Election Updates and a Conversation with Jigar Shah at ETC
This episode is also available as a video on YouTube.
This week on the podcast, Peter and Jackie review the latest election news, including the BC election, which produced a Conservative majority government over the weekend, and the Alberta referendum, including the question on separation.
Jackie then shares highlights from the Electricity Transformation Canada conference in Toronto, an annual event developed by the Canadian Renewable Energy Association (CanREA), including a conversation with Jigar Shah for the podcast. Jigar hosts the Energy Empire and Open Circuit podcasts. His previous roles include Director of the US Department of Energy’s Loan Programs Office, Co-Founder and President of Generate Capital, and Founder and CEO of SunEdison.
Jackie and Jigar cover a range of topics, including the pace of the energy transition, the impact of disruptions in the Strait of Hormuz, electric vehicle adoption, the outlook for emerging clean energy technologies, and Jigar’s views on how data centres can be built more intelligently.
Content referenced in this podcast:
- Electricity Transformation Canada (CanREA conference)
- BC Conservatives Plan for a Stronger BC (2026)
- BC Energy Superpower Plan: Build More Faster (September 2026)
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LinkedIn: @ARC Energy Research Institute
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Episode 342 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian and welcome back. Well, I think it’s worthy of a timestamp given the election mania that we’ve seen, Jackie. So we’re recording Monday, October 26th. We’ve had two elections in the past week, one on the Alberta referendum, and we also have had the BC provincial election.
Jackie Forrest:
Yeah, let’s start with the recent one. The conservatives won the BC election. It’s been nine years of NDP rule. Before that it was liberals. So it’s been a very long time since the conservatives have been the leaders of the BC, and we have BC premier designate Lorne Doerkson, who was really not well known even a month ago. So this is quite a surprise turn of events here in BC.
Peter Tertzakian:
It really is. And not only did the conservatives win, they won by a super majority that are calling them like 60-plus seats in the house. So I mean, it’s really quite a remarkable reversal of fortune for the NDP. And the policy platform of the conservatives, I went back to the website and took a look, is to grow natural gas resources, LNG. So the tone shift is definitely more resource biased than getting the economy humming again.
Jackie Forrest:
Yeah. And if you go back the last few elections, the Greens did have a lot of influence because it was like a government where at times they needed the Greens to get the majority. And so the Greens are only two. With the 64 seats, conservatives don’t need to work with any other parties. And you’re right, they have a goal to double BC natural gas production by 2032. Well, that would be quite a fast increase and then triple it by 2035. They support the Pacific Link pipeline, the oil pipeline from Alberta to the Southern BC coast. They want to repeal CleanBC. And we have talked about CleanBC on the podcast before, but it was pretty aggressive net-zero targets by sector. And many of the business community felt it was very difficult to achieve. And so I think that will be positive in terms of doability in terms of growing businesses.
I don’t know what they’re going to have for climate policy without that, because that has been the backbone of BC’s climate policy.
Peter Tertzakian:
Now I know the bulk of this podcast is actually going to be on renewables because you went to that big conference last week. With the new BC government and potential repealing of things like CleanBC, do you foresee any impact to the renewable push in BC?
Jackie Forrest:
Well, it’s hard to say because BC is short power right now and they do really need more generation to come on quickly. And renewables is the quickest. It’s very quick to bring on. They’ve had two big procurements. There was a plan to have more procurements for renewables. And of course it pairs nicely with the hydro that they have. So we just look at necessity, I think renewables has to be part of the future, but it really wasn’t being driven to me by the CleanBC goals as much as the need for generation and the need for generation may even grow. If you’re going to be doubling and tripling your gas production, a lot of that’s electrified, you’re going to need more electricity. So we’ll see, but it doesn’t necessarily mean that the renewable slows down.
Peter Tertzakian:
Yeah, there’s a bit of an economic conflict here with natural gas because on one hand, natural gas prices are incredibly depressed. I just checked this morning, I mean station two prices up in Northern BC are selling at a $1.60 Canadian. Meanwhile, in the United States it’s well over $3 US and internationally it’s like 20, $30 US for a gigajoule of natural gas. So having very low natural gas prices on one hand is positive for more natural gas fired power generation because it makes it much more economic. On the other hand, $1.62 is hardly a signal for drilling rigs to go out and drill for more natural gas.
Jackie Forrest:
Well, you have to hope that along with this production growth comes those LNG export facilities so we don’t have this oversupply that that’s where it goes. I will say too, when it comes to power generation, if you’re going to start a natural gas generator right now, even without CleanBC, maybe you could do that theoretically. You can’t get these generators with five-year waiting list. So again, that’s where I come back to in the near term, I think renewables is going to continue to be necessary and it’s not because of climate policy that that goes in. There’s also going to be a repeal of the DRIPA, the BC Declaration of the Rights of Indigenous Peoples Act. I’m not going to pretend to be an expert at that, but that certainly has been a concern in BC in terms of even some developments that the government gave companies licenses.
