a16z Podcast - America's Energy Problem: The Grid That Built America Can’t Power Its Future

Episode Date: July 16, 2025

U.S. per capita energy usage peaked in 1973. Since then? Flat. Meanwhile, China’s per capita energy use has grown 9x.Today, AI, EVs, manufacturing, and data centers are driving demand for more electricity than ever—and our grid can’t keep up.In this episode, a16z general partners David Ulevitch and Erin Price-Wright, along with investing partner Ryan McEntush from the American Dynamism team, join us to unpack:– How America’s grid fell behind– Why we "forgot how to build" power infrastructure– The role of batteries, solar, nuclear, and software in reshaping the grid– How AI is both stressing and helping the system– What it’ll take to build a more resilient, decentralized, and dynamic energy futureWhether you’re a founder, policymaker, or just someone who wants their lights to stay on, this conversation covers what’s broken—and how to fix it.Resources: Find David on X: https://x.com/daviduFind Erin on X: https://x.com/espricewrightFind Ryan on X: https://x.com/rmcentushTimestamps: 00:00 Introduction01:05 Challenges and Solutions for Modernizing the Grid 01:56 Decentralized Energy and Technological Innovations 02:34 Grid Capacity and Transformer Issues 04:10 The Role of AI and Software in Energy Management 04:55 Policy and Workforce Challenges 08:44 Texas vs. New York: A Tale of Two Grids 10:31 The Importance of Battery Technology 13:11 Balancing Energy Sources: Solar, Nuclear, and More 14:54 The Future of Energy Consumption and Grid Management 19:45 Wind Power: The Forgotten Energy Source 20:53 Challenges in Grid Monitoring and Communication 22:19 Load Forecasting and Weather Impact 23:49 Nuclear Energy: Current State and Future Prospects 26:44 Small Modular Reactors and Micro Reactors 30:55 Technological Innovations in Grid Management 35:41 The Role of AI in Regulatory Processes 41:39 National Security and the Electrical GridStay Updated: Let us know what you think: https://ratethispodcast.com/a16zFind a16z on Twitter: https://twitter.com/a16zFind a16z on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.simplecast.com/Follow our host: https://x.com/eriktorenbergPlease note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

The energy grid and the electrical grid of the future, it's not just going to be the dichotomy of generation, transmission, and storage. This sort of next generation of what the grid looks like is going to be in a much more decentralized way. Why are delivery costs such a big problem? The grid is aging now and brittle. The workforce is aged out. Should we just leapfrog the grid?

I need this power now, today. The United States needs to get better at megaprojects. Things that are billion dollars, things that are at scale. There is no safety, there is no national defense, there is no national security without a reliable electrical grid. U.S. energy usage per capita peaked in 1973. Since then, it's been flat. Meanwhile, China's per capita energy use has grown ninefold. Today, with AI, EVs, manufacturing, and data centers demanding more power than

ever, America's electrical grid is buckling. We haven't just underbuilt it, we've forgotten how to build it. In this episode, I'm joined by A16D General Partners David Yulevich and Aaron Price Wright, and investing partner Ryan McIntosh from the American Dynamism team. We talk about how the U.S. energy system broke by fixing it is about more than megawatts and what it's going to take from new tech and talent to faster permitting and smarter software. Let's get into it. As a reminder, the content here is for informational purposes only. Should not be taken as legal business tax or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies

discussed in this podcast. For more details, including a link to our investments, please see a16z.com forward slash disclosures. U.S. energy peaked in 1973 in terms of per capita usage. China's has increased ninefold over that same time period. We have some reasons to be optimistic now that things have started to change or will change further. Why don't you give some context there? What's happened and why should we be excited about what's coming forth? The history of the grid in the United States

was build big power plant, industry formed around it. The grid grew incredibly fast through the 20th century. Then around the 80s and 90s, things started slowing down. And then through the early 2000s, the grid effectively froze in the United States. A big piece of that was a lot of the energy generation, a lot of the manufacturing, a lot of sort of heavy industry moved to Asia.

And so for the last 20 years, effectively the grid has ossified. We forgot how to build new power plants. We forgot how to build new power projects, new loads, sort of large data centers, large factories, large mega projects. And you said we forgot, were we not allowed to, or we actually just lost the know-how?

We were allowed to, but we lost the skill set. And I think you can see it in more extreme examples with nuclear power plants, although that sort of transition happened decades before. But basically the grid itself, the grid operators forgot how to plan, how to move quickly, how to do it cheaply. And so now we're at this point in time

where we are reshoring, we are bringing back manufacturing, we are bringing back data centers, and there's this highly concentrated demand, and it's now, now, now at sort of any price but they cannot move fast enough. And so that's what we're seeing today. We talk about data centers and the grid being inflexible to this. It's playing catch up. We need to do a lot of the growth that happened in China and bring this here and do it incredibly

fast. How did this forgetting happen and how can this relearning happen or this retraining happen? It's a good question. I think a lot of it's like a workforce issue. I think a lot of it's a policy issue. I think the United States historically was a bunch of regulated utilities, sort of the top down, big thermal power plant,

big transmission lines connecting the substations then distribution lines going to individual factories, homes, things like that. And I think some of the newer technologies don't necessarily benefit from scale in the same ways that these large thermal plants typically did. And so this sort of next generation of what the grid looks like is going to be in a much more decentralized way.

