Catalyst with Shayle Kann - When to colocate data centers with generation

Episode Date: September 12, 2025

The idea of colocating data centers with behind-the-meter generation is picking up steam, including large projects in Memphis, Texas, and Utah developing significant on-site capacity, mostly from combined-cycle gas plants. The main argument is speed to power. Building your own generation allows data centers to sidestep the challenges involved in grid upgrades, transmission, and permitting.  But when does a good idea jump the shark? In this episode, Shayle brings Brian Janous back on the show to talk about why a data center might not want to colocate generation. Brian is co-founder and chief commercial officer at data center developer Cloverleaf Infrastructure. He makes the case for relying on alternatives instead, like batteries, grid-enhancing technologies (GETs), advanced conductors, and a range of other non-generation options to take advantage of untapped capacity in the existing grid. Shayle and Brian cover topics like: Whether 24/7 loads actually needs 24/7 power and why utilities solve for peaks, not 24/7 needs  The constraints of colocation, including gas constraints, added complexity and cost, and permitting challenges The complexity of multiple-party solutions involving VPPs, GETs, and other alternatives vs. the relative simplicity of single-party generation  Why both Shayle and Brian are skeptical of on-site nuclear Resources: Catalyst: The case for colocating data centers and generation   Latitude Media: AEP, Dominion argue there’s no such thing as ‘isolated’ colocation for data centers   Catalyst: Explaining the ‘Watt-Bit Spread’   Catalyst: The potential for flexible data centers   Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor. Catalyst is brought to you by Anza, a solar and energy storage development and procurement platform helping clients make optimal decisions, saving significant time, money, and reducing risk. Subscribers instantly access pricing, product, and supplier data. Learn more at ⁠go.anzarenewables.com/latitude⁠. Catalyst is supported by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform by visiting ⁠energyhub.com⁠. Catalyst is brought to you by Antenna Group, the public relations and strategic marketing agency of choice for climate and energy leaders. If you're a startup, investor, or global corporation that's looking to tell your climate story, demonstrate your impact, or accelerate your growth, Antenna Group's team of industry insiders is ready to help. Learn more at ⁠antennagroup.com⁠.

Latitude Media covering the new frontiers of the energy transition. I'm Shell Kong, and this is Catalyst. I don't think there's a credible argument for behind-the-meter nuclear at a data center in the near future. And by near future, I mean, the next couple of decades. We're just saying not on site. I mean, that's the distinction I want to make here. We are going to, and I think we should build a lot of new nuclear in the U.S. I just don't know why it needs to be co-located with data centers.

I don't think it does, because it doesn't solve all those problems that you're talking about. Coming up, near, far, wherever you are, you'll be powering my data center. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more

at energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand-new podcast, Critical Capital Capital. Each episode, I talk with people deploying capital, shaping policy, and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fishtank PR, an award-winning PR firm focused on climate and energy tech, renewables, and sustainability. FishTink is known for generating prominent and effective media coverage for the brands they work with.

If you want a PR partner that's thoughtful, shoots straight, and gets results, you'll like Fish Tank PR. To learn more about Fish Tank's approach, visit fish tankpr.com. That's F-I-S-C-H-Fish-Tankpr.com. I'm Shale Khan. I invest in early-stage companies at Energy Impact Partners. Welcome. All right.

So here's a thing that often happens, a cycle that plays out again and again and again. Here are the conditions precedent to this cycle. there has to be a hot market with lots of activity, lots of investment, and plenty of hype. And then a trend begins. A few players start to do something new. It catches on. It gains steam. And at some point, it kind of jumps the shark.

And then everyone starts talking about doing that thing or just doing it. But the original rationale for it has kind of been lost. And people stop questioning exactly why it makes sense. I've been wondering whether that's starting to happen lately in a particular part of data center world. specifically the idea of pairing on-site power generation with data centers behind the meter. There are so many announcements about this right now ranging from it actually happening, for example, the XAI data center that is actually running on generators,

or there's a big meta project in Louisiana that's going to build a bunch of new natural gas, two very speculative things, which is where I would put a bunch of the announcements around new nuclear getting co-located with data centers in various locations. We have talked about this a little bit. before in a different context with Sheldon Kimber, who's the CEO of Intersect Power, which is adopting a strategy, at least in part, of co-locating wind, solar, storage, and some natural gas with data centers they're building, especially in Texas.

