A power producer’s view of keeping the lights on. What does rising electricity demand from data centers mean for the US grid?

28:27So yeah, we have been focused on understanding what's happening in demand response. We've been focused on, are there things at some of our power plants that we could do to improve the availability of the asset when they're most needed. So an example there might be we have a peaking natural gas plant that often can't get gas in the most extreme winter scenarios. If we can add fuel oil at those locations, we can triple its certification to deliver capacity. I think some of the lower cost things that we can do include adding or replacing equipment inside of combustion turbines to get more output out of an existing asset.

29:15We, to your point, Ed, we're actively working on the ability to convert peaking plants to combined cycle operation, where there's a pickup in not only the amount of capacity that's available, but the efficiency of that capacity. We're working on completely de novo battery storage projects, renewable projects, and gas projects. So the spectrum of solutions that are required, I would characterize it in the way that we talk about it internally here is we really do need in this moment more of just about everything. and each one has their own particular characteristics and fit and need. And some are a better fit in certain markets.

30:03Others are a better fit in other markets. And so you really are constrained by the resources that you have to focus on all of these opportunities internally. And just thinking about PGM specifically, as I was saying earlier, we had this agreement between the administration and these 12 governors. essentially sounding the alarm and saying there's a real problem here. So what was the solution that they proposed? What do they actually want the industry to do in response to the concerns that they're raising? They proposed an emergency procurement of capacity under long-term contract. And the concern that will need to be worked through in a stakeholder process that I would have is that you end up with this not being a one-off procurement that brings you back to functioning competitive markets, but instead becomes a recurring mechanism that leads you to splintering the market in a way where you create real risk around the existing resource base at the time that you might be over-investing in new resources.

31:19Now, there was another element of that procurement or proposed procurement, which is that the data center community should be responsible for paying for it. And that's something that we can dig into further, if you'd like. Yes, because that's clearly an important part of the debate. I think that's a great way to sort of open the debate out a bit. But just sticking on the specific plan for PGM then, what's your concern? You said there's a risk of splintering the market or fragmenting it and causing problems for the longer term. What do you mean by that? As you begin to procure new resources under long-term contract, and there's an underlying market for the remaining 200 ,000 megawatts of resources, you could end up with a dynamic where you're paying, let's say,$500 a megawatt day for the new resources.

32:16Those resources then become available in an auction that's competitively cleared for the rest of the resources. But that subsequently cleared auction results in very low prices that lead to demand response leaving the market because it can leave the market very quickly. Other older power generation assets that might require real maintenance to perform reliably, either don't spend on the maintenance, take greater risk around performance, or retire. So when we create that bifurcated split market, splintered market, we create risk on the performance of the vast majority of the existing resource base.

33:04Oh, got it. That's really helpful. I have to say, because I've heard this concern talked about in the past, and I've never really felt like I understood it. But actually, that's super clear. So thanks very much indeed for clarifying that. Because I'd sort of vaguely thought that, oh, well, it's kind of okay to pay more for the new generation, because the new generation is going to need increased investment. And therefore, it's sort of fair that you should pay more for new capacity. But of course, as you say, if you're actually then driving out old capacity. That's not fair and actually not efficient.

33:35And then we're going to need to answer the question of how much exactly are we procuring under long-term contract? At the time that the capacity market didn't clear with sufficient resources, we were short about 6 ,000 megawatts of capacity. Subsequent to that, every year PJM updates its long-term projections. Based on the updates of the long-term projections, we were then short not 6 ,000, we became short 3 ,000 megawatts of generation, which is the amount that we procure, how long do we procure it for. All of those questions will need to be addressed through a process that gets into enormous details and risk allocation questions between customers and investors.