So there's also an element of relearning of what is the grid actually? Is the grid these large sort of power systems and large infrastructure projects? Or does it look like a lot more decentralized way where we can eliminate a lot of the wires in between things like delivery costs, which have increased exponentially? And can we do it in a more dynamic and flexible way? So things like solar and batteries, they don't need to be massive. You can put them anywhere. You can put them next to load. And so this is also sort of an grid to go down. So there's a lot of challenges. Well, if you think about what our grid is,

I mean, it's a piece of technology that was designed about 100 years ago. And very little technology on the grid has changed in those 100 years. And you look at why our delivery costs such a big problem. Grid is at capacity. Getting a new project onto the grid today, you know, you sign up for interconnection.

It could take a decade. There's a backlog of 20 plus years to get a new transformer. The transformer technology we're using today, it's kind of bananas if you actually look at what makes a transformer. First of all, there's one company that makes these, and there's one plant in the US that produces the right type of steel that you need in order to make these transformers. And it's a hundred-year-old tech, and it's like the wait list for transformers is insane. So I think we're getting to the point in demand starting to rise again and the calcification of grid technology where it's like should we just leapfrog the grid? Like do we really need to wait in line and

wait for this to catch up? I think there's like two versions of how you do that. One is how do you get power gen and power storage essentially as close to demand as possible and that's a problem for new tech to really help solve because we're talking about instead of these like mega projects that we're used to building, well, not used to building anymore, like massive nuclear plants, massive new natural gas plants, etc. We're talking about much smaller and more distributed sources of power, bypassing interconnection altogether in many cases. We're seeing that as a pretty big trend with data centers.

As data centers are just building power directly on site and co-locating power with the data center because they're like, I can't wait. Microsoft's like, I can't afford to wait 10 years to get an interconnection with the grid. I need this power now today. So how do you get power more tightly coupled with the load that it's actually going to serve? And that's a really interesting problem for tech also from a software perspective because if you get generation, storage, and usage all co-located very closely together, like that's a really interesting problem for tech also from a software perspective, because if you get generation, storage, and usage all co-located very closely together, like that's a very good problem for AI to solve.

Like reinforcement learning, stick that in there, and suddenly you get massively efficient systems that you couldn't get at grid scale. I think an interesting point to add on to that is that there's very little visibility into the grid itself. So they understand sort of power plants are operating or not, but especially at sort of the distribution level, the things, the power lines you might see outside your home, there's very little understanding of what's actually going on there. And so there's like a reluctance, especially when you have things like net metering

where I'm sending from my home a battery back to the grid, things get incredibly complicated. And so the grid operators don't have a very good understanding of when can they allow new projects to go online, how much power, when to actually cut people off. And so there's a lot of these policies, interconnections, sort of the general term, but states like Texas have much more lenient policy of you can build wherever you want. If we need to cut it off from the grid, we're going to do so. And so it's sort of this connect and manage approach.

Whereas other states, they will do these incredibly long feasibility studies in a variety of sort of scenarios with the entire grid is at peak capacity, but they want to make sure this specific project can stay online 24-7. So that ends up creating these massive delays of being able to study every single possibility. So there's a lot of policy approaches here as well. And there's a bunch of these technologies called grid enhancing technologies, which are effectively like an average power line might be used at 50% capacity, but it needs to be designed for the peak capacity

for the summer when everyone has their AC on. And so there's a lot of sensors or other technology that could be placed there, so you have a much more dynamic view of what our infrastructure actually was looking like. And so when we have these new technologies, then we can much more efficiently use the infrastructure we have.

D.U., what are your reactions to this conversation thus far, where are some areas you're particularly excited about or reasons to be optimistic? Well, I think the reason your reactions to this conversation thus far? Where are some areas you're particularly excited about or reasons to be optimistic? I think the reason we're having this conversation is we're touching on a bunch of these topical themes, which is that we're in a moment in time where exactly like Ryan said, the grid is aging now and brittle, the workforce is aged out. We'll talk about that more, I think in a minute, but we had to go out and hire and train entire specialized

crews, specialized people that work with cement and concrete, specialized people that work with steel to go build the large Vogel reactors in Georgia. We put them on Vogel reactors three and four. We turned them on. Huge win. And then those people that went back to building highways or bridges or something else.

And instead of just going and put them on Vogel like five, six, seven, 8, 9, 10 and building just this massive crescendo of nuclear power, we just put these people back into the general workforce. And so we're not learning our lesson there in the workforce. And at the same time, we have this insatiable thirst for energy, whether it's EVs, whether it's data center compute for AI, or just generally a shift

toward more and more consumption of electricity, or even just like the reshoring and manufacturing, all these things that are just very, very electron heavy. At the same time that we're seeing this, you know, what Aaron brings up to me is a piece that we hardly ever talk about, which is resiliency and not having people be as dependent on the interconnectedness of the grid. People that you deploy solar, we talk about distributed compute

for those of us that are in the tech world and how important it is to have distributed compute and have networks be able to suffer and survive through segmentation of things. But the grid is very interdependent. Even in the US, there's really only a few major regions that can segment themselves off. But when you deploy solar solar or you deploy batteries,