There was some question if they had done the consultation in the right way because of that. So I think for a lot of business people, repealing that may be helpful in terms of clarifying are these licenses that were given still okay?
Peter Tertzakian:
Well, it’s certainly going to be interesting to watch BC over the course of the next few months as ministers are appointed and the platform commitments on the website and what the premier has been saying, whether those things actually get enacted and how fast they get enacted. So we’ll be watching that space very carefully. Now the other election item of course was the Alberta separation vote.
Jackie Forrest:
That’s right. So it took a while to get the numbers. It turns out hand counting isn’t that fast, but at this point I think we have maybe not the official. I was looking, the official results don’t come out till the 29th of October, but I think we’ve got most of the counting done. Just as a reminder, in May 2024, Alberta banned electronic vote tabulators. I hope that they reconsider that actually after how long it took to count all these votes. But of course the big question, number 10, they counted as fast as they could. I think it was done something like four in the morning, the first day. 75% almost of Albertans want to remain in Canada. So a very strong signal that the people that want to separate are really the minority. There was some difference in different regions of the province, but the overall number is 75%.
And I think there was a lot of relief from the business community. Deborah Yedlin, ahead of chamber of commerce and past podcast guests said it’s a huge relief. And I think a lot of people felt that way.
Peter Tertzakian:
Well, I mean, I don’t think it was a big surprise that the vote would lose. It was just a question about how much it would lose by. And I think within the range of many of the polling agencies, which was like 20 to 25% in the land or actually 20 to 30% landed right around, I think 24.5% basically said leave and 75.5% said we want to stay. So three and four effectively said we want to stay. And superficially from the outside looking in, that’s a very positive result. But I think internally there’s still structural issues within the province that have yet to be resolved given that regionally, certainly the rural population, the percentages for the leave side of the equation were far greater.
Jackie Forrest:
Talking about elections, there’s also obviously the midterm elections November 3rd. Lots happening right now in the United States and news over the weekend that maybe some pressure on the Republicans is growing and maybe that’s increasing the chances of a Canada trade deal. We’ll see. Maybe we’d be surprised that after so long of trying to get a trade deal that it could happen quickly. I don’t know what the chances of that are, but that’s what we’re reading this weekend.
Peter Tertzakian:
So what’s your call on that?
Jackie Forrest:
Well, I hope we get one. I think Canada really does need a trade deal. Our manufacturing industries, they really need access to the US market. So I hope we get there, but this one has been hard to follow. It’s hard to see that in the lead up to the midterms with so much going on that they could come to a good trade agreement at the same time.
Peter Tertzakian:
Yeah. I personally think it’s wishful thinking to have a deal anytime soon.
Jackie Forrest:
I visited Toronto last week to the Canadian Renewable Energy Association’s annual conference. There was 3,400 people there. There was 225 exhibitors, a really large trade show and a lot of excitement around the opportunity for electricity investment across the country. And it is a renewable conference, but there were people from broader electricity sector and the people in the trade show, there were people selling inverters and transformers and construction companies. So I really look at it as a broader electricity trade show. But with renewables, for a lot of the reasons I said at the top of the podcast, the fact that it’s available and can scale quickly, the outlook is that we have approximately 25 gigawatts of projects operating in Canada now at capacity, and the same amount is currently in development or moving through the procurement process or being planned. And so CanREA thinks this is about a $200 billion investment over a decade.
And yeah, the trade show certainly showed the excitement of that. A lot of companies, Canadian companies, but a lot of foreign companies too. I was actually interested to see a lot of Chinese companies. It got me thinking about Bob Galyen, who joined the podcast about a month ago, talking about how good those Chinese are at manufacturing. And I certainly felt that talking to them about the lead times that they were offering and they seemed to think they had a big price advantage over Western suppliers. So it was interesting to see so many of them show up here too.
Peter Tertzakian:
Yeah. Let’s just put those numbers in perspective for our audience because I always like to get context. So you said there’s 25 gigawatts of renewable projects right now in the queue?
Jackie Forrest:
Yes. Under development or plans and there’s 25 in the ground right now too.
Peter Tertzakian:
Just to put that in context, so Alberta’s total power generating capacity today is what, 13, something like that?