34:22Like so many of these things, it's not simple. There's not a very obvious and straightforward would answer to them, which seems to be a big complex system. It's a big complex system. And as is so often the case across the power system, these things are very nuanced and the details really matter. Yeah. I mean, having said that, Melissa, do you have a view on this when you think about the right ways to incentivize new generation to get more capacity on the system? What do you think are the right principles for doing that? I mean, step one, and this will surprise you in no ways, Ed. I think about who are the final consumers of it, and I think about households and household electricity prices first.

35:02So overall, the U.S., the number is that essentially electricity bills are going up faster than our incomes are. That's the high-level takeaway. And I think the number was between 2019 and 2024. Hold on, I've got it right here. Yeah, between 2019 and 2024, electricity prices for households, and this is numbers from the EIA, the Energy Information Administration here in the US, which is what the IEA quotes, but they increased by 26%. So that's the price for households. So unless you are investing in tons of energy efficiency or have other opportunities to lower your overall electricity demand, I mean, that meant your bills went up.

35:42And then at the same time, if you looked at annual net earnings, like for a two earner couple, two kids, that kind of a household. If you looked at overall, incomes only went up 23%. And I know we can say, oh, it's just a few percent. And I'm like, no, no, no, no, no, y 'all. Like these are averages A. So there's going to be households where they feel this way more intensely. And those households are increasingly the already energy insecure, already more energy vulnerable households in this country, which we've talked about at length on the show, Ed. But that's my first principle. That's where it comes from first is like, all right, who's paying the bills?

36:16And I go to at risk vulnerable households? Like, how are we thinking about that? And so as much as I, you need to understand all these dynamics that Paul, you've laid out in terms of how the wholesale market works, how these different, you know, pieces influence each other, all that. To me, I'm like, what does that mean for the final bill? What does that mean for what people are paying and companies are paying for that matter? So when I look at the right tools, it's tools that take that into account, that think about that. Right. And just as a footnote on this, again, as we talked about quite a bit on this show, that is becoming an increasingly salient political issue, the question of how much households are paying for their electricity.

36:57I think traditionally, I think Amy Myers-Jaffe has made this point, traditionally everyone worried about gasoline prices and it was the price of the pump and that was a thing that everybody looked at and that was the yardstick from a consumer perspective of was US energy policy successful and effective or not. and now increasingly it's becoming electricity prices and as I say when you see the administration and the governors of 12 states get together to address an issue that's how you know it's really the alarms are flashing red in all of their offices it really tells you that that is something they care about and they care about it because the electorate really care about it as well sure I mean I started out in the the boring part of the energy world in electricity and transmission and all that.

37:43And I'm laughing because, Paul, I mean, that's the heart of where LS Power and where you do your daily work, right? It's around power generation and transmission and all the pieces there. And so now it's more exciting. And exciting has some positives and some negatives. There's positives where there's tremendous opportunities associated with increasing demand. Massive opportunities. Good night. The conversations I'd have with different political groups that were trying to figure out, how can I upgrade my existing infrastructure? that's aging and not doing great when I have flat or in some cases in some regions negative electricity demand because I've shifted and I've offshored some industries or something else.

38:20Like, how do I manage that? This is a very different challenge, which I think presents opportunities. But man, there are challenges too, because our systems aren't built right now to do what we're trying to do with our power system. And so we have to figure that out rather rapidly. I couldn't agree more. I think this, when you look at one of the things that we think a lot about here is digesting all of these choices to what's going to work for the ultimate customer and bringing that back to what are the right incentives, policies, rules that can allow us to accomplish that. This is a critical service.

38:59We always need to keep an eye on that fundamental fact. And the fact, to your point, that we are in a growth environment creates a real opportunity that the industry should not shy away from to bring down costs by using this incredible machine, the grid that we utilize on average half the time by using it more, by amortizing it over more megawatt hours by embracing the potential for new large loads and bringing them in in a way where households net benefit. I think there's a huge opportunity there. I've been talking a lot about peak demand in my daily, a lot of it, with people who don't normally think about that.

