With Laurent's segle End from London and Gerard Reed from Berlin. This is redefining.
Energy today on reilli if an energy job, we're going to talk about broken grids and how they can cope with the lord growth of data centers.
Absolutely very topical given what's happened in Spain and also what happened to heat throw and on whatever grids, we realize the importance of them right.
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Back to the show so Jab in order to talk about bockn grids and how to fix them, we have an extraordinary guest.
Yeah, Jeremy Kent. I've known this man a couple of years at this point in time, and he's brilliant. He's the founder, CEO, and chairman of a company in the US called One Power, where he leads the company's vision and growth. And he's really a pioneer in the whole industrial power sector. And what I mean by that is he's bringing renewable energy to new industry. Really, you know, data centers and companies that are looking to electrify their processes.
But he's doing it very fast, he sure is.
And he's taken responsibility of everything from transformer all the way down.
To meet Let's listen to Jeremy.
Jeremy's great to have you on the show.
Thanks Jardan and Laura. Nice to say me here.
Maybe I'll kick off by just asking really about the energy system in the US, and just we're hearing a huge amount that power demand is going up. Can't build a grid too much renewables. It all sounds like a bit of a mess, so maybe just give us your sense of it all.
The American power grid is the largest machine ever built in the history of the world, and right now that machine is seeing new use cases, new demand, new problems, and it's not able to fix itself. It's not able to fix itself because of economic reasons, because of engineering reasons, because of policy reasons. And so now you have an American grid that isn't ready for the next iteration of
American industrial revolution. And as we see new mega loads popping in the grid to give us the things that we like to use, that grid is on a path to fail if something doesn't change. And so that affects all of the new loads, and that affects all of the existing loads. And that's what we're watching and that's what we're focused on.
Can you dig into that a little bit more when you say that, right, So just talk what the change is going on. So what we're saying is electricity demand is going up? Why is it going up? And then can be related to that, talk a little bit about the grid across the US and distresses that you see there.
Yeah, So if you think about the machine that is the grid, that machine was based around the original big loads in the early nineteen hundreds. It was based around refineries, steel plants, chemical plants, these big things that may be really big, like one hundred megawatts or some of the biggest refineries in the world at like three hundred megawatts, And that was the big loads on the grid, and then there are a bunch of smaller loads that worked
around the system. Now, all of a sudden, you're seeing a whole new industrial revolution with data centers, with bitcoin mining, with big industrial greenhouses, with big additive manufacturing where you're dropping in these new loads that are bigger than most refineries all over the place. You're seeing a grid that was never built to have a gigawat of new load in Columbus, Ohio that's now all of a sudden seeing that,
and it can pop up super quick. And so what you're seeing is it's forcing stress on the whole system. How much can you move power from the existing power
plants to those loads? How much can that transmission system deal with You're seeing lines that are one hundred years old in the transmission system that are now being stressed to their max and haven't been stressed to their max in the entire time, And now all of a sudden, for economic reasons, you have utilities that are so used to giving out dividends that are having a hard time
investing in that. So they're saying, it's hard for us to build anything quick, and we can't do that without losing our credit rating because we don't have enough of a reserve built up because we never thought this was coming. And so for the first time in one hundred years in the power grid, you're seeing this astronomical change in the demand and the inability of that system that is coasted for one hundred years trying to serve that demand.
And it's going to cost everybody because when the industrials suffer, which our twenty six percent of the actual energy usage today or electricity usage today and rapidly growing, is their percentage start stressing the grid and putting more load on the grid. That has an effect on everybody else, all the way down to your home.
I like to word stress because we're all also seeing that on the supply chain. When we talk two equipment manufacturers and they all say, oh my god, I can't deliver anything before two thirty. So why we were very interested to have you on the show is that, in fact you are building those new load centers. What have
you witnessed the past two or three years? And I don't even want to enter in the rabbit hole of tariffs and some which may add another layer of complexity, But from an induscal point of view, how do you assess the supply chain right now.