Jackie Forrest:
Well, capacity’s quite a bit higher than that, but in terms of how much we’re generating at one time, on average it’s 10. I think our peak load is between 12 and 13 in terms of generation. The thing with renewables is, as you know, their generation number is quite a bit smaller than the capacity number because the wind’s not always blowing, sun’s not always shining. Although a lot of discussion around batteries, which does kind of extend the amount of generation time that renewables can contribute to with the help of batteries.
Peter Tertzakian:
Right. So the 25 gigawatts is double the peak generating capacity of Alberta more or less.
Jackie Forrest:
Yeah, but it’s a capacity number, but yeah, so it’s pretty significant and a lot of economic opportunity like $200 billion, divide that by 10, 20 billion a year. That’s a lot of construction companies, a lot of companies that have to build transformers and switch gear and all the stuff that goes along with that. Like I said before, renewables are affordable. In Canada, they’re pretty low penetration rates in most provinces. So these issues around intermittency, they’re not such a big deal in most of our provinces, especially because we have hydro to pair with them and they have no supply chain issues. We can access the technology. There’s actually an oversupply in things like modules and batteries and things like that. So I think that’s pretty exciting. And of course, lots of great speakers there. And I was happy to have the opportunity to talk to Jigar Shah.
For those that don’t know Jigar Shah, he’s a big name in clean energy in the United States. He’s been on numerous podcasts. I started listening to him in 2018 on the energy gang, but now he’s on a podcast called Open Circuit. He has his own podcast called Energy Empire Podcast. He’s got a long history. He was an entrepreneur earlier in his career. He founded SunEdison. He co-founded Generate Capital, so he’s been involved in financing clean energy. And of course he joined the US Department of Energy during the Biden administration and led the $400 billion loan program to accelerate clean energy. So it was great to have him come to Canada and hear what he had to say.
Peter Tertzakian:
So we’re going to flip to that interview now, so I’m going to drop off. So while you were in Toronto interviewing him, I was overseas, so it’s time for me to duck out and for you to play that interview.
Jackie Forrest:
All right, let’s switch to the interview.
Welcome, Jigar, to Canada and Electricity Transformation Canada.
Jigar Shah:
It is always a pleasure to come to Canada.
Jackie Forrest:
Yeah, we’ve been here a lot. I mean, I hear your views on American policy and electricity systems. So I was interested, you just delivered your keynote, that you had a lot of knowledge of Canada even in the time of the FIT program here in Ontario. So it was great to get your perspectives on that.
Jigar Shah:
Oh, I come here a lot and I think I’ve been working hard to harmonize policy and that kind of stuff since 2006. And so I think it’s been a real extraordinary journey to try to figure out how to learn from the great things Canada’s doing.
Jackie Forrest:
Yeah. And you know we’re integrated, unlike some folks I think in US administration right now.
Jigar Shah:
Well, I also think the First Nations work is amazing, and so we have a lot to learn.
Jackie Forrest:
Yeah, very different. Okay. Well, as you know, I told you, I’ve been listening to you since 2018, and so it’s great to actually talk to you in person. And I learned one thing from your past podcast, it’s good to have a little conflict. So in your keynote, you made the point that Straight Hormuz is going to accelerate the energy transition. And I actually, I agree with you, but I think there’s going to be a two-speed transition in that North America is going to lag the rest of the world. Why? Because we don’t have access to Chinese technology to the same extent. We have lots of cheap gas. Policy’s really not supporting the energy transition here. Oil prices are high, but no one’s worried about shortages like in the 70s. I wonder what you think about that. Can you see a world where Africa, Southeast Asia, they get the cheap Chinese technology, the EVs, and here in North America we’re blocking a lot of that technology from coming in and therefore the costs are higher and it’s taking longer.
Jigar Shah:
Well, I think this is a temporary phenomenon, and I think it’s important to note who benefits from all of these policies, because when you decide to unlock the potential of the oil and gas sector of Canada, which is I think what the city government is pushing, then if prices are high, they’re going to make more money, but the price of gasoline or diesel continues to be set at a global level, and so people still pay more for those things. And then to the extent that the cost of electricity goes up, people still want solutions to bring their own costs down. And today, whether you have access to Chinese technology or not is sort of beside the point. If you look at the Australian cost of solar, for instance, it’s less than a dollar per watt to put it out. Now, even if you charge 20 cents a watt for tariffs, you’re still at $1.20.
That’s still way cheaper than what you’re buying power from your local utility firm. And so at some point, you can’t say on this side that the work that the Canadians are doing or the Americans are doing to exploit their oil and gas riches are going to translate into a lower electricity price for you. It doesn’t. And so you’re still going to deploy that technology. And then once you’ve deployed that technology, you’re going to say, “Well, now what do I do with all this cheap electricity that I have? I’m going to buy an electric vehicle. I’m going to buy a heat pump.” And even the minister was talking about how Ontario is pursuing electrification. And so I think both things can happen, and I don’t think it’s relying on Chinese supply chain. In fact, I think we have a lot of supply chain now coming out of India and Turkey and Ethiopia and America.