39:47And this idea of it's like the freeway, those roads are empty sometimes, unless you're in Houston as a Texan, I can say that. They're busy all the time, it feels like. But there's definitely highs and lows. There's rush hour and there's not. And so how do you manage that so that you can better utilize your infrastructure that you've already invested in? And then to your point you made earlier, use the stuff we are building right now better as we move forward. Because we've learned a lot. Let's use it better. Yeah, 100 % agree. I just wanted to – I always have to tell this story because it makes me laugh so much.

40:19But you talk, Melissa, about things being interesting in the electricity system. I have a Wood Mackenzie colleague, Ben Hurts-Sharkle, who is our head of Grid Edge Technologies, which is usually a pretty kind of wonky, specialized area. He got interviewed on ABC News last year on the Breakfast News. And as he said himself, this is a really bad sign. When they get me on the morning show, this tells you there is something pretty badly wrong in the electricity system. It should be. No one should ask any questions. No one should want to know about it. It should just happen very smoothly. switch the light on no problems and uh yeah the fact they want to talk to him does indicate that there is something very different in the system we're working with now well it's the thing we're used to like your electricity bill um you know it comes you you see it once a month maybe you don't if you're privileged enough to like put it on auto pay and let it do its thing but you see it once a month versus like a gas pump i mean depending on how much you drive you might see it once a week or more frequently.

41:19It's just, yeah, it's become more interesting. That's a good story. Yeah, indeed. So anyway, let's talk a little bit about potential solutions. And as you say, making more use of existing grid infrastructure, definitely part of it. I think that's very important. A lot of people agree on that. Something you just mentioned, Paul, is this concept of data center operators in particular agreeing to pay for all the costs associated with that infrastructure. We've seen now a few commitments. Microsoft's made one, OpenAI, Anthropica, I think, has made one. We had Brandon Oyer, who's the head of power and water at AWS on the show recently, and he was talking about an agreement that they had with NIPSCO, in northern Indiana, big development to install three gigawatts of new capacity to support new data centers they're building there.

42:18Again, that was all being done with a firm commitment not to increase bills for residential ratepayers at all. What's your sense, Paul, of those commitments? Do you think they are realistic? Is that going to work? Is that going to be the solution to this, to make sure that the cost allocation does fall on the companies. And I suppose ultimately, obviously, it gets passed on to consumers. It'll get paid by the people who are using those services. But still, in the first instance, the idea is that the cost will be bought by the companies that are developing that data center capacity and need the power infrastructure.

42:56Is that going to work, do you think? I think there are certain things that are inevitable. and I don't see a path forward where the broad set of households and the economy writ large is saddled with the bill for the one component of our demand picture that's driving it, and that's data centers. And I think that there's a general, to your point on the statements out of a variety of the leading companies in this area. I think there's recognition of the fact that for a durable social license to continue to do this, there needs to be a way where customers aren't picking up the bill for that incremental load.

43:43So I think there is an inevitability to it. I don't know that it would be something that we would be talking about extensively were it not for the fact that we've seen abnormal rates of inflation hitting the sector over the course of the last couple of years. At the same moment when the hyperscalers want to grow data center capacity, the cost of building new combined cycle or even peaking power plants has more than doubled. The cost of transmission upgrades has increased. We're increasingly pushing the existing system, the existing grid towards a level where meaningful new investments are going to be required to integrate new generation capacity, to integrate new loads.

44:32So if we were in an ordinary, we're bubbling along at a couple percent inflation for what underpins the cost to supply, I'm not sure we'd be having this discussion. But when the cost to build a combined cycle has gone from$1 ,500 a KW to$3 ,000 a KW over the course of several years, I think that question is front and center. And I think it's inevitable that for us to continue to succeed in serving this new load, that we'll need that load to step up and take care of the cost associated with doing so. And again, I think a lot of the benefits of that can accrue to the rest of the customers. Right.