But I was having this conversation about when it does and doesn't make sense to put generation on site a couple of weeks ago with my friend Brian Janice. You have heard Brian on the show before. He's the co-founder of Cloverleaf Infrastructure. He's the former head of energy at Microsoft, and he thinks about this stuff. day in and day out. Anyway, it was a good conversation, so I thought we would do it again in front of mics. So with no further ado, here's Brian. Brian, welcome back. Thank you. Appreciate you having me again. Okay, first thing, when you're developing a new data center, campus, land, whatever, when you're

developing a new data center, what are the basic requirements from a power perspective? And there are a bunch of other requirements? What are the basic requirements that you have from a power perspective? what has to be true? What has to be true is you still have to have a very high level of availability of power. I mean, outside of crypto operations, any sort of modern, whether it's an AI data center or a cloud data center, still necessitates a significantly high availability of power, in part because the cap-ex costs associated with the infrastructure you're putting in there so high. You want to have high utilization, plus the services that you're serving out of that,

whether it's AI-infrancing or some sort of traditional cloud application, still requires a high-level availability. The one area that comes up a lot in this discussion is training and say, does this training, can that act a little bit more as a batch workload? And it's true by definition it can. And at the same time, nobody wants to build a $20 billion training model and just turn on and off every time the electricity starts to cut out. Well, isn't it true that my understanding from having now

seen a few actual load profiles from these data centers is that actually it is kind of operated in batch. Like independently it is. There's spiky load profiles, actually, right? But it's sort of a different question as to whether there can be peaks and valleys in the load profile versus whether there are forced peaks and valleys as a function of the electricity availability, right? Exactly.

Yes, exactly. And I was talking to a big AI operator about this either day. and their response to this was, we don't want any surprises. Like, if we need to go down, and it was more of like if we need to go down, we'd rather go down for a week than go down for a few hours every afternoon. Like, we'd rather just know that it's coming and plan for it, but to be, like, completely dispatchable on an unplanned basis would likely be more problematic.

Okay, and so then the basic paradigm is connect the day, the center to the grid. The grid provides, generally speaking, high reliability, not quite high enough reliability to what you want. So you also put a UPS on site, which just bridges seconds to minutes of power outages, basically. And then you generally put backup generators on site as well, which are supposed to fill in the blanks where you have longer outages. So that architecture, grid connection, UPS, backup gen set. That's the kind of basic, like, dominant paradigm, right? Correct.

Yeah. Particularly for your traditional cloud data centers, you'll see that. I think with some of the AI training sites, we've seen more of a move away from backup generators. Some of that is, in part because of that bad change. Like, they could handle an outage if it ever happened. And keep in mind, like, the outages we're talking about that the generators there to protect are pretty rare. Because we're talking about these sites being. connected at very high voltages on the transmission system.

So, you know, we're talking about like, you know, Winterstorm Uri's sort of events that you're really concerned about. So in that case, both for that reason, and I think out of necessity, because especially we're talking about these gigawatt scale sites we're seeing, you're not getting diesel generators permitted at that sort of scale anyway. Though didn't XAI that, that Colossus site, they just kind of did it, right? Anyway. They just kind of did it.

It still wasn't at the scale of, you know, even recently the sites that OpenAI has been talking about that was recently announced or with Oracle, like just today, really, or the last week we've seen. You know, those were, you know, 1.3 gigawatts in Port Washington, Wisconsin that I'm quite familiar with. Another 1.4 gigawatts, I believe, in Abilene. I think for those kind of sites, it would be very difficult to permit that scale of diesel generators in most markets. Right. Okay, but I guess the first point I wanted to make here is that, because what we're going to talk about here is this concept of co-locating generation with data centers that seems to be fairly hypey at the moment. But I wanted to first clarify by saying actually a lot of data centers, most data centers, certainly all cloud data centers do have on-site generation already. It's just backup generation. And so when we talk about the things like demand response and making data centers flexible and so on, you know, there is a existing generation on site that could theoretically serve that in a lot of data centers, I think the limitation to that tends to be an air permit one, right? You have limits to how much you can operate those generators, if they're diesel anyway. That's right. Yeah. And we were always