Jackie Forrest:
Okay. Well, and Mr. Lecce, the Ontario Energy Minister, addressed the conference this morning and he talked about electrification. I do want to push you on the EVs though, because we’re blocking Chinese technology from coming into the US. Canada’s got a very small number of cars. The emission standards have really been rolled back in the US and here in Canada too. So automakers don’t need to put very many electric cars in the fleet. I’m a huge believer in electric technology. I’m all electric at home. I think it’s a better technology for transportation, but there’s not a lot of choice.
And so if you look at the IEA current scenario, their forecast is 10% of auto sales in North America are EVs all the way to 2035. And I have to believe that because there’s not a lot of choice for consumers today that want electric. I think we’re going to be laggards in that. I mean, around the world, they’re just getting all these cheap Chinese delivered 9,200 cars at a time on the big ships.
Jigar Shah:
Sure. But look, I think when you look at electric vehicle options in North America, Tesla continues to sell hundreds of thousands of vehicles, and you may not like Elon Musk, but at the end of the day, they still make great cars. I mean, the full self-driving vehicle kind of works. I mean, the driver that picked me up from the Toronto airport last night full self drove me all the way to my hotel.
Jackie Forrest:
It’s incredible.
Jigar Shah:
And didn’t actually touch the steering wheel the entire time. And autonomous vehicles are coming. Every autonomous vehicle is electric. And so I think that people have this feeling that what’s happening in their life this week is going to continue for 10 years, and I don’t think that’s true. I think that right now you can get an American-made electric vehicle or a Korean electric vehicle made in America, et cetera, et cetera, for roughly the same price as you buy any other car. And right now, gasoline prices are stubbornly high. And what the oil markets are saying is that’s going to be the case all the way through 2027 and probably through 2028. And so as people get sick and tired of paying those prices at the pump, I think you will see a huge resurgence of interest in electric vehicles.
Now, could Canada decide to bring a lot more Chinese vehicles into the country? Maybe. Or Canada might decide to invite one of the Chinese automakers to manufacture here in Ontario. And so we’ll see where the market goes. But I think the notion that you’re going to keep out vastly superior technology out of the hands of consumers is something you should not bet.
Jackie Forrest:
Yeah. By the way, a truck, a decent sized diesel truck right now in Canada, it costs $260 to fill the tank, and I have an electric truck and it’s costing me about $15 to fill the tank. So it’s just crazy how cheap the fuel is right now. And even if electricity prices double, going to cost me $30 to fill the tank. So hopefully people see that. Hopefully we get more options though. I agree that Tesla Y and the self-driving is great, but a lot of people, you have been exposed to the technology and as there’s less choices, I think it takes longer.
Let’s talk about electricity, load growth. So the Bloomberg New Energy Finance thinks that we’re going to add two Canadas in North America in the next 10 years when you look at their load growth forecast, and two-thirds of that is data centers and the rest is other electrification and EVs. Do you think that’s actually going to happen?
Jigar Shah:
Well, 50 years ago, Amory Lovins wrote an important paper called The Road Not Taken that said that we could take the soft path of the hard path and the soft path pursued energy efficiency and getting a lot more out of the energy that we’ve already produced and getting more work out of that energy. And economists though he was crazy and that if we reduced energy consumption at all, that that would reduce GDP. Today, GDP is 65% less energy per dollar of GDP in both Canada and the United States, so the soft path worked. Right now, I think everybody is measuring the hard path again, but I think there’s a lot of soft path to do. So we can still double our fuel economy in our cars by going electric.
Jackie Forrest:
Yeah, it’s so efficient. You’re not losing a bunch of primary energy to heat.
Jigar Shah:
Totally. Same thing’s true with heat pumps. You can double the efficiency of heating and cooling by going to heat pumps. You can double the efficiency of all sorts of things. And so as energy gets more expensive, which is what the Strait of Four Moves is doing, what you’re finding is a bunch of people are rediscovering the soft path. So do I think we need load growth? Of course we do. I mean, we’re not going to electrify our entire lives by just staying flat through energy efficiency. There’s going to be some growth needed, but do I think it’s going to be 4Xing the grid? I don’t think so. I think we might be able to live with 2Xing the grid, but that’s still a lot of growth for the people who are building new generation and new transmission and new distribution and that kind of stuff.