The problem with the supply chain is that everybody is so used to the way they used to do things that nobody is adapting to try to solve supply chain problems like you would in any other industry. Right now, you have utilities who say, here are the only six facilities we buy breakers from. And now when demand goes up, those six facilities are stressed, and utilities aren't saying, let's
go quickly add six more. They're saying, well, we'll just wait for those breakers to come out of those facilities that we know and trust. You're seeing that with transformers. I've had the privilege of touring some of the largest transformer factories in the world, and it is absolutely amazing to see how much they're stuck in the nineteen hundreds. Every single transformer coming down that line is different, every single transformer is custom. It's rare to get an order
for two or three of the same thing. And so these factories have adapted to all of this bespoke nature where they had the luxury of time and no demand before, and they weren't trying to grow fast, and so they could be bespoke in a world that you're seeing now with new load popping up at the scale we're seeing it, bespoke doesn't work. The entire system falls apart. And so what we're actively involved in is working with suppliers to get into mass produced, standardized things that are good enough.
You can get the nice custom thing when you have the luxury of time. Right now, the American grid doesn't have the luxury of time. The American grid needs solutions that are repeatable and scalable quickly now. And the easiest way to do that is with all the load coming off and going on the grid. So at all of the generation points and all the load points, you can start standardizing like crazy. If the whole system's willing to change, you just have to get it to change.
So, Jeremy, how do you get it to change? And listen, at the end of the day year at a CEO of an energy services business, so as you just gave that example there of the utilities just always going back to their old suppliers, and yeah, how do you get it to change?
Basically, it's a lot of discipline and it's a lot of changing the way we think about things. What we said, Gerard is we need one standard design with as few different parts as possible that works from the widest range of things possible. We only buy a thirty megawat transformer for our one thirty eight kV to thirty four or five kV systems. If you have a twenty megawatt problem, you're getting a thirty megawatt solution from us. If you have a thirty five megawatt problem, you're getting a sixty
megawatt solution for us. I've only got one block, and that block is thirty megawats. And it forces a lot of awkward conversations when the normal engineer for the customer goes, well, but we only need forty megawatts, and you go, great, that means sixty And they go, well, well, couldn't you adapt this design? I really like blank? And you go, I'm sure you do like blank. That's not our standard part. Our standard part I can have here on a much
quicker schedule. I can mass produce my standard part with various factories around the world. I can now, all of a sudden two refine that design in a way that most people never get to refine designs. Most transformers never have a full suite of seismic testing of ballistic testing of load testing because they've only built one or two of them. Going back to Model T. This is ford to one oh one do the same thing over and
over with interchangeable standardized parts on a line. The entire game changes and you go, it's good enough for everybody. And that's how we actually so you can keep up with this new load and with the new behind the meter generation and actually solve all these industrial power problems. But to really answer your question, Gerard, a lot of times we just say, I know you want that, but we're not going to give that to you. We're going to give you a solution that works that is not customized.
It's a standardized solution. And if you want customized, and you can wait five years like everybody else.
Can I just ask that. The question on this is explain a little bit why everybody has gone this customized approach in the past. I'm talking about a utility. Utility's bild, not a grid. Why would you go to a point where every transformer is different? Why did they go down this road?
Well, there's two arguments. I'll give you the utility argument and I'll give you what I think is really going on the utility argument is that we put our great engineers to solve each unique problem, and each problem is a little bit different, and so they design it each time and end up with the solution that's best for that substation at that location, for that new load at that location, for whatever it is. And so let's apply
good American engineering to a good American problem. The reality is in America almost all utilities are compensated based on the rate base that they create, and if they add cost, that cost is more rate base, then all of a sudden they get a higher actual cash value rate of return because they spend more money. The more they spend, the more they make. And when you have that model, there is no incentive from the CEO down to the head of engineering down to the guy in the field
to cut cost. If you cut cost, you end up getting a lower bonus. And so when you take those two competing problems one hundred year culture of we just like to do everything bespoke for that site, that way through the overall financial incentive of that cost more and we get rewarded more. Nobody in that system is going to change. I don't know what it would take to make them change, but it's not going to happen naturally without some major legal wrangling of them.