having to look at, you know, as we would build campuses larger and larger, we're sort of eating into those emissions allocations. And so you end up with less runtime, less ability to test those generators, you know, to keep them operational for emergency purposes. Okay. So, that's the first clarification. There is generation on site, but it's kind of limited. It's expensive. It's dirty, generally speaking. But the thing that people are talking about a lot more now, and you see these announcements coming, I think, from left, right and center is this concept of co-locating generation that's not intended to be backup generation. It's intended to either be, it's intended to be prime power, either to entirely serve the load of the data center, though I think

that might be, you tell me what you think. I think that's more of a mirage than anything else, more likely sitting there operating 24-7 or as close to 24-7 as it can alongside a grid connection, ultimately. So can you straw man for me the argument for when you might actually want to do that? Yeah, I mean, the argument is that if I go to utility and they tell me it's going to be five to seven years to get the connection at the scale I want, then maybe it's faster for me to just build my own generation. So that's the argument. And it's sort of further bolstered by the idea that, which I actually think is a false idea, but an idea that because I'm putting a 24-7 load on the grid, I need to match it with a 24-7 generation source.

And you hear that a lot out of the current administration about, well, wind and solar can't help us do what we need to do because they're intermittent. So we need to have lots of base load generators because we need to connect these data centers and we need to keep the lights on. So that's the other part of the argument that I need to match the output of this resource with, what I need to input into my data center. Okay, so two-part argument there that you made. The first part is time to power, speed to power, which is the term that has overtaken the industry. That, I think, intuitively makes sense,

and you do hear about these extraordinarily long interconnection times. The interconnection cues are remarkably clogged. There are hundreds of gigawatts of theoretical data centers sitting in the load interconnection queue of some utilities. And so, of course, it makes intuitive sense, that if you have the capacity to come online earlier via bringing your own generation, some of these data center operators would certainly do that.

Why do you think that that is, at least to some degree, a mirage? Well, I think there's a number of reasons why. One, it assumes that while there's congestion on the electricity grid, there's not on the gas grid. And that's just not true. Like everything, there are certainly places I can go to get abundance amount of gas to supply a data center, but it's not true universally.

It's not true that I can just always stick a pipe in the ground and get unlimited amount of gas to build data center. And we should clarify that these generators folks are building, at least today, it's all gas, basically. It's not all gas. We should talk about some of the other things people are talking about, too, but most of it is gas. Most of it's gas, yes.

So assuming what they're talking about in any sort of off-grid consideration today, at least you've wanted to do it in the 2030s or 2020s, it's going to be gas. So there are congested, lots of congested sparse, Quad-Sutti gas grid. So that's problem number one. Obviously, we have lead time issues with the generators themselves, which has been much discussed. You also have to deal with the integration issues into the data center itself. So data centers really, I mean, anyone who's designing a data

center has always designed for two sources of power, right? You have the grid source and then you had your backup generator source. You could island, you know, people talk about data centers. becoming microgrids, data centers have always been microgrids. They've always been inside to do that. And so getting to the level of redundancy that you would want in that system would require a significant overbuild of that system to meet the standard specification of any typical data center engineer. And then when you think about that overbuild,

then you get into the cost element. Because actually one of the arguments that made for off-grid is that, well, I don't have to pay all this T&D, so it's going to be cheaper. for me to just have my own islanded system. And almost no case would that ever be true, because you would overbuild that system to meet the level of reliability.

And we're not even getting it to the level of reliability related to the intermittency sometimes of gas and the idea that you could actually get a firm gas connection, but we'll put that aside. But let's say you have a data center that's 100 megawatts of IT. You've got a PUE of, let's say, 1.2, so now I'm at 120 megawatts of generation. And now I'm also thinking about having some sort of N plus redundancy.

So I'm going to put in another unit, depending on the size of the units, maybe I'm putting in another 20 megawatts or 30 megawatts of generation on top of that. So now I'm at 150 megawatts. And now I start to operate the data center. Well, most data centers significantly underutilize their peak, theoretical peak capacity. So you might only be running that thing at 90 megawatts, you know, on average. Or less, right?

