And so you don't get as much sun. That is the tyranny of orbital geometry. You know, the only way to fix that is to like change the axis of our, I'm sure Elon Musk is working on this right now. So then eliminate to winter. But yeah, so you have winter, right? When the sun shines less. So the obvious thing to do is like, just build more solar, just build more. And you can do that to some extent when you can get the land, right?

1:22:01Panels are dirt cheap. So if you can get the land, you just build more solar, you overbuild. And if you overbuild by a factor of 1.6, you can take care of all of seasonal storage basically. And then you don't have to worry about winter. Winter is not a thing anymore. You can't always build overbuild by a factor of 1.6 because you can't always get the land for that in the situations where you can't get the land you can build like batteries hold their charge really really well so you can you can build a battery to hold some charge for seasons it's just expensive because you you use it very slowly you only use it like a little bit of the year so you're you're amortizing your cost for this big battery that you only use a couple times a year you know when i talk to who's worried that much about seasonal seasonal storage it's just night it's really just night that everyone's worried about and storms are not a not a big because it's just fancy night.

1:22:47So as long as you have batteries that can get you through the night, intermittency is pretty much not a big deal. I love NOAA, saying the quiet parts out loud, but the point both NOAA and Casey make is a really important one to understand. Solar produces electrons directly. Nuclear, as built today, produces heat that produces steam that turns turbines to produce electrons. They believe that that difference in efficiency is a crucial advantage for solar. He frames up intermittency and storage challenges well, too. According to Noah and many other solar people, the solution to meet most of our needs is simply to overbuild solar panels.

1:23:26Build and install more and more of them, and thanks to learning curves, the more we install, the cheaper they get. So overbuilding is one route to deal with seasonality when the sun shines less, but still leaves the challenge of nighttime when the sun doesn't shine. For both seasonal and nighttime storage, or long-duration energy storage and short-duration energy storage, batteries are getting cheaper and more energy-dense. Very cheap, energy-dense batteries would help alleviate some of the issues with the grid. Just store up solar energy and release it, predictably, when needed. Meredith told us that, for now, she's not ready to rely on batteries because they're part of what she calls the could grid.

1:24:06There are a couple of grids. Let me explain what I mean by that. There's the grid you can see out your window, which has got wires and it has poles. And somewhere there's a generating station, or maybe you have a generating station and you've got some solar on your roof. So it makes electricity and it transfers electricity from place to place and somebody uses that electricity. And then there's the other grid, which is the policy grid, which is about how people pay for the electricity, what kinds they encourage, what the problems are, and so forth. And then there's a third grid, really, which I call the could grid.

1:24:50And my opinion is that most people don't know much about the physical grid, and it's hard work to find out about the policies. but what people learn about is what I call the could grid that is in the Sunday paper there'll always be something about you know batteries are coming or you know offshore wind is just about to start or it's all about what we hope to have in the future and there's nothing wrong with learning about that we should but you kind of know what's going on now and that is hard to find out about. So I felt that I should really write a book about what is going on now and leave the interpretations of what is likely to happen within 15 or 20 years to somebody else.

1:25:40The interpretation of what is likely to happen within 15 or 20 years is the multi-trillion dollar question, though. So we asked Eli to tell us about the current state of batteries and what we might be able to expect in the future. Yeah, so I mean, we've made huge progress in batteries, right? Lithium ion batteries have been just a almost miraculous like invention. In terms of the amount that the costs have come down over the last several decades, it's been orders of magnitude cost reduction. It really is like where we are today versus where we were 30 years ago. It's just night and day difference.

1:26:12So batteries have have massively improved. It does seem like they're probably running out of headroom for further improvements for current chemistries. So we're down to like, you know, below$100 for, you know, for the cell level. And, you know, I don't think there's another order of magnitude improvement in the current chemistries. So we need new chemistries probably. And, you know, particularly we need new cathode chemistries. An interesting thing about batteries is that the cost declines come from two places. One is what we've been doing, which is optimization. The major chemistry right now is nickel, manganese, and cobalt in the cathode.