or you deploy an SMR reactor or your own power generation on site for your own data center, you don't have to worry about how brittle the grid is because you're fairly resilient from it. And I think that's a component, is that the energy grid and electrical grid of the future, it's not just going to be the dichotomy of generation, transmission, and storage. But as Aaron brought up, you might do all three of those things in the same place

and not have to worry about how robust the grid is or how capable the grid operators are. And I think that's a dimension that was never important to people before, but it's important today. And you can certainly imagine, if you're the military, you certainly care about having reliable access to power at all your forward operating bases and even at home,

at your home military bases. Like you just cannot lose your ability to have electricity. And so I think all these things are just coming together at once and it's really exciting moment in time. And I think it's buoyed by the fact that we're also at this sort of technology inflection point where AI can help some of these things, not just be a consumption driver,

but even be an enabler and facilitating more efficient use of electricity, better monitoring of the grid, better ways to even go through the regulatory and permitting process, which is onerous for many cases. Building on that, I think Texas, literally today, we're recording this during a massive heat wave that's affecting most of the Eastern and Southern United States.

And if you compare the grids of Texas with New York, Texas famously, historically had massive grid failures several years ago when a big heat wave came through, the grid couldn't keep up with all the air conditioners that were going on, and people saw massive power outages. Everyone was really mad. People were like, oh, ERCOT doesn't work, DREG doesn't work.

And what has Texas done in the couple of years since that happened? They have absolutely flooded the grid with solar capacity. Texas has doubled their solar capacity in the last approximately three years. And with that, they've just deployed thousands of batteries. One of our portfolio companies, Base Power, is one of the players here, but there's many battery power companies deploying all across Texas to provide storage for that solar power. And if you look at the performance of the Texas grid versus the performance of the New

York and surrounding area grid during this heat wave, I must have seen 10 news articles this morning about how well Texas grid has done. The elasticity and ability to react to very quick changes in demand without having to change kind of base load power. Like you can't build a new natural gas plant or a new nuclear reactor overnight, but solar is just so insanely cheap. Like it's basically having a giant, massive,

huge nuclear reactor in the sky that will go forever. And Texas isn't a green state. This isn't a political issue, but it's like, why aren't we deploying the world's cheapest form of power literally everywhere we possibly can and then just putting batteries everywhere? Like there just should be batteries everywhere. It's bananas to me that batteries as a topic has like recently gotten caught in the sort of political crosshairs. We really as a society need to be good at power storage and batteries. Like this shouldn't be a controversial topic.

We invented the lithium ion battery, and yet today, if you want to buy a battery, whether it's for a drone or for the grid or for your car or for whatever it is, like you're either buying a battery made in a lights-out factory in China or you're buying a battery produced in Vietnam by a Chinese company, and like there's no meaningful effort in the US to change that. And I think that this is a really critical problem, not just to manage power load on the grid, but for power for all of the things

that we need to power the next generation of innovation in the United States. I think we'd be hard pressed on the American dynamism team to think of a company that we've met with an interesting technology in the last two years that doesn't have a battery in it somewhere. So as a country, we need to be investing in battery technology and battery manufacturing.

By the way, if China decides that whatever your company is doing that's using batteries doesn't align with what they like or they want to punish you, being cut off from being able to buy batteries from China is incredibly punitive to a company. And we've certainly seen that happen with some of our startups. And then you find out quickly that the ability to procure and source batteries from places that are not in China is very difficult.

If you extrapolate that out to what would happen to our whole country if we just were unable to buy batteries from China, it could be catastrophic in a very short period of time. Just to add on to a quick point on the grid side of batteries, if the rest of the country, which is presumably watching what's going on in ERCOT, which is the grid operator in Texas, if Texas can prove that you can deploy these sort of decentralized, distributed energy resources and to sort of flatten these peaks, provide more resiliency and ultimately lower price of electricity, then every state should go and do this.

There's a very complex web of deregulated and regulated entities when it comes to the grid. Of course, there are a lot of different policy and workforce and political reasons why not everywhere is this decentralized world. And it'll probably be more complex than just these deregulated energy-only markets that Texas works with. But I think this is going to be very obvious if it

isn't obvious already. And I think the United States needs to move incredibly fast to make this happen and hook up batteries, solar panels, make it easier and cheaper to do it. Even colocation for large loads is still a very politically fraught issue. Utilities are pushing against this. It's still really hard to hook up solar and batteries to your home. I think it's actually cheaper to put residential solar on your home in Germany than the United States. And that's largely a permitting, largely an installation issue.

That's crazy. That should not be the case. Aaron, I believe the quote in your college yearbook was, drill, baby, drill. How do you think about your love for oil and gas with other sources of energy? My parents will be shaking their heads if they hear this. I think broadly speaking, our approach to energy in the US just needs to be yes and. You look at the sort of atrophy of our power build out over the last 30, 50, whatever, you know, you name your timeframe years compared to let's say China.