45:20And I think it's something which is always important to remember in this discussion, is that when we look at the history of electricity bills and the increases that we've had over the past few years, that's probably not really anything to do with data centers, actually. That's to do with, as you say, that cost inflation that we've had in the system. Costs have been rising for a while, really coming out of the pandemic. and so things like the cost of transformer some types of transformer our data at wood mackenzie show have doubled in cost in the past five years or so as you say there has been a significant increase in the cost of transmission in recent years so we've kind of already had those cost pressure pressures building up now we're looking ahead looking to the future and thinking okay So over this period, that is when the costs of the investment needed to support data centers really going to start to kick in.

46:15And as you say, that price inflation is still continuing. The costs of all this equipment is going up, I guess, partly fueled by increased demand because of all the new capacity needed to support data centers. But it is definitely something that we haven't really seen play out to the full degree, I think when people look forward, there's a lot more of it in the pipeline. That's exactly right. I look back. The moment that I started in this industry, we were completing a combined cycle, which doesn't have particularly different technology or characteristics than the investments that we're making today.

46:54And we were building it for around 400 a KW. By the 2012 timeframe, we were building a new combined cycle at 900 a KW. And today, again, as we look forward to deliveries early next decade, we're talking about prices that are on the order of$3 ,000 a KW. So we did have that steady growth, and then we had a step change. And we're dealing with that coming through not just in combined cycle world, but also in other elements of the infrastructure and the grid system. And then when we go back to like the final prices that people are paying, I mean, you combine that, okay, natural gas combined cycle, we look at those spot prices, what was it, 56 % year on year increase, but then it still wasn't as high as in 2021.

47:46You know, we can remember talking about how prices went there. So there's a reason why this is being referred to as the age of electricity. Like there's, there is a reason why. and behind that is a multifaceted, multidimensional, quick-moving set of forces that are causing more pressure on this system. And we're at a critical moment where, yeah, we can step into the opportunity and we can make investments and make them in ways that work. And I say we as in there are different we's in that equation. And so, you know, different regions, different communities, different countries, when you take it global, et cetera.

48:22Or we cannot. I think we're going to step into the opportunity. I hope we step into it more than we might have thought we needed to because the opportunities to me, I don't know about you, Paul, but they're just so tremendous. It's like, wow. I mean, when you think about what's behind each one of these, you know, demand sources, whether it's residential side, industrial side of the equation, like what's behind it and what is it driving in terms of broader economic impacts? I just – the list is long when I start picking it out of the different things that this can enable if we're able to invest in our electricity systems and take care of those opportunities and step into them.

48:58And from my seat, I'm really optimistic that we can. I think it really is a matter of getting these. I'm glad to hear that. That is great. I'm so glad. You're not like, Melissa, this is not good. That makes me happy. I think competitive markets combined with the right set, the right framework and the right rules create tremendous opportunities to bring capital to bear, to bring innovation and new ideas to bear. I think if we get these incentives right, if we point people in the right direction, if we give them the right market signals, if we give them a durable set of rules, we're really good at responding.

49:38And so what about the role of policy and regulation here then, as we've been saying? Big issue for the administration, big issue for state governments, politicians right across the country. What can energy policy and regulation do to get those kind of good outcomes to make the most of the opportunities in the way you're talking about? I think there's real opportunity in creating more competition in transmission. We talked briefly about the compounding increase in transmission costs. Melissa, you mentioned that 26 % increase, which was inflation plus between 2019 and I don't know if the more recent years, 2024 or 2025, but over that same period of time, it's entirely likely, and this is my guesstimating off of my 10 % CAGR, but that transmission rates inside of the customer bill doubled.