I mean, on a 24-7 basis, right? Like, I just was talking to a data center operator who said that their average actual utilization relative to nameplate capacity is like 40 to 50 percent over the course of a year. And so, you know, you can quickly do the math on if I'm paying $2,700 to KW just roughly for that generation, and I'm having to overbuild it by, you know, maybe even 2X, right? The per kilowatt-hour cost of that system is extraordinarily high. I mean, extraordinarily high. And if you look at it in a place like Texas, for instance,

where the average price for electricity on any given day is actually pretty low. Like the real-time price may be sitting around $20 a megawatt hour. So you go off-grid in Texas, and you're paying somewhere between $150 to $200 a megawatt hour 24-7, and your neighboring data center connected to the grid is paying $20 for that same power. Now, I'm leaving out the T&D, you know, I mean, there's stuff on top of that. But, you know, the average cost, electricity in the market, Texas is pretty cheap most of the time. And the only argument you know,

you ever had for building something like a baseload generator Texas is that sometimes the price would go to $5,000 or $9,000 a megawatt hour. But with the massive amounts of solar and storage coming out on the grid, which you probably talked about in another show, we're not seeing those spikes anymore. We're not seeing the scarcity pricing. Yeah, we haven't talked about it that much. Volatility in ERCOT is down, which is interesting. It's way down. Yeah, it's way down. So you don't have the scarcity pricing anymore, which is effectively sort of the proxy for a capacity market there, is that, you know, you don't have a capacity payment, but every once in a while, you know, if you're dispatchable or 24-7 running, you get these really high rent payments.

But if those don't exist anymore, which is not to say they couldn't come back, but they've certainly been decimated the last couple years with solar and storage. It makes that economic argument even harder. Okay, so now I'm going to bring your term back to you, though, of course. You coined the term the bitwatt spread. And the core principle, the bit watt spread, is you have to understand that actually the cost of electricity is sort of not important in the context of the revenue and earnings you're going to get off of operating a data center. So assuming that that remains true here, yes, maybe it is not actually cheaper to build your own generation. But if it does get you faster time to power, that probably is a trade you would make, right, just on a pure economic basis.

It probably is. in a lot of cases you would. Yeah. So it's not a deal killer that you're paying that much for power. It's just something you have to take into consideration, that you're not getting necessarily an economic benefit for doing that, and you're still competing with others that might be able to get grid access elsewhere, and they're going to obviously end up with much better margins than you.

Still, it may not stop you from doing it because you'd rather have the revenue versus not have it. And that's generally the argument that's made in the off-grid scenario is, well, I can't get the power anyway, so I might as well do it this way. Now, I tend to, and we can kind of get into sort of what are some of the strategies that would actually get you that power, and I tend to be maybe more optimistic about the availability of grid power than others. It's almost like a lot of the industry just throw out their hands and like, well, this is hard with the utility, so I'm just kind of go, you know, kind of take my ball and go home. I think that's the key difference between, at least how I've heard you articulate that you're thinking.

here and others, which is that I think the assumption otherwise is that necessity is the mother of invention and there is necessity in the sense that like we're just, we can't find sites where you can get connected with a large enough data center fast enough. And so even if it is suboptimal, even if you're going to sacrifice a little bit of reliability or you need to overbuild and you need to pay more, even if all those things are true, we're still going to have to do it if we're going to build out the data center capacity that everybody wants and maybe needs. I think your view is a little different in that you actually don't think, you think there is more headroom in interconnection capacity on a reasonable time frame on the grid. Is that right?

Do I have characterized your view, right? Yes, that is my view. And why do you think people are missing that? A couple of things. First of all, and it only took us, what, 20 minutes maybe into this to mention Tyler Norris's name. So Tyler's paper about flexibility, which everyone's talking about and right. Please. Actually, just with Tyler this week talking about this. Tyler's paper does a great job articulating my perspective, which is the problem we're trying to solve here is not that I need a 24-7 generation

to match a 24-7 load. It's that I need to solve for the summer peaks and the winter system peaks in order to connect a load. That's what a utility does. And I think it's a, I think there's a misunderstanding that when you go to utility and say, okay, where's the power going to come from? the utility goes and solves for 8,760 hours, where's your power going to come from? That's not what they do.