And if we want to accomplish the goals that we've set out as a society to accomplish over the next decade, like we need more power. And it's a matter of yes. And I think solar and batteries, extremely important. And you should talk more about the exciting things that are happening around nuclear. But like there is a place for oil and gas. Like I cut my teeth at Palantir working in oil and gas. My husband worked in oil and gas. Like the first check I wrote A16Z isn't an oil and gas company. So this isn't me coming with a particular agenda around carbon. This

is me coming and realizing that like we basically need every tool in our toolkit and we should be using technology to deploy whatever makes most sense, wherever it makes most sense at scale. If we're talking energy mix of where we're at today and where do we think we're headed, if I were to make a personal bet, solar batteries are just the ability to be incredibly cheap and deploy incredibly fast. Spin up and spin down. Yeah, and I think that already is a way, but I think that will continue.

But I think to be very clear is that you need all different types of energy. You're going to need true sort of base load dispatchable power. It's going to be gas, it's going to be nuclear, it's going to be geothermal, it's going to be a lot of hydro as well. And I think as you attach more of these sort of renewable resources or these non-reliable resources, while incredibly cheap and works most of the time, this long tail risk, once you get to like 50 to 75% of the grid, is going to become very, very expensive. You need a lot more battery backup, things like that.

And so I think it's going to be very complex and it's going to be different for many different regions. But certainly it's not all of any given resource. Yeah, when you look at like the changing nature of load over the next decade, some of that is going to come from data centers. Some fraction, I would say it's probably overstated how much data centers contribute to the growing load in the United States over the next decade. Data centers generally are base load. If you're training a model, you're largely using a dedicated amount of power for the long term. Maybe there's some fluctuations if you're doing more inference. But I

would generally say like data centers represent base load. But then you also have things like electric vehicles. You have things like heat pumps and air conditioners. You have industrial autonomy, which may or may not be running 24-7. So, you're going to have some increase in the base level of power we as a society need, but continuing to increase the size of the peaks and troughs of how we use energy on a day-to-day basis. And we should be thinking about designing our grid and designing our energy mix and

power sources around what those loads look like and not over solving for either base load or variable power. I think just to put this in more tangible terms, the peak summer load in places like California might be half of what it is in winter or something like that. And it depends on what climate you're in. And so the concept of baseload is like, do you build all the plants you'd need for the 100 gigawatts of power you're going to need when it's wintertime?

Or in the summer, half the year, you're only going to need 50. So what would be baseload? What you need to do in modern civilization is every time you turn on the switch, like the power is working. And so how you actually match supply with that very, very fluctuating load, both daily and seasonally, is very complex. And so like today you might have to build a natural gas, what's called like a peaker plant, that might only operate like a week a year.

And so that's an incredibly expensive asset that is going to only be delivering very expensive power, but is only needed when all the other resources are tapped, and it's like that last couple megawatts of power. The alternative now you could do is what's called like demand response or with batteries on the grid, is say, okay, well, instead of doing this $10,000 sort of a megawatt hour plant, I can just make it so everyone's thermostat in this area turns down a couple degrees. And so then an aggregate means that I don't need to build that large asset or pay that expensive premium Okay, pushing back on that like I think that the American consumer will fully organ reject that level of

Dictation over how they use that I think a more likely outcome is that you can do it on the compute side and just say look These three racks of the data center are just going to go offline during the peak summer heat when you're running your AC. This is not a critical job. Right. It's a non-critical job. It's not a mission job. It's a back office job.

And you're just going to run it at night instead of during the day. And you're going to pay less electricity for that benefit. I don't know if I agree with Erin that AI is not going to suck up all the compute. I think that Constellation just turned up a new nuclear reactor, or is reactivating a reactor. I think Meta immediately sucked up all of the power that they're going to generate, or nine-tenths of it or something, from the new Constellation reactor that Meta signed the contract extension for.

And so, I think we actually probably are underestimating the amount of compute that we're going to soak up with electricity over the next 10, 20, 30, 40, 50 years. The amount of data we're going to start storing, just look at video. The amount of video we create per minute has just ballooned way beyond anyone's expectations. I'm sure the same will be true for AI compute. And I think once you start getting into like robotics and autonomy, if you think about compute expansively, I totally agree. Yeah. And so those things are going to be much more responsive than do I want to go have my room

be 74 degrees instead of 71 degrees? Well, let me tell you, anyone that's done business in Tokyo in the summer knows, as a nation, by the way, Japan has done this, it is absolutely terrible. It's horrible. We're not going to do that in America. Please. We're not going to do that. We love you the thermostat idea.

We're not going to do that in America. I want to say, you to do that. We want to do the thermostat idea. We're not going to do that in America. You're in the 40th floor of a Japanese building wearing a suit, by the way, because you have to wear a suit. It's swalteringly hot. Everyone is walking around like they're not miserable, but they are miserable. And you watch them by the window, but the window won't open. It is one of the worst. Why doesn't France work in the summer?

This is why. It's terrible. Exactly. So we hate this idea of spoiled living in California. I will say like one of the biggest proponents of this are current users is like crypto mining. It's like these are flexible. Yeah, but that's right. But those people are demand responsive, right?

So those people will just turn off their compute when it's not cost effective. Totally. But it's important for the grid is that you can build these assets and you have the demand for power here. Like they're going to soak up that demand. But if it gets far too expensive, they will also shed that demand. In the US, my guess is that this already is reflected in the fact that you have peak load pricing.