50:35So that's a 100 % increase. And oftentimes those are the result of a lack of planning and a lack of competition. They're the result of needing to solve the immediate problem. So instead of planning five, 10 years out, thinking about what are your CREZ zones, what will be your load zones? Where can you put large amounts of new load, but also perhaps large amounts of new generation? How can you solve these problems by actively planning forward and make thoughtful investment rather than simply rebuilding what we already have in the ground? Scope here for another footnote, I think, on CREZ, which I'm now going to embarrass myself by revealing that I don't know what it stands for.

51:23Is the C competitive? Right. Renewable? Yeah, renewable energy zones. Oh, man. We could have a whole story on this. This is my world for so long. And the idea was, Kevin Costner, you build it, we will come kind of a deal. Like, hey, we're going to say these are great areas for wind. We want to bring that to load centers. We're going to build this. And we believe that it will get filled up with lots of electrons. I am. That's what we think is going to happen. And it's been wildly, wildly successful. Wildly successful. Because what's the constraint on getting new loads on? Having a highway to put that electricity on so it can get to where you want it to be.

51:57Like that's a major constraint. And it was done in Texas and it worked in Texas because Texas has got a competitive market with sort of liberalized generations. So it was easy to kind of just, as you say, build it and then allow a whole load of different generators to use it at one end and a whole load of different consumers to use it at the other. Is that fair? Paul and I both want to talk. So Paul, you go first and then I will go second. We both have so many thoughts. Crest was actually the result of a political decision where the legislators in the state decided that there were these renewable energy zones that could be unlocked and made a determination and provided direction to the Public Utility Commission to go and plan an expansion of the system.

52:41We were lucky enough to be a non-incumbent that the PUC invited to participate in that process. We built over$500 million worth of rate base in the panhandle of Texas as a result of that. And there are now many gigawatts of not only wind, but solar and now data center that are coming to and around the panhandle in large part because this resource was unlocked. Somebody made the proactive, forward-looking decision in a moment where we might have had a couple thousand megawatts of wind in the state to unlock 18 ,000 megawatts of wind in the state. And it's gone well beyond that. yeah plus batteries plus other i mean when it comes to the overall system it was really what's the big constraint what do we want to unlock and texas did have an advantage we've talked about ercott versus you know when you cross over state lines and and the different you know restrictions that you have or just additional processes that you have that you have to go through which can make things more complex and the different incentives but it really was we're going to build the freeway to move the electricity around we're going to tap into this domestic resources and remember when this was happening oh my gosh is like 20 years ago at this point almost i mean i have gray in my hair y 'all that happened um over that period but this was when wind prices were way higher they are and they've unlocked batteries have unlocked other generation resources at much higher prices and the economics were just very clear if we build this out we see clear pathways to having the development that we want when it comes to generation and then also supporting the industries that need that generation and the households that need that generation so is that a model that can be followed elsewhere in the country then or not really, as you say, because some of the conditions in Texas were pretty specific to that state?

54:31I mean, Paul, just get your thoughts on this. When you think about ways of improving transmission infrastructure, getting more built, what could be done? Does it go back to all these issues about permitting reform and everything we've talked about in the past? Does it get back to planning? What does it really need? We're happy to wave in permitting reform all day long, bring it on. It would be amazing to be able to get these things done more easily. But fundamentally, it comes back to long range planning and policy decisions. and certain states, in particular states, are very proactive about figuring out problems that they want to solve, unlocking resources that they want to unlock, and taking actions that enable that.

55:23And I think that, from my seat, is one of the biggest opportunities to get this right. Melissa, you wanted to come in on this. yeah i mean i think the fundamental principles of understanding the problem so let's go back to that top of the show right what is the actual problem what is constricting or restraining or preventing us from moving forward into a space and i don't know don't shy away from the hard problems like step into them and say what are we able to do and when it comes to crez and texas it was like if we unlock this thing everything else happens it's like setting up that perfect run of dominoes and And if you can get a position just right, knock the first one down.