1:26:56One of the ways we've optimized it is we've changed the ratio of those materials. We've used more nickel and less manganese and cobalt. Nickel is cheaper than manganese and cobalt, so we've had cost declines because of that. And then the other improvement is just overall density, right? So if you think about for any mass manufactured product, like your cost is a function of your materials. And so higher density with the same materials means you can drive the cost down lower, right? And so that's what I think we really need is just like better chemistries that will drive the cost down much further, particularly cathodes is like kind of where the, I wouldn't say low-hanging fruit because it's actually maybe harder than anode stuff.

1:27:42There's a lot of people working on anodes, but that's like where we could really drive the cost down, where there's most room, I think, to drive the cost down if we had a breakthrough. So that's going to be a matter of huge importance. I think also like materials, lithium mining is going to be important. Mining for transition metals, increasing our sort of nickel and cobalt stocks is going to be very important and then like battery recycling like figuring like it turns out it's actually like cheaper to like apply like a lot of energy to a used battery and it's a lot of energy that goes into like this plasma recycling but it turns out to be less than it takes to mine new materials so uh so that could also like really drive the cost down like in the long run and so yeah i think there's definitely a world where it's less than 10 current costs maybe less than five percent maybe less than 1 % of the current cost of batteries.

1:28:34And higher density, and the higher density means you can do a lot more, right? So it means like you could have cars that can go 1 ,000 miles, 2 ,000 miles on a single charge. It means you get lots of exciting things happening and even aviation, electric aviation. It means cheap home batteries for consumers. So it makes the grid defection stuff that I talked about earlier easier. So just huge possibilities if we can get the cost a battery's low. We should probably take a second and explain here. A battery has two main pieces, cathodes and anodes. On your standard AA battery, the cathode is marked with A +, and the anode is marked with A -.

1:29:12Batteries are filled with ions, atoms that have gained or lost one or more electron, which give them an electric charge. In a lithium ion battery, for example, the lithium ions have lost an electron, giving them a positive charge. When you charge a battery, the electric current from the charger pushes the ions from the cathode to the anode. When the battery discharges, ions move back from the anode to the cathode. Improving cathodes can significantly reduce costs and enhance battery performance, as cathodes often limit the battery's capacity and longevity. They're harder to innovate than anodes, but offer more potential for cost reduction and efficiency gains in battery technology.

1:29:51These improvements in batteries still exist in the could realm. A hard bet to make on something as crucial and fragile as the grid, but Eli imagines a world in which the function of the grid becomes decentralized. I kind of view batteries as more useful at the edge of the network than at the core of the network. So if you could have a home battery or a grid battery, like the home battery is maybe better because it can provide the same services as the grid battery, but also provide like resilient services. So if the grid goes down, like you're still okay so in general i think like it's better to have batteries where the users are rather than like where the power plant is maybe it's not an all or nothing thing but like like i would rather see batteries being sort of ubiquitous all over the place and then there's like incentives to kind of arbitrage right different like let's say we allowed the price on the grid to fluctuate and then incentivize people to arbitrage to uh make profits right and so so that that would that might be better than like grid scale storage.

1:30:50So, so I don't know, I would like to see a lot of experiments with that. I mean, the problem with grid scale storage is like, what is the period for which you're storing, right? Are you storing for a four hour period, an eight hour period, a 12 hour period, a six month period, right? Like what are you actually doing? And then the way you invest differs based on those assumptions, because the optimal size of your battery farm is different for different use issues. So I much more prefer a world where we put batteries like kind of everywhere and then allow the price on the grid to vary and then let people buy and sell on the grid.