Like for me, my power is 10x more expensive between the hours of 4 and 9pm, so we don't run the washing machine. And so leave it to organizations or individuals to figure out how to manage that, but just like charge people for more power. It's a little bit of a non-sequitur, but I like that we keep talking about oil and gas, we're talking about natural gas, we're talking about batteries, we're talking about solar, we're talking about nuclear. Ryan even mentioned hydro,

which of course is totally viable in some places. The thing that nobody ever brings up anymore, except for I think a very fringe group, is wind power. And I'm very happy to hear that nobody here is jumping for wind. I think wind is incredibly cheap when it's working. You kind of know solar is going to work on this reliable schedule.

The sun's going to be out, it's going to be working, spare some cloudy days, but there's still always something coming through. But the wind might not blow for a week. I think it's worse than that. I think I read that globally, one-third of all wind turbines are out of service at any given time. The other thing is I think wind is the only power generation mechanism where when you get too much of the input the blades of a wind turbine feather

and turn off. Whereas there's no such thing as too much sun for solar. Too much water and hydro, that's not a problem. But too much wind and the wind generator turns off. Who wants a system where you get more of the input you want and then it stops working? It's also just extremely hard and dangerous and specific to service.

Like you see those videos of people climbing the ladder up to the top of the wind turbine. Yeah. Yeah. Grid operators look at wind and it's like great when it's working, but they can't plan for it. They have to build other capacity to supersede that if it's not going to be there when they need it.

So fine, I seed wind. We can move, we can move past wind. Yeah, I agree. So no wind. But I do think the demand response, this went to the point that Ryan brought up, that monitoring the grid is really important. Being able to send signaling on the grid is really important.

And you have to remember, we're all used to the internet, which has bi-directional communication and messaging. It has data layer and control layers. There's a full control plane and things like that for the internet. The electric grid doesn't really have that. And so to be able to send messaging and things is very, very difficult. And now a lot of people just do it out of band using the internet. To actually send messaging and do monitoring of the grid itself

without an overlay network is very hard. And that's one of the challenges that people are now, I think, starting to address. Yeah, it's wild how much of a mystery what's happening on the grid is at any given time. Like, we really have very little visibility and it's very hard for I think centralized utilities to deploy meaningful software to understand that. So when we think about as VCs like what types of things do we look at and what do we get excited about, I think companies

that kind of are going at this monitoring from the opposite direction, like how do you get software almost insidiously on the grid? Like how do you start learning more about demand and generation as close to the source as possible, and then try to feed that information back from each other, like the idea that you're going to go sell a software tool to a PG&E or similar and have a reasonably speedy top-down implementation

where you actually get good signal and metrics and can actually do interesting things with that data. To me, I find find a little bit unbelievable. Something very interesting that I learned is a lot of the load forecasting, which is basically the tasking of wind plants need to go online. So there's usually a 24-hour-a-day ahead market that will basically say, you need to run your plan at this time, and then this sort of supply and demand match to a price.

And there's like a merit order. It's complex, but that's how it's done. But most of this load forecast is done by just looking at the weather. They look at basically one of the best indexes. They look at where the homes are, how many people are there, and then what the temperature is going to be. That often is sort of the largest factor that goes into this modeling. But if we have all these sort of connected resources, we have solar, we have EV chargers,

all of this stuff is spitting off data, telemetry, and things like that. We're going to get a much better look of how load is actually being forecasted real time, which is going to help a lot of understanding like where do we actually need to build? What is the actual price of power? And then you can start making these markets, I think, a lot more efficient. Well, when you look at energy desks for the big hedge funds or energy trading companies, their weather guy is usually the highest paid person on the desk outside the portfolio manager. Those climate and weather PhDs that are working

on a trading desk, they are just absolutely raking it in because they're like, God, right now, because there's very little other data. That's why you see when the stuff that goes on in Texas, like heat waves and things like that, if they even get it wrong by a couple of degrees where it's like, they think it's going to be hot, but it gets actually really hot, that's when you get these crises.

Crises that end up causing a lot of strain on the grid, and you have to turn off all these very expensive plants, and then you get the headlines. They're usually also the ones that are worst for the environment as well. Yep. Do you let us know if you have any reactions to this, or otherwise give us the state of nuclear? Where are we right now?

What are the major bottlenecks? What are we excited about? I think that the biggest thing that's shifted in the last two or three or three or four years in nuclear is that everybody now acknowledges that nuclear energy is clean energy. I think that's been one major shift in public sentiment and perception.

Nonetheless, there's still major headwinds politically with nuclear that need to be overcome. Taiwan, for instance, turned off their last nuclear reactor. Insane. It's unbelievable. This is an island country that is seven days away from a total energy blackout if they get an oil and gas blockade from China so that they can't bring in ships

to deliver oil and fuel. So at any given time, they're like seven days away from a total blackout, and they turned off their last nuclear reactors at all. Why'd they do it? Because they caved to political, like very loud vocal minority groups. Environmentalist activist reason? Yeah. This party ran on a commitment to turn off the reactor before they realized how stupid it was.