56:02And not that you sit back and don't worry about it. You're watching every domino. But it just unlocks the entire game. It unlocks the entire system. And so within that, I mean, there's certainly tons that could be modeled in other areas. And the exact how it would play out, the process, the details, you know, would we be talking about, okay, we're going to identify these zones, build very long lines, figure out ways around it. In Texas, I mean, a lot of the areas you had open space when you were going into West Texas. So, you know, the constraints were different. but that doesn't mean you can't take huge lessons learned from it.

56:32And you can apply those in other areas. And the fundamental principle is what's the actual root cause problem here? Like what is the biggest lever that we can possibly pull that will have the biggest impact? And I would say that when it comes to the grid and investing in the grid, I mean, that is a tremendous lever arm. It's massive. And we see that with the timeframes, right? It was the longest timeframe. When you talk about the different timeframes bringing on more load, more demand, more generation. And then it was this outlier of how long is it going to take to build out the wires and invest in the capacity there.

57:02And one thing I'll flag is that the answers aren't. So for me, policy ed, we've talked about this technology agnostic. What are you trying to solve and then let technologies come in and do their thing and come together to actually work together to do something more effectively and efficiently. So there's new lines. That's one conversation. There's new across state lines, big, you know, huge power lines. There's also local distribution upgrades that need to be made. And even on existing transmission lines and thoroughfares, we can be using them better. And we can be investing in technologies that can help us to better utilize those assets and resources.

57:37And how do you get more grid enhancing technologies in the system? How do you actually upgrade those systems as well? And these are all part of the conversation, or at least they should be, in my humble opinion. Yeah, that is a great point. So I wanted to wrap up, Paul, just if we can by talking a little bit about LS Power and the future of the company. You just closed a very big deal, sold a big package of natural gas assets. I think it's about 13 gigawatts of capacity there, which you sold to Energy for about, I think,$13 billion. Could you talk a little bit about that deal? Why did you do that?

58:11And what does that say about the future of the company and where you go from here? We made a lot of the investments in those assets through a variety of private equity funds. And private equity funds have finite lives. There's an underlying covenant with your investors that over time, you're going to give them their money back. And a transaction with NRG or other transactions like it for us are part of following through on that obligation. We firmly believe in the future of natural gas in this country. We're focused on adding to our portfolio of natural gas-fired power plants. We believe in the value of demand response.

58:58I think it's one of the most underutilized tools that we have in our portfolio of solutions, we continue to be active in looking for ways to solve some of these energy demand questions through natural gas-based solutions. So the transaction is really one that's driven by where we are or were with investment partnerships that happen to own those particular assets. Got it. I mean, it's exciting times, isn't it? We've been talking quite a bit about challenges, is also an enormous amount of opportunity out there right now. A huge amount to do. Certainly not enough time to cover it during this conversation.

59:41No, indeed. But yeah, we are out there actively looking for places where we can put new battery systems. Same with new transmission infrastructure, looking for more opportunities to compete, to come up with competitive, innovative solutions that can keep costs for that business under control. Right. Well, I certainly hope you'll come back on again at some point in the future and talk some more about all the things that you're doing. We ought to wrap it up, though, for now. Just before we go, time for our free electrons, I think, personal items that we've brought in. Melissa, what's yours? Oh, my goodness.

1:00:22I was logging in to record this morning, And it's like somebody heard that I needed the perfect free electron because I had a different one. But the IEA, right before I logged in, not joking. Hang on, just to check, you sure you don't want to do two? Oh, can I? Can I do three? It's a running joke, Paul. Like, I always have two, but I'm trying to restrain. I was trying to be good, Ed. Like, come on. No, but do you get their energy snapshot? It's just like a little short. Oh, yeah, yeah, yeah. I get that. Okay. So guess what the one today is? It's about the mega batteries. that are transforming power systems.