So I think that there’s enough to go around, but I don’t think we should forget about the soft path. We shouldn’t forget about batteries. We shouldn’t forget about shifting capacity through time and space, which is what batteries allow you to do. The electricity system is the largest commodity supply chain in the world where everybody wants to run it in real time. It doesn’t make any sense.
Jackie Forrest:
Right. And you talked about today at your keynote, the fact that we’re underutilized in so much of our distribution and our grid and that achieving these sorts of load growth forecasts is a lot easier if we get… What you were saying, some of these grids are like 40% utilized, 60% utilized.
Jigar Shah:
The best grids are 40% utilized and several grids are down at 14% utilization. And so we are not running our grids for cost optimization. We’re running our grids for the five hours a year that we need to hit peak. And today we have the technology to shift that peak, and Ontario’s developed a lot of it. And so we’re now in a place where we can do that, but culture is standing underway. A lot of utilities think that that is a weak way of running your grid, but I would suggest it’s a far more robust way of running your grid.
Jackie Forrest:
I mean, Canada, really, we have very low penetration of batteries right now. I looked at a chart in California, Texas off the charts. Canada’s less than 5% of the penetration rate. We have some in Ontario. We’ve just put in some incentives in Alberta, so we might start getting more there, but really we have very few. One of the issues that I’ve heard you talk a lot about is just utilities and their mindset, and they haven’t really done it yet. So do you think that’s really going to change? I mean Canada, we have a lot of Crown corps. You think that utilities in the United States are slow?
Jigar Shah:
Well, look, I think the Crown corp model allows you to change actually really quickly, and so there needs to be something that causes them to move. And right now, I think what the minister suggested was affordability is on the ballot and that everybody wants a plan from the Crown corp and exactly how they’re going to have all this load growth while keeping rates flat or lower for consumers. Guess what? The only solution to that problem is batteries. And so they could try 14 different pathways, but eventually they’re going to come home to batteries. And so I hope that doesn’t take them more than a year to go through that. But remember, we developed 10% of the entire installed base of batteries in the United States were deployed in the last three months. And so this can happen very quickly. The supply chain is infinite for batteries.
I mean, I think the Chinese manufacturing supply chain is only one third utilized. The US supply chain for batteries, which we built up in the last four years, is only about half utilized. And so there’s plenty of extra batteries around. They’re not sold out. So my sense is that if you want batteries at the time at which you decide to do it, you can deploy them all in 18 months.
Jackie Forrest:
Yeah. Well, and there’s more success stories coming. Australia just had recently a huge success story. Texas, I read an article about Texas and California over the summer, how more stable they were, how their prices were flat to down, where PGM that has very few batteries was very different.
Jigar Shah:
PGM is the Canada of the United States.
Jackie Forrest:
Yeah. And so we are starting to get shamed. You starting to see articles like that. I agree with you with that. Okay, let’s switch to clean energy in general. Wilder Hill Index, it’s down about 75% from the peak. We call it the Biden bump at the very peak of 2021, and a lot of people have lost a lot of money in clean energy since that time, and it kind of is reminiscent of CleanTech 1.0 where people just stayed away for a long time. When you look at the capital markets, who’s raising money today? Some of those areas that are deemed to be expensive energy, do they ever come back? Do people ever put money into those? I’m talking about things like hydrogen, carbon capture storage, green steel. Some of these things that are just expensive in the current policy environment can’t make it work.
Jigar Shah:
Well, look, I think that it’s very hard to generalize. I would say that the money that has largely been put into clean energy companies, I think we’re talking about equity now into companies, has in general returned a very good rate of return as a sector. Now, when the Biden bump occurred, that looked like an 80% return on investment. Today, it looks like a 20% return on investment. I think a 20% return on investment’s fine, and I think a lot of people who invest in infrastructure think it’s fine. Is it a tech multiple? No. So if people are expecting a tech multiple in the clean energy sector, they’re the wrong kind of money. But if you want slow and steady wins the race and a very reliable 20% rate of return on a broadly diversified group of equities, then you’ll make that.
Now, when you look at the hard to abate sectors, which I think is what you’re talking about, like hydrogen, et cetera, there are companies are doing it the smart way, like green ammonia, basically decarbonizing the hydrogen that we already use.
And then there are people who are doing it the dumb way, which is like, “Hey, let’s compete with cheap natural gas with really expensive hydrogen and just make people pay extra for it because they’re going to do the right thing.” That has proven not to work. Even on clean steel in some of those places, there’s a lot of specialty uses of steel where they are willing to pay that premium for the better benefits that that steel provides. Now it’s 1% of the market, but 1% of the market is still large enough to build a billion dollar facility. And so you’re starting to see people actually carve out those niches and engineering wood. Engineered wood is one of those things, a company like InventWood where they make wood that’s stronger than steel, but they’re starting with decorative applications because people are willing to pay five times more for those applications because they want it to look nice and their wood actually looks nice compared to a steel beam.