It's just like colossally stupid. By the way, turning off a reactor, like a real full-scale reactor, it's not like an SMR where you can just flip it on like a few days later or a month later. With these large reactors, it could take years to turn them back on. That was just terrible. But broadly, I think the tailwinds for nuclear are just getting stronger, where people recognize that it is clean energy. I think there's still messaging work to be done. We should stop calling the spent fuel nuclear waste,

because it's really not waste. Almost all of it can be recycled or reused. People do need to recognize that those tailwinds are shifting. So that's happening. I think that people understand that those tailwinds are shifting, so that's happening. I think that people understand that it's baseload power, so it's not dependent on it only working during daytime. It's not like hydro where you have to be around an appropriately configured water source. And then I think that one of the largest inhibitors to creating new power plants in this country,

it's not that we can't do it, we can. There's a huge regulatory impermanent, I would say, morass that has to be swam through that is incredibly expensive, requires an army of consultants, many tens of millions of dollars, many, many thousands of pages of applications and documentation and process review. And again, this has to do with like building the power plant, getting the fuel, transporting the fuel, storing the fuel. Each step along the way is extremely laden with regulation and policy.

And some of that's for good reason. But finding ways to better navigate that to make it more efficient is really a step in an area that a lot of companies and people are focused on now. And actually, I think the government now is also focused on how do we streamline the approval process for a new reactor or how do we start approving

new reactor designs. And then I think the last thing I guess I would say is that right now, if you're gonna put a lot of energy and work into building a nuclear power plant, you wanna build a really big one. We largely only see really big power plants in this country, like the AP 1000s that we turned on in Georgia. And those again came in, I think they were 10 years late and multiple billions over budget. But we only do that because if you're going to put in the effort and time, you want to get the

most bang for your buck and generate the most power. We are now starting to see movement from the government in the DOD, in the Department of Energy, and from the national labs to really try to create a more fast track process for these small modular reactors or even micro reactors that use a much safer form of fuel, use much less nuclear fuel, use a different kind of nuclear fuel that's not nearly as risk-prone as the kind of nuclear material you'd use in like a weapon, but it's not nearly as enriched to the same degree, it's not even the same material. And so that process is now getting a lot of steam. We have an investment in a company called Radiant Nuclear. They are building a factory

that creates what effectively is an SMR. They would probably call it a microreactor. It's a one megawatt reactor. It can be put on the back of an 18-wheeler and shipped around. You can move it to where you need power if there's been a natural disaster, like a hurricane, you need to bring in power overnight. You could bring in a few trucks with four or eight of these reactors and power up a whole city after a disaster. And so that kind of flexibility and power is really compelling. I think there's a lot of tailwinds, a lot of good things happening. One thing to understand is that the DOD spends an incredible amount of money dealing with

the cost and frankly the risk to human lives, not just the cost but like the real risk to human lives, transporting fuel around the world to Ford operating bases, anytime we do a military exercise, anytime we're engaged in a conflict, the movement of fuel factors in as a primary concern and consideration of what we deal with. And so, you know, we've read reports that they spend well over $200 a gallon at times, sometimes up to $400 a gallon for diesel, effectively, to get diesel into the right place at the right time.

And so you can just imagine that having a nuclear reactor you can put in the back of a C-130 and fly around the world to wherever you need power, drop it in the middle of the desert, turn it on, you have power for five years. It's just an incredibly compelling value prop. There is no question that nuclear needs to be part of the equation. Not only is that baseload power, but on the SMR microreactor side, it gives us this incredible flexibility in grid resilience. There should not be a single military base in this country that's not nuclear backed from a power standpoint because if the grid goes down, whether it's from a cyber attack or just instability or

demand issues or cascading failures, you want to be able to fail over to nuclear power and not worry about the runway lights turning off. Yeah. And especially as we start to look at the kind of electrification of our weapon systems, our military vehicles, our drones, etc. Like those all need to get charged up somewhere. And how better to charge them than a nuclear reactor? The only thing I'll add to your nuclear comment is I think the advantage of nuclear, and I think that Radian has done very well of really leaning in on, is the power density factor.

If you want a reactor that is reliable and power dense, you want it to operate at very high temperatures. You want as highly enriched fuel as you possibly can where it makes sense commercially. So you want HALU fuel and you want to serve customers that will pay the premium for that. They'll be able to buy this reactor that they know is going to work. And if you're doing that, you want to have these economies of scale on the manufacturing side. You want it to be done out the door and don't need to like assemble it on site. You don't want to have to like have constant maintenance. And I think these other sort of reactors that we see, maybe on the civilian side,

if you build a reactor in a factory or you build modular components in a factory, but you still need to do construction work on site, you're still a construction company. Even if the technology is there, and I would argue a lot of the existing AP1000 technology is quite good, and other countries can do it quite cheaply. China is using a very similar design. The UAE just built one for incredibly cheap.

And they have very similar nuclear regulation, like in terms of frameworks, and obviously their regulatory bodies might move faster and things like that, but they're not like completely ignorant of some of the concerns. Well, and maybe this is a much more broad question, but the United States needs to get better at megaprojects. Things that are billion dollars, things that are at scale.

And I would argue the NRC is a big component of why it's expensive, but I think it's also the same reason that it takes a billion dollars to build a bike lane in San Francisco is why we are not able to build. Why we don't have a high speed rail in California. Yep.