1:00:56So back to our previous conversation, last time I was on and we were talking through it, it talks through essentially battery deployment. It's got the great cost curve and the global deployment. It breaks it down. But Paul, to just what you were talking about, it actually has an entire chart that shows about how much of peak demand is being met in a few different key regions, including the United States. And then they zoom in on Texas and California. And it shows this like whoop in the curve here in the last year about how much more we're seeing these mega batteries actually take part of the load.

1:01:27So I just flag that with people. It's free. It's just their little energy snapshot that they send out. So that's my free electron for today. And I'm going to try to not talk about my second one. So don't tempt me. Don't tempt me. Well, I know Paul's got a great one. In fact, Paul's one is so good, though, that I think we should let him do that last. I'm going to very quickly do mine, which is power generation in China and coal-fired generation in particular. I was just posting about this on LinkedIn just this morning. Obviously, a lot of discussion about how much coal capacity China's got, still adding to that capacity.

1:02:04It is undeniably the case, though, that coal-fired generation in China went down last year. So despite everything everyone says about, oh, they're not transitioning, it's still an economy reliant on coal power and so on. A lot of that is true. China is absolutely still relevant on coal power. But last year, and this is some new Wood Mackenzie data we just published, so that's why it was sort of front of mind for me. Last year, China's power demand grew by 5%, but their coal-fired generation went down by nearly 2%, 1.9%. So that is pretty significant. And that's driven by, of course, there's been massive investment in renewables there, a lot of wind, a lot of solar, some nuclear, some hydro capacity being added as well.

1:02:52It's unclear whether this is the final peaking of coal demand in China, and there could still be some growth to come, not least because of data centres. And of course, they're building a lot more data centres in China as well, just as they are in the US, and that's going to need more power, and it's going to need more 24-7 power as well. So we could see coal generation still pick up again. But even so, I think it's pretty significant what happened last year. And I think a useful corrective to the people who will sometimes say, oh, there's nothing happening in China. It's all the same. No such thing as a transition.

1:03:24I mean, you can argue about what a transition is, what it means and how fast it's going. But I think you cannot argue about whether or not there has been change in China's energy system. I think that is unarguable. Something very big has happened there. And I think it's important to note that. So interesting. I'll just as a follow on to that, Ed, real quick. Paul, your free electrons are great. So we got to get to this. But when it talks about how much peak demand is being supplied by batteries or is being met by batteries, in California, it was 25 % in terms of share of peak load. In Texas, it was 10%.

1:04:01I am now going to dig in and see if I can find the China numbers. Like, I'm really curious how they're actually investing in batteries and what that is looking like in terms of peak. So just as a side, they didn't make the top chart that the IA put out, but it's a great point. Yeah, that's fascinating. And of course, actually, coal and batteries could be pretty good complements. People think of them as sort of rivals, but coal plants are the best if you run them as baseload 24-7. And then if you have demand, which is flexible and goes up and down, pairing batteries with that coal could work well.

1:04:33Not necessarily great for the climate, right? I mean, it's still not a way to get to a net zero system. But in terms of curbing emissions and certainly curbing the growth of emissions, could actually be very effective. Yeah, so that's really interesting. Yeah, as you say. There's so much I want to say right now about efficiency of operating power plants. You highlighted it earlier. There's so much. But OK, another show. Yeah, another show. But you're right. It is fascinating. And also just to throw in, as you say, the efficiency of coal in China, also the flexibility, because that's something they're pushing on as well, is making coal plants more flexible, although they're not naturally well suited to that.

1:05:09So that's a whole other debate. But anyway, as you say, for another time. Anyway, Paul, we've been building you up on this. We've been building it up. It's such a good one. You should have your chance. Give us your free electron. So MyFreeElectron is, and I've been thinking about this and getting texts about it, is the need for us to, as an industry, and I think as business leaders, to focus more on mentorship and providing internship opportunities for undergrads. I think as AI proliferates, one of the things that I'm hearing and seeing is that it's becoming more and more difficult for these young people, especially those that are technically oriented, to find good opportunities in undergraduate for mentorship growth and seeing what the real world looks like.