They look at, would the incremental addition of this load on the system cause me to exceed what I can supply on the hottest summer day and the coldest winter morning? So, first of all, it's a capacity problem, not an energy problem. And so flexibility, being able to identify sources where we can, whether it's on the customer side of the meter or the utility side of the major, unlock more flexibility and unlock more capacity on that system is really the goal. The second part is, in addition to the time element, there's also this sort of space element.

I mean, the way to think about the electric grid is it's about moving power through space and time, right? You generate it at a particular time. You move it through space with transmission lines. You can move it through time with storage and with other types of flexibility. And so when you think about the orchestration of that system, the argument that you're hearing somewhat from the current administration is that, well, we can't possibly do it without lots more baseload generation, all the while while they're canceling transmission lines, like the Graham Belt project. But the transmission line itself is a substitution for baseload power, because if you can move more power over more space, you're reducing the need to have to generate

that power on the other end of that congestion. So in that sense, transmission and generation are sort of substitutionary. And storage is the same way. If I come, company like Form Energy is really successful at scaling up 120 plus hour batteries, you actually need less transmission because you can put batteries on those sides of those congested lines and store it for time. So this whole notion that we need X, fill in the blank tech, you know, I need combined cycle plants running very high utilization to supply data centers just isn't true because it just, it's not, you have to look at that in the context of what are all the other things that we have on the system that are able to meet that same need, but just in some

different combination of space and time. And so for that reason, I just, I think there are ways that we can solve this problem in terms of getting more out of the existing grid, and that includes things like grid enhancing technologies. It includes using varying durations of storage to help alleviate transmission connection. It includes advanced conductors. There's a lot of tools that we have. virtual power plants, you know, I mean, I can keep going on and on about there's all these different things we have. The problem is, I think, for most people, they boil it down to this simplistic, you know, 24-7 needs 24-7 versus I can orchestrate all these things and, in essence, replicate that 24-7 output.

I just did it with a dozen different things rather than one thing, which my view is not only is that going to be faster because a lot of these things already exist or are relatively easy to deploy, it's also going to be cheaper because there's less overall infrastructure I have to build, and it's going to end up being more sustainable. Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it from the control room to the living room.

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We're living through a profound economic shift, and energy sits at the center of all of it, Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers, but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital, as I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts.

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We've talked about this a little bit before, and I'm curious because it's evolving fast. What's your view of how the model for that evolves? I mean, I think the other thing that is appealing about the, I'm just going to put a generator on site at the data center is that you have a single agent, right? Whoever's developing the data center says, okay, I'm going to go buy a bunch of gas turbines, and I'm going to put them on site,

and that's going to reduce my load to the grid, and it's all in my control. Whereas some of the things that you're talking about, it's a multi-party problem, right? like grid enhancing technologies have to be deployed by the utility. There's nobody else to do it. So it involves more coordination. We're starting to see some of these sort of interesting novel programs emerge where utilities

say if you're a large load and you want to get interconnected, you can bring your own generation, bring your own capacity, I guess, and they can include batteries in that or things like that. But what are you seeing happen? Is there like, is there a programmatic, scalable way to use the mixture of resources that you're talking about, as opposed to it all being these unique snowflakey bilateral type of deals? Yeah, look, to be honest, this is where my argument maybe falls apart, right? Because the orchestration of this is the real challenge. Like, in theory, like what I'm describing, is faster, cheaper, and more sustainable.

And I do believe we can add a lot of capacity to the existing grid. And yet, I have to orchestrate this behind 3,000 different utilities in the United States and multiple different RTOs with different rules about how they accredit capacity. And so this orchestration opportunity really is, I think, the huge opportunity to end up in a world where we actually do connect a lot more of the stuff to the grid rather than end up in a world where everything is bifurcated behind the meter,

which I think is a worse outcome. And so it does require a lot of innovation. And some of that is just sort of boots on the ground work. And that's sort of what Cloverleaf does. We go work with utilities to try to figure, out, you know, on a case-by-case basis, how do we implement these things and how do we get these load connected faster? But then there's other pieces like, you know, doing the actual grid analytics, which there's numerous companies we could talk about that are doing that sort

of thing, like Erenia or folks that are trying to come up with new business models, like great care around how you, you know, implement these things and many others. So I'm encouraged by a lot of folks are sort of honing in on this problem and trying to figure out, you know, how do we reduce the friction here? How do we help utilities to understand, you know, hey, here's a better way to do this that would enable more rapid load growth in your system where you're not losing out to these sort of off-grid competitors, if you will? The other version of an on-site generation thesis that I've seen that, I don't know, on its face seems somewhat logical to me is it's not about off-grid.