I just think that the laws of capitalism always applied. People had forgotten about them for five years, and now we’re back to them.
Jackie Forrest:
Yeah. So going forward, you’re saying that there is a return to be had in some of those areas. For the people that bought at the top, it’s hard for them to recover, but going forward, there could be new capital come into these projects.
Jigar Shah:
And there is. There is no shortage of capital in this sector. There’s a shortage of dumb capital, right? 75% of venture capitalists do not raise a second fund, and so a lot of those people who raised their first fund in 2018 are not raising a second fund. But for the folks who are good venture capitalists, they’re raising plenty of money and they’re investing money. And so we’ve just gone from heady days to less heady days, but good entrepreneurs are still raising money.
Jackie Forrest:
Well, and another area that is hot right now is anything to do with electricity because I say clean tech has become clean electricity or just electricity in general. So anyone associated with electricity, obviously it’s easy to raise money. So let’s talk about these data centers. You made a interesting statement. You said we’re doing it the dumb way. So describe with the data center build out why you think it’s being done the dumb way.
Jigar Shah:
Well, if we look at major cities like Calgary and other places, what one data center looks like is just building Calgary in one place, and it’s not easy to accommodate Calgary in different parts of the Canadian grid. And so the question really becomes, have we mapped out the grid? Some of the best companies in the world are based in Toronto, like ThinkLabs and those kind of folks. They can take the data from the Crown companies and actually within eight minutes tell you exactly where there’s underutilized capacity in the grid, and then you should put it there. There’s a few places where you can put 400 megawatts worth of capacity, very few, without adding a lot of extra cost to the grid. And then there’s lots of places where you can put 25-megawatt data centers without adding a lot of cost to the grid.
And so this notion that we should figure out how to put the city of Calgary in 10 different places across the grid and not expect it to cost a lot and not expect it to be done the most inefficient way possible is dumb. And so we should stop doing dumb things. And if it’s essential because of AI training-
Jackie Forrest:
Yeah, I was just going to say, don’t the training models need a gigawatt spot?
Jigar Shah:
Sure. But we have 30-gigawatt data centers under construction now in the United States, and so I don’t know why Canada wants to copy the United States to have all this voter outrage and figure out a way to have rates go up by 9% a year. Canada should be smarter about it.
Jackie Forrest:
Well, interestingly enough, so I’m from Alberta, got the metadata center. We just had a big conference and tons of Americans came up to it, and I got the sense that it could be quite big here in Canada because it’s getting very hard to build in the United States. Just in the last couple weeks, now suddenly Saskatchewan’s got a big project, New Brunswick has a project, Nova Scotia. The Crown corps have not been as transparent as Alberta where you have to file that you’re making a load request, and it’s been clear, something like 20 gigawatts of potential projects in Alberta when we only use 10 gigawatts on average. So are we going to see just because it’s so hard to build in the US, do you think Canada’s going to have a huge amount of data centers come here? It’s feeling like we’re at the start of something.
Jigar Shah:
Remember that the US is not hard to build and Canada’s not easy to build. The US has just learned what it looks like to do data centers the dumb way, and our governors across the country have decided that we are no longer going to allow people to do it the dumb way, including the governor of Texas, because the voters in Texas have said, “If you continue to do it the dumb way, we’re going to vote you out of office.” And so the provinces in Canada still haven’t gotten that message, and so they’re continuing to entertain stupid projects. Fine, but at some point, if they go for those stupid projects, they will lose their job. That is what happens.
And so I don’t know, if they want to lose their job in Canada, they can continue to do it the dumb way, or they can accelerate their learning from what the governors in Texas and Wyoming and Oklahoma, which are Alberta-like places, and say, “Oh, I guess I should learn from my peers and not go down that route for two years and do it the dumb way.” That’s their choice. I mean, I don’t know. I don’t need to baby them. They can either learn from our mistakes or they can repeat them.
Jackie Forrest:
Yeah, it is kind of interesting. The Alberta premier has really embraced the data centers, even created a video about the reasons you should love them.
Jigar Shah:
Voted up for Abbott until he was pulling 50-50 against his opponent, and then he realized he was supposed to be against data centers.
Jackie Forrest:
Yeah. Well, and even these new announcements in Atlantic Canada already seeing all the opposition show up in the press. So yeah, they are. Well, let’s talk about social license because it is all related to that. What could they be doing better in terms of getting social license? Because it feels like these big hyperscalers have just doing a poor job of it. They’re just having a hard time getting people to accept these projects. Is that going to change?