To illustrate what you're saying about, some realization the still could be about at the centers. We're seeing the XAI data center in Tennessee built in recall time, and they just put thirty two deesel engines. So it's the type of approach you are advocating.
That particular data center may have some other legal issues that I'm not necessarily advocating, but what I am advocating for is a inventory of standard parts that can go do a new industrial load in record time. We have parts just coming in just on order. Let's order six of these thirty megawatt transformers. Once order six more, and now when that new load comes in, we can build
those systems in record time. We're working on getting so standardized where every substation is the same, every distribution system we build is the same, every piece of equipment is the same, that we can build a substation from a green field to running in ninety days, right ninety days from the day we break ground to the day we go. Here you go, and now all of a sudden, you can move super fast. And by the way, if that location has a problem because the utility is taking longer.
You can shift all those exact same parts to another site that is ready. That's the only way you solve this problem of how fast do you go? Is you go, I'm ready to drop a generic substation in anywhere. And these generic substations are big. These are one hundred megawatts to four hundred and fifty megawatts.
So Jerry to just to be clear that what you're doing is you're bypassing the utility. Really, what you're doing is you're going to your industrial customer, whoever it is an old world chemical company or a new world data something, and you're going.
Okay, you're my client.
I'm going to build this all for you. Right, that's what you do. So maybe talk a little bit about what is it actually delivered to them?
What do you do?
You hit the nail on the head, Gerard that what we're saying is the change is not going to come from the utilities. The change is going to come from the load saying here's what we want. Because in the United States, most customers have a right to take voltage or service at the highest voltage they want to. So if you're a new data center, take service at one hundred and thirty eight kV or three hundred and forty
five kV. What we do is either we go to your site and we own and operate your power system from where it ties into the transmission system to your door. So that means we'll own the underground cable system to get to a substation if we need to, or the overhead. We'll own the substation. We'll then own all of the power distribution on the site, and we drop power off at your door. In other sites, what we're doing is we're actually going out and finding where that power is
ahead of time, and we're pre building those sites. We're building electrified industrial parks where it's our land and our power system, and you can bring your facility to us. If your bitcoin mining, you can show up with mobile units, drop them off and plug right in. If you want to show up and build a building, you can show up and do that. If you want to show up
and build a greenhouse, you can do that. But what we're finding is that that bridge of getting from one hundred and thirty eight kV or three hundred and forty five kV down to the four hundred and eighty volts at used at scale is where the bottleneck is five years if you use the normal system, and so the only way around that is to get into this mass
production standardized parts. And the other nice part of that is now, all of a sudden, if everybody uses that same standard catalog of parts, the cost goes down for everybody, the reliability goes up for everybody, because we now have interchangeable parts. If I only have three different types of transformers, I can have a spare of each one of them here that can back up any one of the facilities that we work with, and it's good for all of them.
And so what we're really seeing is industrials saying, if you've got a standardized solution that gets us online faster and higher reliability and more interchangeability. That's very interesting to us because for industrials, they don't get paid more when it costs more. They get paid more when they save more money, and so they're all for cost effective solutions.
Can I ask you a little bit about the role of sort of renewables and storage in.
This Yeah, For a lot of the emerging industry, the new guys, their business is about getting a business up and going right now as much as they'll tell you they have a long term plan. There is nobody there who knows what twenty years in the future is. Yet as those companies start maturing, we expect to see what we see with our current customers. Are existing industrials who had factories for one hundred years, is that they start going, Hey,
how do I now also get rate predictability? How do I know what the cost of a kilo one hour is? And if you want long term rate predictability, renewables is still the best way to do that. You can't get a twenty year natural gas price, I don't care who you are. You can get a twenty year price from energy off of a wind turbine or a solar system.
And so we're helping fifty year old factories now get to net zero, not match, not twenty four to seven, but like annual netted on an energy basis, which gives them a huge financial predictability that they didn't have before. I think you're going to see those new industrials eventually want. And then when you talk about storage, everybody gets all excited about big sexy storage. It sounds great, it looks great.