1:31:24And then you don't need grid scale storage in a way. Whether the batteries are centrally located or distributed across millions of homes, Casey also put the battery conversation in terms of how much battery each person will need in order to have enough storage to make solar work at scale. But basically, you can think of the total amount of batteries in a particular economy on a per capita sense. So roughly how many kilograms of lithium ion per person does a country have? And that's a pretty good proxy for their wealth. And then you can also think like, okay, in 2050, how many kilograms of lithium ion batteries per person will we have?

1:31:58And if you say, well, probably less than a ton, but kind of on that order, I think that would be roughly right. Just to put that in perspective, it sounds like a lot of material, but if everyone in your house has a car, then you have a ton of steel per person. right? Just, just on the car, not including the house. And if you, if you live in a house, you probably got, you know, five or 10 tons of wood per person. So, so, you know, it's kind of interesting to think like, you know, there's me and then there's my ton of steel and my five tons of wood and, and, you know, how many millions of gallons of water you consume per year.

1:32:24It's just kind of a fact of life that we need to dig stuff out of the ground and do stuff with it. So the subtle point about batteries, about storage is that if you have a bunch of solar and you put a bunch of additional batteries on the grid, then those batteries make a shitload of money. And it It also makes the solar make more money. And if you have a bunch of batteries and you add some solar, then both of them make more money. So it's this thing where there's a kind of a harmonious factor going on here. More batteries increases utilization of your solar panels. More solar panels increases utilization of your batteries.

1:32:55And both of those together are significantly competitive against any other form of grid stabilization or additional power provision later in the afternoon. This has been the case for five years now. I mean, even Texas has been installing batteries like five to one or 10 to one versus new gas turbine pica plants. And that's Texas where gas is essentially free. The Texans have many things, but they're not really sentimental about value. This is like trusting the curve squared. More solar creates more demand for batteries, which increases utilization of solar and so on as the two tumble together down the learning curve.

1:33:26It's all about the money in this case. Noah made a similar point that Texas just cares about money. So you should watch what Texas is doing, but he says it more colorfully. Texas will have a lot of stupid political rhetoric where someone gets up and says, batteries are Satan's energy. Batteries will make your kids gay. And then they'll say whatever. Right. And then, and then they're like, but my house has batteries cause it made me some money. Like that's, that's the Texan attitude. Yeah. Batteries will turn your kids gay. It's like Texans say the dumbest things in political speeches, like absolutely unbelievably dumb.

1:34:08It's just like, Oh my God. And, but then they, the Texan business people then go and just do whatever makes money and are super pragmatic. You know, they, they do, you know, what be that building housing, building any form of energy that works, whatever it takes investing in tech industry, they will just do it. And it's just totally divorced from the silly rhetoric. I think that's as good a place as any to wrap up the arguments and move into analysis, because Noah captures what is maybe the main theme of the season of Age of Miracles. No, not that batteries are gay, but moving from silly rhetoric to economics when determining which energy sources to bring online.

1:34:47And on that front, there does seem to be a really compelling case for solar. I'm not optimistic about offshore wind, but if batteries can get cheap and plentiful enough, the solar and battery combination is a formidable one. Honestly, after talking to Noah and Casey, I'm more solar-pilled than I was before, and that's after reading everything that each of them has written on the topic. I want to trust the curves. Of all the people we spoke to, they were the only ones who made me think twice about nuclear. It's not going to be wind, geothermal will play a role, oil and gas will and should continue longer than most people think, but everyone we spoke to other than Casey and Noah see a big role for nuclear.

1:35:26Alex is working on nuclear policy. Mark has a nuclear podcast. Meredith is a nuclear fan. Eli thinks nuclear will be an important part of the mix. Angelica shifted from wind to nuclear. But Casey and Noah just don't think we'll need it. It's almost like there are two camps. Those who believe that solar and batteries will just get so cheap that nothing else matters. And those who believe that we'll need a mix and that nuclear has an important role to play in that mix. After all these conversations, Julia, where do you come? I think both of us, Paki, are in the camp of we need a mix. We need everything included in the conversation.