It's not about like, okay, my grid connection is coming in five years. I'm going to put generation on site and go off-grid until the grid connection arrives necessarily. It's about reducing what you look like to the grid from an interconnect capacity. So, like, if you want to cite a 500-meagwatt data center and the utility says, I've got 300 megawatts for you at this site, throw probably, more than 200 megawatts on site, again, for redundancy purposes, but throw some amount of generation on site and operate it such that you never pull more than your maximum interconnect capacity on the grid, and then you unlock a site that is at a scale smaller than what you otherwise would

have been able to do. Does that have legs to you? That does, yes, because what you're there doing in that case is you're already starting to work on that orchestration with the utility. Now, the question in that scenario is putting that, generation behind your meter, the fastest most efficient way to do that orchestration, you know, or does, is putting a long-duration battery on the utility side of the meter, solve the same thing? Or does... It's sort of, again, yeah, it's a question of like, what is optimal to which I'm pretty sure I know the answer versus, like, what is fastest and easiest to do.

Yeah. And in some ways, you know, the less infrastructure you have to build, the faster it's going to be, right? So, you know, what the argument you would make is, well, the fastest way to do it is through like a virtual demand response sort of program. Like take a bunch of loads that would agree to get off during certain hours in exchange for some price. Like you're not building anything there. You're just orchestrating, you know, a VPP. So which we should just pause on that for one second because it's an interesting concept

and I've started to hear people talking about it a little bit. As far as I know, nobody has actually implemented this wherein you say that the concept here is, let's keep with my example. I want to put a 500 megawatt data center in a given location. The utility says I've got 300. megawatts of capacity that is deliverable to that location. But if you can get 200 megawatts of demand response or whatever the number is, you can aggregate enough load that can shed itself within that deliverable zone. So there's like a geographic constraint to it. Then we'll count that

as capacity. It'll be counted the same as if you would put a generator that's going to just shave your peak onsite at the data center, which I think is a good idea. There's a lot of nuance to it, getting capacity accreditation for demand response at that level is nuanced and it's geographically constrained and all of that. Yeah. You have to understand the rules. And we are pretty close to doing that on a couple of projects. So we've been working really closely with Volta and some others on this concept and working

to convince utilities and grid operators of this approach. The first pushback you get from, especially vertically integrated utilities as well, you know, if I do a VPP, then I'm not building anything. right? I want rate base. Our counter argument to that is that if you can utilize that VPP as the bridging solution, you end up getting to connect that load sooner. You get that load for life and you do get to ultimately build against that load long term. And if you really help the utility see, this isn't about like, you know, not getting to build, you know, integrate any rate base. It's about meeting the customer need as quickly as possible with the least amount of friction. So that's what I like.

about that approach. So it does take some work to get it, and you're right, no one's done it at any real scale yet. But I think we're going to see it pretty soon. Okay, so I took us on a little bit of a tangent there, but you were talking about the various ways in which you can do the, something reduces the interconnect limit that you require for the data center, a virtual power plant being one instantiation of that, a long-duration battery and the transmission system being another instantiation of that on-site generation being a third or on-site storage, I suppose, for that matter. Right. Yeah, any of those could work. And so really that goes back to that orchestration question of, like, what is the right type of resource that could be orchestrated together to meet the resource

adequacy requirements for the interconnection? And that could be any number of different things. And so ideally, you would want to have a tool where you could take any point of interconnection on the grid and any amount of load you wanted to pull off that grid and it would spit out here's a stack of capacity, least cost to most cost, that would meet that time duration that you're aiming for, right? That's what the answer you want every time you go to do a point of interconnect. Yeah, and in the ideal world, that piece of magic software that does that thing is used and trusted by both the utility.

That's right, because it's got to be used to actually say yes, by the utility, by the grid operator. That stack is all accredited capacity. the box, you can connect at that load level. Right. Right. I look forward to that day when that is possible. Me too. When you find that company that has nailed that perfectly, please let me know because we will be their first customer. Yeah. I think before we go, I mean, we talked about most of the different types of resources people are talking about putting behind the meter.