That's nice, big sexy storage. At the scale of a five hundred megawad data center really doesn't exist in the world, and if where it does, it's just so hard to put into a single site. What you're seeing though, that super attractive and changes the grid is four hour on
rack batteries. If you just have even a two hour on rack battery on the transmission system, that facility has so much more flexibility as the grid gets stressed to ride through a one hour event or most events are a five minute event, that just having one hour of on rack storage at the end solves so many problems for reliability for the grid that that almost like bulk but localized storage is way more valuable than here's a big battery that's only going to really draw down fully
once every five years.
Before we go into the hardware, there's always a layer on interest is software cod You see those new type of software, whether you know you build them yourself or the SaaS or are they really better than what you have like five years ago.
The first thing I have to admit, Laurent is that most of the power grid when it comes to communication, is really really dumb. We the grid don't talk to each other at all. Well, I've had a thing written on my wall for eight years that essentially just says,
how do we talk to each other? Because you can have all the software you want at your little facility, but that's irrelevant if you don't know what the facility next to you is doing, and the grid's doing, in the grid one hundred miles away at the main interconnects doing, and so actually getting the systems where we all talk to each other does not exist in the US period.
By the way, we're part of the problem. We don't want to share our stuff with the utilities, and the utilities definitely don't want to share their stuff with us, and so until somebody forces all of us to talk, the software is all so localized it doesn't matter much. We're seeing software that's better at manipulating the market. Right it's able to predict when the rates are headed up and shut down ahead of time and try to get you the most cost effective price based on real time
price signals. But that's not reliability, that's not operational, that's just playing the market. And so there isn't enough information sharing to even really have good software to help solve this problem. Right now, most utilities find out that they
have an outage on their system. When they get calls from customers or the smart meter at the house goes down, they don't actually know that a lot of substations are down, and so at least at the bulk power system there's a little bit more communication, but those signals aren't all being shared with us, so we can predict it. And so what I really think the real question is the
software code's not hard. It's the fact that none of us will share information with each other, and none of us have the ability to figure out who owes who a duty? Do I, the industrial user, have a duty to help protect the guy next to me? Do I have a duty to help protect the grid? Or can I just be a massively or energy your hog data center and suck everything out and say screw you, keep powering me. I'm gonna suck it all until you go down, and then I'm gonna be pissed. And so until we
all figure that out. Software doesn't do.
Much except it does one thing, Jeremy. What it does is enagbors the industrial customer, the new twenty first century industrial custer, to have cheaper, more reliable power. That's what enables it to do. Because you can do stuff now that you haven't been able to do almost for the laste hundred years, because we went back a hundred years ago. You were building the power center beside the industrial lord, and that's changed for one hundred years. You just move
a too ca. Buts now we're going back to that world. Software is enabling you to do that right as well.
Yeah, you're able to operate more complicated systems behind the meter Gerard, that's absolutely true. And you're able to do better things economically for that thing by looking at real time power signals. That's very fair. I just don't think that solves the overall reliable of the grid problem you.
Operate in PGM, my soul Harcot, Is it the same problem everywhere? Or some have started to find solutions.
The only place where I've seen more sophisticated solutions is when you start getting into very small, locally controlled utilities. You have utilities like SMUT who are going out of their way to adopt new stuff to drive the price of power down. But like when you talk at the grid level and the bult power system level, I personally have not seen that anywhere. I haven't seen anybody forcing the conversation that I think has had in there.
By the way, just for our listeners, SMUD, I know it's a California utility, but maybe you could just talk a little bit about that just to give you.
SMUD is a Sacramento Municipal Utility District and essentially it's locally controlled, locally owned, kind of a self service utility. It's got a different profit model for its executives and its leadership, and they've done a lot over the years to explore things. They're one of the first California utilities to put in real amounts of wind. They've played other games to drive down the price of power and to have better data, and to reward their executives by driving
the price of power down and protecting rate payers. And so that's a very different model than the publicly listed investor own utility who's trying to show that they're a better public company because they made more money off their rate payers, especially when there wasn't a lot of load growth. Are now in a very high load growth. They're trying to figure out how to survive that from a financial
credit point of view. And so that's an example of a smaller utility where we're seeing stuff it's more creative and innovative. I know there's a couple smaller ones in New England that have done some things, but none of those are the mega investor owned utilities we all think of.