1:06:02And I don't think that industry should look at this as a immediate return opportunity. I think it's more of a social obligation and responsibility. We should be working on providing mentorship and growth opportunities for young people and expecting no immediate return. 100 percent. Yeah, I think that's absolutely right. So important to be thinking about that for a variety of reasons. Sorry, Melissa, you were going to say. I was going to say I did two internships and I was also a co-op student through my education. So I spent a quarter at school and then a quarter working in a lab. I discovered that I shouldn't work in a clean room on silicon wafers.

1:06:40That was not my first call. But the amount of practical experience I got, discovery of where I needed to go and just overall like practical learning. My education in the classroom was fantastic. UC Davis for undergrad, UT Austin for grad, fantastic education. But I was much better when I came out and also better able to position myself into a path I wanted to be on and could be great at because I had those internships and I had those opportunities. um so just just nodding my own personal thing and people who spent time with me who were never going to hire me and never going to get you know directly anything out of it they spent time mentoring me talking to me talking me through like okay here are your options like what are you thinking for you and so i couldn't agree more couldn't agree more yeah absolutely and as you say paul it does seem like ai is sort of squeezing opportunities for people who are at the beginning of their careers, but people have to start somewhere, right?

1:07:33Yeah, my own personal opportunity on this, and I'm grateful to this day, I worked for Johnson & Johnson for a couple of years while I was an undergrad, happened to be in Central Jersey, and Rutgers was in Central Jersey, and certainly a lot of hours in front of the computer redoing P &ID drawings, but also an opportunity to spend almost two months working on commissioning a new pharmaceutical line in Puerto Rico where they were sending me down there. And I almost felt like I might have been adding some value in the moment. Can't confirm, but what an opportunity as an undergrad. For me, it was Cindy at National Labs.

1:08:17And, I mean, Ed, we've talked about my career path and where I went and the opportunities I saw to do public service for years. And now I'm, you know, after doing academia research back in industry, and it's like, yeah, phenomenal, phenomenal. Also helped me to pay my bills, I will admit that, like, which was a hugely important thing to go through school. But it adds to the educational experience. And it really does. I mean, tremendous, tremendous. So one thing I'll add, Ed, to your point is I actually think about how virtual engagement has affected internships and young career opportunities. I got so much out of having conversations, being in the same spaces, being just, hey, come into this meeting, come in and listen to this, those types of things.

1:08:59And so the fact that my internship was in person, and I'll say with interns I work with now and folks that I mentor, those in-person opportunities are really, really massive as well. and yeah that can add to the cost if you've got to bring an intern in and get him a desk you know those types of things but the value we're adding to the overall workforce which that's a whole other discussion we could have is tremendous so my own personal soapbox for a minute yes i do absolutely agree with that and as you say it's partly about training the senior staff the leaders of the future the people who are going to do the things that can never be done by ai but also it's about adding capability right now to do things which even though there are some many increasingly I guess a growing number of tasks that can be performed by AI there's a lot of things still that you need a human for and that humans can add value to and it's important that people recognize that and give people those opportunities yeah I think that's absolutely right and I think it's good to end on that important message.

1:10:03We do have to leave it there, though, for now. It's been great talking to you. Paul, thanks very much for joining us. Enjoy chatting with both of you. Thank you. Absolutely. Melissa, I hope to see you again very soon. Absolutely. Look forward to it. And Paul, enjoyed the chat. We could all find time to sit and talk through these things today. Yeah, thanks very much indeed. Both of you, it's been great talking to you. Very glad we could get together and have this conversation. Thanks very much to our producers, Stuart Duffy, Toby Biggins Gilchrist and Dan Cottrell. And above all, as ever, many thanks to all of you for listening.

1:10:33We really value your feedback, so please do keep that coming. And we'll be back soon with all the latest news and views on the future of energy. Until then, goodbye.