Jigar Shah:
Well, I mean, will masculine energy go out of style? I don’t know. That feels like the tail is old as time, but I think it can be controlled. I think one is we have to be science-based, and I know Dunsky’s putting out a new report that shows how we do data centers a smart way in Canada, and so people should read it and figure out whether they agree with it and all that stuff. And that includes more renewable energy, it includes more batteries, it includes integrating it into the grid that we already have, all of those things. I think second is the data centers actually can afford to provide a lot of community benefits. And so in order to accommodate this load growth, particularly for the 80 hours a year that the grid is at peak, you can either build a bunch of infrastructure, which costs a lot of money, and sure you could charge it to them, or for one 10th of the cost, you can just give a bunch of people free batteries and change the way you operate the grid.
I don’t know. Does Canada want to help people or does it want to just do things the old dumb way? That’s their choice, but the technology allows you to do things the smart way. And there’s a big announcement coming out in the United States where the hyperscalers are giving people free batteries now, and they’re actually taking this smart approach. Why? Because it builds more social license, and it’s a gift that keeps on giving. When you give somebody a free battery, their bill goes down by 20% for 20 years, which is a pretty good deal. So we’ll see.
Jackie Forrest:
So you’re going to give every house in a county or something a battery in their garage, like a 10-kilowatt battery that they can then use?
Jigar Shah:
Yeah. So you give everybody within a five-mile radius, a free battery, everybody within a 10-mile radius, a 75% discounted battery, everyone within a 20-mile radius, a 50% discounted battery. And you create enough capacity that the data center doesn’t have to turn down. When there’s a grid crisis, you can turn down all the households and the businesses, and they don’t notice because they have a battery.
Jackie Forrest:
Yeah, and it works.
Jigar Shah:
And it works. And then the rest of the time you use that battery to make the grid more stable, which is what Texas and California have done, as you suggested. And then that reduces the rates of electricity the whole year around. And so it’s like, “Oh, gosh, such a great idea. We should do that.” Well, they’ll go through 14 bad ideas before they get to a good one.
Jackie Forrest:
Yeah. I mean, I’d love to get that battery and I could see how people would buy. And one complication in many places in Canada, there’s no return on investment at the retail level. You just have one price all the time.
Jigar Shah:
That’ll change.
Jackie Forrest:
We need to change that so people would get some money in their pocket because of that, but we’re not there yet.
Jigar Shah:
That’s how it works. Once you get a battery, then the people start clamoring to their crown corporation, “Hey, why aren’t you giving me time of use rates? Why aren’t you using my battery to give me a 20% discount? Oh, because you hate me? Okay, well then I’ll just make sure that the next person I vote for as the head of the province doesn’t hate me as much as you do.” This isn’t that hard, but I think everyone makes it so hard. Like, “We have new technology. New technology is good. It’ll actually reduce the cost of serving you. Oh, it violates the culture that your grandfather taught you? Okay. But at some point you should grow.”
Jackie Forrest:
Well, I hope that is the case. I’ve been wanting to get a home battery for quite a while, but with flat power prices, it’s just really hard to justify. And then I have an old why you just told me, I didn’t know that Tesla finally has said they’re going to allow new Tesla-
Jigar Shah:
Starting in October.
Jackie Forrest:
… to provide power to the house, so that will help. Maybe I’ll have to get a new car over that. But again, there’s no economic incentive other than I have solar panels, so the economic incentive is I can capture more of my own power, which is a little cheaper than getting it off the grid. But anyway, let’s hope we get the innovation. Couple more questions. There’s kind of an era of state capitalism now. I don’t know if you’ve heard, but the Americans want to take us over 51st state. And so that’s created the federal government to really get in gear. We’re going to build trade enabling infrastructure, including oil pipelines, but transmission lines as well because we need to increase our trade amongst each other and get exports off the West and East Coast. And so we’re getting a situation where the state is much more involved, government is much more involved than there used to be.
And there’s a bit of an argument, government shouldn’t be picking winners and losers. We should have capitalism and you’re going to just waste money. You were at the loan department for the Department of Energy. What’s your view on that? Is there a role for government and can it be done efficiently? And is it better than just allowing capitalism and companies to choose?
Jigar Shah:
Well, I think it’s very clear that when you let capitalism and companies choose, then by definition, you have slower innovation cycles. And so we have to decide whether you want faster innovation cycles and trillion-dollar companies or whether you want slower innovation cycles in billion-dollar companies. It’s just a choice. Every country has to make that for themselves. It is very clear that Canada invents a lot of cool stuff, but then those people move to Silicon Valley or they move to other places because that’s where their dreams are encouraged. And so I think the state is now saying, “We’d like to encourage your dreams here. Please don’t leave. We’d like to do stuff here.” I think that’s a good thing.