Let's talk a bit about technology, and you've been need to transformer. You have ideas about how to better the technology. We've seen recently the famous drop Bagdino who is also launching a new type of transformer. So transformer is it the new hot technology.
What we've found, Laurent, is that the most boring, reliable thing possible is the best answer.
You're right.
There are all kinds of cool transformers coming out that do all kinds of crazy stuff, and you can spend a lot of money on a transformer that will change its voltage for you, that has various different windings that can do different things. We don't think that's the thing that you mass produce, and we don't think that's the
thing that solves most of the problems. We also have to realize that most of this all actually ends up being twelve or twenty four volt DC power for the servers that are being built at the end of the whole thing, So nobody actually cares about what the AC signal looks like. What we're doing is we're taking and saying, let's build the most boring, stable transformer possible. We are doing a FR three oil filled transformer, so it's not mineral oil, it's less likely to ever catch on fire,
and it's less likely to cause an environmental problem. It has no moving parts in regular operation. We are not doing voltage changes on the transformer. If you want to change the voltage tap, you're doing that manually when it's de energized, because you should only do that once or twice, and it's a life. We're sitting there saying how do you get rid of all the exposed live parts possible? So we're trying to go to dead break connections where on the thirty five kV side there's nothing to touch
that causes a problem. You can set an army of snakes and birds loose in your transformer and they could never touch anything that causes the short because that's the number one reason that transformers have failures as animals. And then we're saying, how do you get real time condition monitoring? Because if you've built this dumb thing that should never fail, the question is, how do you know it's okay, and
I swear to God. America's power system still depends on once a year oil samples to figure out how transforms are doing. For like ninety five plus percent of the transformers in America, Once a year, a technician goes out, goes through the little valve at the bottom, draws a little bit of oil into a vial, sends it off to a lab, and then sees what gases are dissolved in it, and goes, oh, look transferwer two three seven one four. How does spike an argone over last year?
I wonder when that happened. I wonder what caused that. I don't know if it happens slowly over time or all in one instant. And they sit there and go it's probably good for another year based on some archaic formulas. How the hell do you know how that transfomer is doing? Right? By the way, the utility solution is just have an extra transformer next to it, so we've got two. In case one fails, we're going, what the hell are you
talking about? So what we do is we actually have condition monitoring where it's doing dissolved gas sampling on that transformer every ten minutes. Every ten minutes, that transformer takes a sample oil and says, what are my ten dissolved gases? And if there's ever a problem, it sends me a text message. Our control room gets it, we know what
it was. We can watch it spike. And now all of a sudden, I can tell you, Laurent, at your facility, all of your transformers are good or Girard, your third transformer, I'm seeing a spike in argon I don't like. I'm gonna go ahead and schedule some predictive maintenance and maybe I'll just swap it out with the standardized part in four hours for you in next month, and then I'll deal with this one on the side and you have
a new one that works. But now I actually know how my stuff is doing, and right now, nobody knows how their stuff is doing other than once a year they see one data point and go look there, we go like, what the hell? It doesn't exist in any other system.
You're making me laugh because I'm just taking to the flintstones here taking care of everything for us. So my question to you is, yeah, so how does the change go fall? Because the system has to break down, and I'm sorry it is breaking down, isn't it. Because what we didn't talk about was the other thing is when you see far As fires, California, wherever it is, you can see the system is not built for the twenty first century, Right, how do we solve it now?