We might not have a high speed rail in California because nobody wants it. And nobody wants it where they're building it. I want it. I fly to LA all the time. Sorry, nobody wants it where they're building it. Sure, yeah. Bakersfield is not a prime destination. I want to train from San Francisco to LA. That takes an hour and a half.

We debate a lot internally, like where does it make sense for VCs and VC Capital to plug in? And arguably, like, we're not going to move the needle on, you know, these multi-billion dollar megaprojects in the US. Like, we're probably not the best people to figure out how to capitalize and build a multi-billion dollar project in California to generate the power for the grid. But I do think that there is a role for technology at kind of like every single layer and every single phase of how megaprojects get built. It's like how do you use AI to navigate kind of site selection? How do you use tools to like move through the various permitting processes faster? Like how do you use AI to help you do

extremely complex and interdependent project management better and more effectively so that something that you have a project with 4,000 people working on it and everyone engaging with different suppliers and timelines that are dependent on each other, like how do you get all those things to align better so that you don't get these 10-year delays so that projects actually happen on time and on budget then as a result attract private capital backers.

I think that there's a role of technology here, what that looks like. TBD. We've seen a lot of companies that maybe five years ago were primarily trying to sell to utilities and grid operators, which is incredibly painful, incredibly difficult. Perhaps rightfully so. They have poles in the ground that are 50 years old. Why would they trust a two-year-old company to sell them software? Are they going to be around in 20 years?

This is a fair question to ask, especially for something as critical as the grid. why would they trust a two-year-old company to sell them software? Are they going to be around in 20 years? And this is a fair question to ask, especially for something as critical as the grid. But now they're developing this software and there's such demand of understanding how grid operators might think and potentially get there faster or have different conclusions. And so now you can go to data centers or people who want to build solar farms or people who want to build massive battery farms. Or even individual people who want to make sure that their power isn't going to go out

and they're going to be caught without energy during an important moment in their lives. Yeah, and so everyone cares now. There's a lot more money who cares about what is the grid actually going to think and where can I build, where is there excess capacity. Maybe I'm connected to the grid, but I also need some battery and solar backup or a radiant microreactor or something like that to be used in certain situations. It's a lot more complex, this sort of micro grid setup, but it's the way we're headed and software

is going to be a big piece of that. I want to hear more about our requests for startups or things that we want to exist that we haven't yet discussed. I mean, put differently, I'm curious where we think there's most bang for the buck in terms of the issues that we've been talking about in terms of there was like a regulatory intervention or some sort of technological unlock what comes to mind?

One area where there's probably a venture scale software company to be built is really around grid management monitoring. I think we see this in the IT landscape, we see it in the OT landscape, but we don't really see it in the grid where there's just full, very, very large. There is no splunk for the electrical grid. There's no power to networks for the electrical grid yet. where there's just full, very, very large. There's no power to networks for the electrical grid yet. There's a whole bunch of things that mirror the IT and OT landscape, whether it's around cyber and monitoring and logging and analytics. There's no looker for the electrical grid yet. three separate companies. I'm not sure if it's one company, but there is a big company to be built and really managing and monitoring the grid and helping to orchestrate and even deal with some of the things Ryan spoke around around

demand response, coordinating that, creating those marketplaces, tracking all those incentives. So I think when we see a company that we think can really be the breakout company there, we would lean into it. I also think around sort of project planning and development. How do you make it faster and easier to build projects within the current regulatory framework? How do you do site selection? How do you navigate permitting? How do you navigate project management?

How do you navigate your sort of construction supply chain? We're starting to see companies pick off pieces of that, but I think broadly speaking, there's room for tech and software in that kind of project development space as well. I think in a more general sense, anything that can bring generation capacity or storage capacity closer to load, I think is going to be very compelling. But it's a system integration or it's an innovative business model.

I think something like radicalizing that I experience is, and I implore everybody to go home and check their power bill. They'll now often separate the delivery costs from the actual generation costs. So what we've seen and we've mentioned it, but the cost to generate electricity, the cost of power has dropped immensely, gas, solar, things like that. But the cost to actually deliver that electricity has increased a ton.

And so in net, it's sort of not changed. And I think that's terrible, and I think we all agree that's bad. And so I think there's a lot of opportunity of bringing sort of generation capacity. In some ways, this is sort of like this more liberalizing force. It's like we all should have our own backup. We all have our own technology. I think there's a lot of really interesting ways to do that and scale it. And overall, as a grid gets more heterogeneous, all of the seams and intersections between things like there's just so much more opportunity for technology than when you had a single utility managing a single source of power centrally,

distributed out broadly. I'll throw another one out there, as I'm just thinking about this. One thing that I've been noodling around is this idea that all the regulation and permitting and policy frameworks that we have in this country, you could think of those as part of the infrastructure that we all have to live and work with and interact with.

So companies that really facilitate, and I would say applying AI to navigating the permitting process. So nuclear is a good example. Again, a nuclear reactor application or a fuel transport license or a fuel manufacturing license, these things have thousands and thousands of pages of regulation and documentation that go with them. You make one small change in your application that has these reverberation effects. You have to update all your documents elsewhere. If you're the regulator trying to go through all these applications, it's just incredibly onerous. Borderline impossible to imagine that a regulator can even possibly get it right. You can argue that it's actually not possible. They just do the best effort. But AI could actually help these things.