We obviously talked a lot about natural gas. We talked about batteries to some extent. What do you think about the sort of like on-site wind solar combo stuff? You see some of this happening in like West Texas because there's space and Goodwin and solar resources. Yeah, I think you can do it to a certain degree and you definitely need a lot of space. So you take it like what what intersect is doing, I suppose maybe the best example. I've talked to Sheldon about this. And I think it does require certain parameters of space. And that's, you're not going to be able to do that everywhere. So I do think that is going to meet part of the demand of the market and you're seeing some of these plans through these massive campuses. There's the one in Amarillo now that's being talked about is like 11 gigawatts

and all these things. Is that the Fermi one? Yeah, I think that's the Fermi one. So that one's interesting because it also includes the next technology I was going to talk about, which is in theory. It includes a bunch of new. Yeah, exactly. So I mean, that's great. And I mean, clearly there's demand for that. But just like everything we're talking about, there's no like silver bullet. There's no, So that's still going to be a relatively small percentage of the overall market because we can't put everything in West Texas. Right. We still are going to have the tendency to want to be closer to major metros where that sort of land availability is going to be really challenging, especially when we start talking about gigawatt and multi-gagawatt scale.

There just aren't that many sites that can do that. Yeah. Okay. So just talking about nuclear for a second because there have been, for me is a good example. That's the company that was founded by Rick Perry, former Secretary of State, or sorry, Secretary of Energy and Governor of Texas. They went public in it, or they're going public in a weird transaction right now. But yeah, they're trying to build this like mega, mega data center campus that includes natural gas, but in the future will include nuclear. But they're not the only one.

There have been a few other announcements that, you know, I saw one of the nuclear microreactor companies announced like a framework deal with a data center operator with a Kolo company. I know Oaklow's got some kind of partnership with Switch. Here's the thing, let me, I'll just jump ahead of this one. As we've explained the logic of putting on-site generation, I don't know that any of it holds for new nuclear because you don't get the faster time to power. You're obviously not building that generation before you can get the interconnect, right? Like unless your interconnect is, I mean, you've talked about like a,

what was it, London or somewhere where he's like a 2038 interconnect timeline? Yes, exactly. All right, so maybe in London, but most places you can get interconnected faster than you can build the new nuclear reactor. I should say I'm bullish on nuclear in the U.S. I just, I'm realistic about the timeline. So it's not a time to power thing. It's probably, it's almost definitely not cheaper power, especially in the early days. And you presumably are already going to have your full grid interconnection for the full capacity of the data center by the time you get there. So I kind of don't understand the logic.

It is power dense. Like, you can do it in theory where you don't have land, but I just kind of don't understand how it makes sense. I don't think there's a credible argument for behind-the-meter-nuclear at a data center in the near future. And by near future, I mean the next couple of decades. Part of the problem you're going to have, too, is if you're talking about a brand-new unit, like a new type of generator unit, like the availability questions are going to be enormous, right? So you're going to want to see that thing operate for 10 years,

before you say, I've got enough data to say, I'm going to plug in my $20 billion, $50 billion data center into that machine. So it's just hard to imagine that that is going to have any type of uptake, even in the 2030s. Like I just don't see, like, and I'm with you. Like I am bullish some form of new nuclear coming to market. We're just saying not on site.

I mean, that's the distinction I want to make here. It's like we are going to, and I think we should build a lot of new nuclear in the US. I just don't know why it needs to. to be co-located with data centers. No, I don't think it does, because it doesn't solve all those problems that you're talking about. Like, it's not meeting that sort of felt need of data centers today. And maybe we're still in the same predicament in the mid-2030s.

I don't think we will be. But I agree. I don't see that you're going to have a huge uptake of that. All right, Brian, fun, as always, to talk to you about this stuff. I appreciate you doing it in front of a mic. And I'm sure we will have an excuse to do it again pretty soon. I hope so. It's always fun.

Shel. Thanks a lot. Brian Janice is the co-founder of Cloverleaf Infrastructure. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf. Mixing and theme song by Sean Marquan.

Stephen Lacey is our executive editor. I'm Shail Khan, and this is Catalyst.