Well, Gerard, there's the engineering question, and there's the American reality question. Americans are stubborn, and we don't like to deal with big problems until big problems cause really big problems and break and hurt people, and then we get very serious and we're going to fix it with all of the American might. I've been trying to figure out for the last ten years what's a big enough problem that it actually gets fixed ahead of time, And I don't know what that is. So my fear is it's
going to be a major polar vortex. It's going to
be a major terrorist attack. It's going to be a major failure in a backbone system that's going to cause a lot of problems where an entire region of the country, if not most of the country, is out of power for an extended period of time, like we saw in a Texas and all of a sudden, everybody gets the stomach and the fortitude to say we're going to go fix the problem and we're going to force utilities to either do better or rely on private industry to step
in to fix it better. It's very easy for industrials to say we're going to make a change. This is stupid, right. I can make that business case to a normal, profit motivated private company. It's very hard to make that across the system. And so my fear is a bad actor is going to go realize how bad the system is and go do bad things to it, or a weather event is going to naturally force it. And we've gotten so close to the system truly going down. In the
last twenty years. There have been four or five major weather events that have almost taken down PJM. Miso Urcott's gone down, and we're not that far away from one that just goes one or two days more. And you get into all the same black start problems, and you see how fragile the big machine really is that doesn't like to start.
Jeremy, maybe we just finished the podcast by asking you ready to talk about your own business one power talk about you know what your vision for this business is and how you see the future over the next five years.
I believe that there is a fundamental energy transition with tremendous new demand coming in, and that demand creates a lot of opportunity to actually really solve problems and show the rest of the industry problems can be solved. And so our goal is to be the essentially private utility of choice for new large industrials. And we are in a utility, but we deal with all of the utility
problems on a one off, bespoke basis. And so our goal is be that solution that shows standardization as possible and that the customers who choose to standardize and choose to invest in their own power systems with us are more competitive, more reliable. And in doing a few gigawatts of that, all of a sudden, everybody goes that's actually a path to change the grid. That's actually a path for the grid to do better. We aren't just talking
about standardization, repeatability, scale, cost effectiveness. Here's a few gigawatts of what's actually been done, and that's a model for everybody else to follow, including future competition. But that's a model that proved the grid actually can change.
Do you know, I mean to us fantastic for once we didn't talk with guys or expert in excel sheet, but guys who know how to open and transformer and see what's in it.
There's nothing wrong with excel sheets. Just want to say that as a finance person.
Jeremie, thank you so much for coming on the show.
Thank you both for your time. Nice to see you. Thanks for setting up hard Yeah, thank you very much. Bye, guys.
Well John, I have two things to say. The first is the podcast a bit longer than usual because the girl was so good. I love his st is approach. And you know what, when I was listening to him, I said, look, his name is not Jeremy Kent. His name is Clark Kent. He is Superman.
Yeah.
It was brilliant. I don't think I can add anything to it. Maybe the only thing I would say it is very clear for me that one of the big growth areas for renewables clean energy going forward is behind the transformer solutions. In other words, you take an industrial park and you push the renewable solution there, okay, and that has huge amounts of advantage in terms of cost, resilient accession.
And the second thing is a question for you, what is the relationship between the song by the Beatles A Jude and Israel report noinga well, the transformer blew Up came the same year as the song A Jude was fifty seven years old.
Very good.
Okay, So, as we announced that at the beginning of the show we're going to do a special episode on the blackouts, we need to find the proper guest that because on LinkedIn all of a sudden, within like twelve hours, there were hundreds of experts of inertia, but in fact we need to wait for and so his report, because these are the real experts.
Yeah. I just want to add something as well. All around the amount of bullshit that I saw in and around this blackouse, it just was mind marggling to me. I just stopped reading it because nearly all of it was sent us, and this is from people in the industry as well. I just went, oh my god, you know, no wonder we've got to black out when you guys are having a clue what you're doing. Sorry, that's what I concluded. I was reading stuff from grid operators where
I was looking going, are you working for utility? I just find battling to you know. Anyway, we definitely need to have a deep dive in that we.
Thank a Blockway Energy for supporting the show, and because we talk about the beaters, we cannot not mention as well the Ronning Stones. So I've got a song. Let's listen to the clip.
You can always get what you want, but if you.
Way you man just.
Lauren is probably a fitting air head to this podcast. Yeah, you don't end up what you want, but you get what you need.
I like it.
I like it.
Okay, job, I talk to you next week, looking.
Forward with my friend, looking forward to Thank you for listening to Redefining Energy. Don't forget to rate the show and subscribe on Apple, Podcast, Spotify, or the platform of your choice.