1:36:02Most importantly, we want to see our energy consumption increase over time because that's directly correlated with human flourishing. And the abundance of energy is the most critical thing here. A few things I'll say. The fossil fuels conversations were really interesting for me. Again, I think the narrative that we've been internalizing for years now is just that fossil fuels are terrible, you know, villainized beyond belief. But we haven't typically taken the time to do that cost benefit analysis to say, actually, they give us basically everything comfortable about our lives, right? The ability to go visit family across the country.

1:36:37It's just kind of short sighted to say, you know, no oil, like stop oil now. It's just not realistic. Paki, I think you and I probably have a little bit of a difference in terms of where we come out on solar. I'm still a little bit more skeptical that solar will become a majority source of energy for us. Two main reasons there. One is TBD, where the costs go. You're already seeing the cost curve start to come back up again for solar. China has been subsidizing the costs of solar panels so that they can just dominate the market there. if that changes or if we decide we want to produce those ourselves, especially if there's some sort of great power conflict that actually escalates, I don't think they're going to be as cheap as they are now for forevermore.

1:37:21Then batteries, I think, is a toss-up, right? There is not necessarily the evidence we have today that batteries are going to continue to get so cheap that they'll just be ubiquitous everywhere. And so, you know, you talked about trusting the curve squared. You kind of have to believe two sets of things for that to be true. And then the second thing on solar, and again, I'm going to come across as the total NIMBY here. We need to take a lot of land. Right. And I don't think I want to, you know, have like states full of, of solar panels. Right. I just think that's, that's a rough way to go when we have alternatives that are much more space efficient.

1:37:53Yeah. I think that's, I mean, so many good points in there on the oil and gas point. Like I'm, I'm really conflicted on like what I think the net impact of this whole thing is like, Like, yes, I think we are like definitely throwing oil and gas out after they've done so much for us. And I also wonder, like, there's just this weird rhythm to the universe where if we didn't have this like enemy to rally around in oil and gas, would we see the subsidies for solar? Would we see a renewed interest in nuclear? Would we see all this work happening in fusion? So like, even if all of the individual kind of like actors are self-motivated, like maybe the end outcome ends up being good and takes us from the spot where like fossil fuels are amazing and they limit kind of like where we are in the car should have scale and because we have this like common enemy then we can unlock the technologies that move us to the next level to your point we're going to need so much more energy ai data centers unless there's huge huge huge improvements in efficiency are going to consume an absolute ton of energy if we start having robots do more of our labor they're going to use a ton of energy and i don't think you get there on fossil fuels.

1:38:58And I think to your point, we agree, like you do not get there on, on only solar. Now, like my, and this is my insecurity coming across, like anytime I disagree with someone like Casey Hammer, I'm like, what am I missing here? Cause that guy is just like a thousand times smart, you know, like we're talking orders of magnitude and intelligence. So like, maybe there's something that I'm missing here, but I do think like, as we talk to other really, really smart people, as we start to get ready for the fusion part of the season, I think one of the things that they say is like solar can get to 80 % of the electricity that we, use.

1:39:28Maybe 80 % of the energy that we use at some point is more and more becomes electrified. We talked to Ryan at Zap Energy, and you'll hear that conversation. It was a really, really fun one. But we asked him why he thought that solar couldn't get over 80%. And it's actually something that I've heard from a couple of fusion founders now. Francesco at Proxima made a similar point. There's this study that Jesse Jenkins out of Princeton did that about 70, when you get to 70 or 80 % of your electricity grid coming from solar power, it starts getting more expensive. So instead of getting cheaper, it gets more expensive for a few reasons.

1:40:03There's overbuild to meet demand where you might not get sunshining all the time or where you get winter. As Noah mentioned, you put in just five, eight, 10 times more solar panels to do that. And that makes things more expensive. There's a land use, your point on the NIMBY side, but just also it's just a ton of land. A solar farm needs 30 times more land compared to even fuel-based power plants. So that's huge. And then there's the transmission and interconnection. The land isn't just like, we don't want these panels here. But as you put more panels, it gets further and further and further and further away from where the electricity ends up being consumed.