It could help the applicants go through the process of filling out their applications and saying, hey, this is where you should drill down, this is where you should clarify. They can look at all previous published applications and say, this is how you need to tailor it. You can probably make it 85% the same and then based on your design or your location or whatever, make some modifications. And then the regulator can do the same and say, look, here's an application that came in, highlight all the areas I need to drill down or show me the things that are different from every other nuclear fuel transport application we've ever seen. Are they using the rail infrastructure? Are they using the national highway infrastructure to move the fuel? AI can just automate all these things that take armies of consultants, months or years to do can be brought down into being minutes or hours.

I'm not sure how big of a company, but I think potentially there's a very large company to be built there. If our check sizes were in the billions, not just the millions, which we're in Jason Horowitz, you never know, how would our strategy change? I think you need even more than just billions. It's tens of billions, hundreds of billions.

It's such a tough question. I think there's tons of policy around this as well. I hesitate to say we should look to how China has built up their grid, but I think the elephant in the room is like in the early 2000s they were experiencing blackouts. Like this was a very common thing, this was horrific. But now I think they've like forexed their grid in the last couple of decades. And so the way they've done this is by basically deploying generation capacity, building hydro, building massive storage facilities, of course, BYD, CATL, like tons of battery production.

They built HVDCs, these large sort of high voltage transmission lines. I would do all of that. I mean, I would look to all of it. And whether or not it's a good investment or not is, you know, look at a number of factors, but like it is much more of the infrastructure projects, the glue that connects the stuff together. I think our lens today is looking at these technologies that enable a lot of this more flexible grid, but I think there's also going to be these technologies that enable a lot of this more flexible grid.

But I think there's also going to be these large infrastructure, the webbing in between it. I think software is a big piece of it that we're spending a lot of time on looking at. But I think how is ERCOT going to be connected to the rest of the grid? Or how are we going to move that to New York or something like that. But China's done this effectively. And I think if you had hundreds of billions of dollars spent or trillions of dollars, what does the grid look like? It's going to be a lot more interconnected. Maybe another answer to your question or a different answer to your question is I think the energy industry is probably

medium to long term, one of the most prime spots to deploy physical autonomy. So when you think about applications of robotics, whether it's humanoids or more kind of task-specific robotics, we're talking about dangerous jobs often. We're talking about manufacturing jobs to build up, whether it's small-scale reactors or batteries or whatever. So, I don't know what the shape of the company is here and how reliant it would be on some of the robot learning work that's happening. But I do think that as we scale our energy capacity, there's going to be a

pretty massive application of industrial robotics to the energy sector. I made this joke, I think, once to Ryan, or maybe I made it at the American Dynamism Summit, that we survived the greatest nuclear disaster in US history just recently when we finished the Vogel 3 and 4 reactors and let all those employees go back to other jobs. So I think if we were writing a billion dollar check into power, what we would do is we would just give jobs to those people and not let them go back

to whatever it was they were doing before they were building nuclear reactors. And we would just really work to streamline the process to make sure that we go build Vogel 5, 6, 7, 8, 9, 10, and all these different states around the country and just put these people to work for the next decade plus building reactors. And that, to me, was the greatest miss and probably the greatest opportunity. I don't think it's particularly our opportunity, but I do think it's an opportunity for somebody to do.

Labor broadly like this is a little tangential, but when Microsoft was building their new data center in Georgia last year, at one point they had on staff at Microsoft or on contract, more than a third of the electricians in the state of Georgia. And they basically maxed out. They hired every single electrician that they possibly could.

So I don't think it applies to just electricians. It's due to your point like the cement mixers, it's the mechanical engineers, it's the nuclear engineers. Like, how do we actually train the next generation energy workforce that we're going to need to modernize the grid is a big, big challenge. These are very high paying jobs where you don't have to check your email on your phone at 9pm at night after you go home from work. They're high paying, it's good exercise jobs, and they're relatively low stress. These are good jobs for people. I think one more comment on this, and it's more of an industrial policy question, is we're talking about specific things, but oftentimes that just moves the bottleneck. We could solve

a lot of the grid connection hookup, we could build a lot of transmission lines, but then we need more transformers. And to build more transformers, you need more electric steel. You could do the same sort of equation for much of the supply chain. Batteries, another good example, is then, okay, cool, we're building cells, but then we also need active materials, and we need to mine, and things like that. And so, you know, it's sort of a whole effort of examining

sort of our infrastructure and our supply chains, and you need to do all of it. And I think that's a complicated question, that's an expensive question. Any last reflections? I think the last thing I would say is that people underestimate how critical and important a resilient, reliable, dispatchable

electrical grid is to our national security. You cannot have national defense and national security without reliable electricity. It's just not possible. So all these things we're talking about are about the upside about capitalizing on AI compute, the switch to electric vehicles and our insatiable thirst for electricity. But at a fundamental level, there is no safety, there is no national defense, there is no national security without a reliable electrical grid.

To reiterate on that, people want reliable, cheap, and clean power in that order. And I think that's largely how we should think about our energy policy. And I think that's sort of the direction we're going. And I think we need to make sure we stay aligned with that. That's an exciting note to wrap on. David, Ryan, Aaron, thanks so much for coming on the podcast. Thank you. Thank you.

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