Now, will they get it wrong the first couple cycles? Of course they will. They’ll pick the wrong companies, they’ll do the stuff. In general, you’re always picking companies. That’s obvious. You can say whatever you want to say from a rhetoric standpoint. The best way to pick companies though is through a transparent checklist and say, “If you’ve met these five criteria, we will support you.” And so you’re not picking winners as much as you’re saying, “If you meet us 80% of the way where you do 80% of the work, we’ll do 20% of the work.” That’s what we did at the loan programs office. We said, “Here’s where the bar is. We’ll give you a lot of free consulting to help you reach the bar, but you got to reach the bar. And if you don’t reach it, we can’t give you a loan.”
So that’s how it works. No one’s lowering the bar and lowering standards for you, but we’re happy to give you resources by which to raise your standards. And that’s how a good private public partnership should work.
Jackie Forrest:
Yeah. And I mean, another example in Canada is we do have… Atlantic Canada has great wind resource, but to build the transmission line is more than any developer could undertake. So the idea that the government would build the transmission line and then that would enable the private capital to suddenly start building more wind in Atlantic Canada.
Jigar Shah:
Isn’t that what they’re doing with the pipeline to the west?
Jackie Forrest:
Yeah, same thing. We’re going to-
Jigar Shah:
No private sector.
Jackie Forrest:
Well, there’s some private type of thing.
Jigar Shah:
I mean, it’s all crap, but there’s no way that they would’ve done it without the government underwriting it.
Jackie Forrest:
Well, especially because in this country, worse than the United States, I would say we’ve made it, especially off our West Coast, so risky to build a project that private capital’s scared to do it because there’s opposition, there’s all these barriers, provinces are against it. And so public money is needed because it’s too risky, I think. We’ve created that. Now we’re accelerating our approval process just like the Americans are doing and trying to make that smoother, but that’s been the barrier.
Jigar Shah:
Maybe, but I also think that some of these resources are shared resources for the sovereign, and so we have to focus on shared resources for the sovereign. The transmission line is a shared resource that makes all the provinces stronger, but no one province can afford to pay for it. And the same thing’s true for the pipeline. So I just think in general, there are certain pieces of infrastructure that have to be state supported, and so we shouldn’t be embarrassed about it. We should just recognize it.
Jackie Forrest:
Yeah. Okay. I agree. And same for the transmission lines. We have this massive opportunity in Churchill Falls to expand that hydrogen, but the transmission line is a huge barrier and a huge cost.
Jigar Shah:
Well, and we have a lot of new technology, so we may not need a new transmission line to that hydro facility. You might be able to just replace the wire there with TS Conductor that can carry two to three times more power along the same right of way with new materials.
Jackie Forrest:
Well, I hope they’re looking at that. I have doubts they are, but let’s hope so. They should. Okay. Well, we’ll wrap it up with, you’ve only been in Canada less than 24 hours. You heard some of the speeches this morning.
Jigar Shah:
Yeah.
Jackie Forrest:
Just your impressions for Canada and clean energy and renewables. I think you probably captured, we’ve had a period where there’s been very low renewables growth, but we’re on the cusp of something that we have 25 gigawatts installed and there’s 25 gigawatts in procurement or under development right now, so a chance to double here.
Jigar Shah:
I think that the opportunities are enormous. I think a lot of the ministers and others who were anti-renewables today are now suddenly all of the above, which is a code word for we’re pro-renewables now. And I think the people in this room have some swagger, but they need more swagger. The way this stuff works is when you are an essential part of the energy strategy, which is what batteries and wind and solar are today, you got to remind people of it and you got to needle them a little bit about it, and that’s how they remember you and prioritize you. And so you can’t be too quiet. You got to show a little swagger. And I saw some of it, but we need more of it.
Jackie Forrest:
Yeah. And our penetration rate of renewables is so small in this country. There’s so much opportunity to grow without some of the concerns people have with intermittency. We’re so far away from that, especially when we have big hydro resources and everything as well to pair with them.
Jigar Shah:
Yeah. I mean, I think what we found in the United States was high penetration was never a problem, and now the batteries are super cheap. It’s most certainly not a problem. So I think the key is to take all of the blessings you have from a geography standpoint and put it to good use.
Jackie Forrest:
Great. Well, thank you for visiting Canada. It was great to have the discussion.
Jigar Shah:
Of course. Thanks for having me.
Jackie Forrest:
Thank you. And thanks to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
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