1:40:41And more transmission and more interconnection approvals are needed to make that electricity get back to where it's being consumed. That gets more expensive. As we know, NEPA is a disaster. And that just gets like really, really hard to do to get all these projects approved. So a lot of people think that it can't get above 80%. If we live in a world where it's 80 % solar, 10 % nuclear, 10 % fossil fuels, and some geothermal mix in 10%, we have 110%, we'll actually probably need 500 % energy. So let's get all the way there. But like, that is a world that I'm excited to live in. Absolutely. And, you know, I think you make a great point about the pressure that has now been put on our energy system to say, hey, let's actually think about investing in other things besides just sitting around on oil and gas for forevermore.

1:41:27We should be innovating. We should be improving. And I think you always need the extreme people to be helping push that movement. So I think that's fantastic. And actually, one of the things that Mark brought up is the oil and gas industry itself got enough pressure that it has improved and cleaned itself up over time. And I think that's great. I mean, if you think about the images of LA or New York City, these places where, you know, previously they were just covered in smog. You had really, really noxious fumes coming out of cars. I mean, they're still not amazing today, but we've made a lot of progress there.

1:41:59And I guess, you know what, shout out to the environmentalists because they have helped push that. I mean, the Clean Air Act, I think of sometime in the 90s, for example, like really put the pressure on industry to clean up. And I think that that is fantastic. shouldn't be lost on anyone. So it's good, you know, it's good. We have the push pull on the system. The environmentalists, I love when they do things that I agree with. And I dislike when they do things that I disagree with. So I mean, I think it's such a good point. Like there, I can get a little carried away on just saying, you know, like, just get out of the way and like, let us let us build stuff.

1:42:32But you don't want a world where there's smog everywhere, where you're not thinking about safety. It's a balance with all of these things that we're talking about, the types of energy sources that you use to how much you want to accelerate versus think about, you know, safety, like all of that stuff should be an appropriate balance. And I think like ultimately, at least, you know, in the West and even across the world, energy usage is starting to pick up a little bit again. The conversation is moving, I think, a little bit from conservation to let's use more energy. And so this was just this weird dark period in human history where we had 50 years of energy kind of going like this.

1:43:09But then we get to unlock this like amazing boom of growth next. And we do it in a clean way. Like maybe it was all for the best. Yeah. You know, I'm a big states rights person, which I think you know, Paki. And I love the idea of actually a place like Hawaii or somewhere else that's isolated on its own saying, hey, we're going to run this experiment here. What if we decided we're going to be, you know, 80 % solar? Like, would it work? I wonder. I did just a quick Google search just now, and it looks like Hawaii is just under 20 % solar, which is much higher than a lot of other places. But their electricity is not cheap, right?

1:43:45It's one of the most, I think, the most expensive of all the states. Obviously, there's still a lot of shipped-in fossil fuels that they're using. But it would be interesting to say, like, could you, okay, like, these solar panels are supposedly super cheap. And if we make this our mission to try to bring Hawaii to be one of these forward thinking, like, you know, majority solar places, like, could they make that happen? And I think it's fun that we'll be able to have this almost playground, right, of different areas trying different strategies and seeing ultimately what plays out. Yeah, to the points that Meredith and others have made, though, and the mark you go first, like, it is a risky experiment to run when it's like, all right, let's go see what happens to our electricity grid.

1:44:23And then you're in the middle of the Pacific Ocean and like, it's hard to get, you know, anything going. They also don't have deserts, you know, to just like throw, you know, throw panels in the middle of nowhere land is. Offshore solar? Offshore solar. Or as Clay had told us, at some point here, we're going to be getting energy from space. Send that down to Hawaii. There's a lot of exciting stuff there. Is it the time to turn our traditional opening question back on ourselves? I think it might be the time. I think it's the time. Julia, gun to your head. What do you think the pie of energy sources in the US looks like in the year 2050?

1:45:01Okay, I'm going to start with electricity, if that's cool. Because I think it's almost a little bit more manageable to wrap your head around. So today we're just under 20 % of US electricity from nuclear. I think we should be able to double that by 2050. And of course, like, listen, I'm a believer, I'm an optimist. There are a lot of reasons to believe that that's going to be very hard to do. We talked a lot about Vogel and the issues with getting gigawatt scale nuclear power online. But I think there are enough people rallying around whether you're on the left and it's climate change driven or you're on the right and it's national security or energy security driven, who I believe that together can help the industry break through some of the weather financing issues, just the overregulation of the industry and like helping break that down.

1:45:47Like if we can get there, I think we can start a big kind of nuclear renaissance here. and then I do think we're going to continue to build a lot more solar there's like you know there's rooftops all over the country like welcoming solar we actually have a fairly sunny country compared to a lot of other countries too especially our southwest and so I think we'll see a lot more solar I do think we'll see more wind going in and little pockets in areas so I imagine those go up and you kind of maybe get to another 20 percent total across those we'll continue to keep our hydro online. So what are we at?

1:46:19Like almost 50, 60%. And then I think the rest will be majority natural gas and maybe a little bit of oil and coal. So I think that's where I leave it. Paki, what do you think? I think we're pretty much aligned. I think we're going to build a lot more solar. I think Noah and Casey got me there. If 50 % of our electricity or more comes from solar, that's awesome. I'd love to see 50 % or more of our electricity come from solar, particularly given how much electricity I think we're going to consume by the year 2050. I do think that 3 to 5x is probably a pretty dramatic underestimate of how much electricity we'll need to consume by then.

1:46:54So let's say 50 % of it comes from solar. I'm going to back you on the 40 % nuclear. I was going to be an asshole and do 41 % just to be a little bit more optimistic, but we'll go with 40 % nuclear. And then I think you're right. The rest will be a mix of kind of wind, natural gas, probably not much oil or coal, I hope, by that point, for the electricity grid. And then I think electricity is just going to be a much bigger piece of the overall energy consumption pie by the year 2050. Certainly, I hope that it is. But for the things that we use fossil fuels for today, planes, industrial, all of that, I do think that we'll have fossil fuels.

1:47:33Alex makes a bunch of compelling points. Mark makes a bunch of compelling points, and they've been great. But I hope a lot of that comes from synthetic fuels, from using either solar or nuclear, depending on if you believe Casey or Isaiah, or a mix of the two approaches, to pull carbon from the air and then turn it into fuel. There's something really, really beautiful about that idea. And I think obviously it also has the added benefit of if you can get that engine going, then there's this economic incentive for carbon capture that's not kind of government subsidy dependent. I think that would be an amazing place to get.

1:48:05So I'm going to say that 20 % of our fuel mix will come from synthetic fuels. I know that is an over-optimistic estimate, but let's be over-optimistic on that. Or has this whole conversation been pointless? Will we be powering everything with Fusion Energy by the year 2050? Fusion has a lot of people excited. We're excited. Governments around the world and at least three dozen, maybe twice that, legitimate private companies are working to bring Fusion onto the grid. But it is still very early. Over the next few episodes, we'll tackle Fusion Energy, It's history, current state, and future with experts, researchers, founders, operators, and investors to try to answer the question, when will we see commercial scale fusion?

1:48:49And what will it mean for humanity when we do? Stay tuned for our next episode where we start the dive into fusion energy. I can't wait. I can't wait either. I'll see you there. See you then.

1:49:04Thank you for listening and watching to this episode of Age of Miracles. If you like what you hear, please rate, subscribe, and share. And if you're feeling really generous, tell us what you think in the comments. Plus, we have a ton of resources and references in our resource hub if you want to go deeper. And we've linked them all in the show notes below. See you next week.