TRANSCRIPT:

‍SPEAKERS

Nico Johnson,Michael Thomas

 Michael Thomas 00:00

So we'reseeing a slowdown in the utility scale solar sector. A lot of folks wouldimagine that's because of Trump, but it's because of some of these persistentfactors. We haven't built a big enough grid or expanded at the scale that weneed to. We've got local opposition and permitting issues. We've had tariffissues even before Trump, his tariffs will make things worse. We're seeing theslowdown there and then in terms of battery storage, we're also seeing aslowdown. So this year, for the first time, 2026 we're expecting there will beless built in terms of capacity additions of battery storage in the US, afteryears of doubling year over year. So those are two of the big headline numbersthat we're finding. Over

 Nico Johnson 00:38

the lastyear, there's been a growing belief that without the data center and AI boom,clean energy pipelines might have slowed in this. Post IRA, post OBB,environment. We just talked about it with Amy harder, and she was very clearthat it probably, in fact, would have had a lot more headwinds. But thanks tothe AI and data center boom, when you track permits, equipment orders andinterconnection filings, though, not just the press releases. The story gets alittle more nuanced. There's data, and you got to find it. Thankfully, MichaelThomas built clean view to follow what actually is getting built. Today we'regoing to separate capital flows from headlines. Michael, everybody seems to befollowing all that you're doing on LinkedIn. You're doing a tremendous jobpublicizing what others are trying to figure out and find online. What does thebuild out really look like right now when you get into

 Michael Thomas 01:31

thedata? So we're seeing a slowdown in the utility scale, solar sector, and a lotof folks would imagine that's because of Trump. It's not in terms of theslowdown now, we'll see that in the years ahead, but it's because of some ofthese persistent factors. We haven't built a big enough grid or expanded at thescale that we need to. We've got local opposition and permitting issues. We'vehad tariff issues even before Trump, his tariffs will make things worse. And sowe're seeing the slowdown there. And then in terms of battery storage, we'realso seeing a slowdown. So this year, for the first time, 2026 we're expectingthere will be less built in terms of capacity additions of battery storage inthe US, after years of doubling year over year. So those are two of the bigheadline numbers that we're finding.

 Nico Johnson 02:16

As anentrepreneur in media, I concur with a lot of my colleagues who ask me, wheredid Michael Thomas come from? Who is this guy? Can you give us a bit of originaround the opportunity that you saw in collecting this data, and why now is theright time and you're the right person, and who we is when you mentioned quick,clean view?

 Michael Thomas 02:39

Yeah, soI have been writing about clean energy for the last seven years or so. I gotinto it just from a personal interest. I wanted to do what I could to helpaddress climate change, play my part, and I was a writer by background. I wrotefor different magazines, and have really written my entire life. And I wantedto use my skills to try to do something, and I felt like I could maybe helptell the story, shine light on what's happening. So I was writing and postingon, you know, blogs and social media and all these things, and nobody wouldreally see much of it for a long time, but, but then had a lot of viral storiesover the last three or four years, first on Twitter, then on LinkedIn, over thecourse of the Big Bill negotiations, I posted something on LinkedIn every day,and that reached a lot of people, but I started clean view, really, with a goalof making my job easier as somebody who's trying to analyze these trends andmake sense of things. I felt like I don't want to pour through spreadsheets for20 hours just to write a single post or understand a trend, and so I startedjust trying to solve my problem, and then was able to find out that a lot offolks had the same problem, and really needed to understand the trends andwhat's

 Nico Johnson 03:51

happeningwhen you map the data centers and the energy build out together. Where are theregions that emerge as structural winners in this race, and what do they havein common?

 Michael Thomas 03:59

So Ithink the biggest winners of both the solar and battery build out, as well asthe data center build out, are states where permitting is faster, where there'sgrid connection. So we did an analysis of how long it takes to build andconnect a solar project or wind project in Texas versus California, usinginterconnection queue data, and we found that it takes twice as long to buildin California than it does in Texas. So you're going to see a lot ofdevelopers, especially on these tight timelines that now are imposed with thelatest federal policy where they need to get things built as quickly aspossible, and especially in a high interest rate environment where time isquite literally money, that speed is more important. And so if you have to waitseven, eight years for a project in California that's eating away at your cost,just to kind of show how extreme it can be, we found one project that wasproposed when George W Bush was president 2004 it's about to get finished inCalifornia. But. I think if we want to accelerate the energy transition, wehave to figure out, how can we permit things faster? And that's not just at thefederal level. That's at every level, from local to state to federalgovernment. From a market

 Nico Johnson 05:10

perspective,do the markets that are more favorable become self reinforcing once one regiontends to land a hyperscaler, 234, more follow. I think it's actually theopposite,

 Michael Thomas 05:21

and thatwhat happens is that everybody will rush to a region, and then theyessentially, you know, get all the land, get all the transmission capacity andand then it's done. You know, that market saturated. You see this even at abroader level, not just maybe a county level, where Texas has seen thisphenomenal growth in battery storage. I'm sure many folks here have heard aboutit. And in the second half of last year, we saw in the interconnection queuedata that half as many projects were proposed. And so there's this slowdowncoming. The reason is that battery revenues have really collapsed in Texas, andthat's because of the success of that industry building so much and saturatingthose markets. Yeah, it's funny.

 Nico Johnson 06:04

Wetalked about this from one of our stages two or three years ago, how it's this,it's this really interesting, quixotic nature of the market, where there isarbitrage until you use it, and now all of a sudden there's no arbitrage, andso the market dies. Strange how that happens. There's a belief, though, that AIand data centers are accelerating renewables, and we just talked with Amy abouta couple of examples. I'm curious, does the data show it? Is it really true?Partially true, misunderstood. How do you how do you view it from inside thespreadsheet?

 Michael Thomas 06:38

Yeah, Ithink that there's certainly been a tailwind in terms of data center build out,and that's because we're seeing this rise in demand. You're also seeing itbecause the price of electricity is going up. I think if it weren't for datacenters, we know, because a lot of analysts have done the work on this, thatprices wouldn't be rising as quickly, and those higher prices, which then arereflected in power purchase agreement prices which solar and wind developersand battery developers sign with hyperscalers or different consumers, those asthey rise, can kind of offset some of the tax credits that we lost with Trump'sbig bill last summer. And so data centers are supporting that. I think onetrend that a lot of folks have missed, that's happened very quickly in the lastyear is the rise of behind the meter data centers. So these are projects thatare no longer waiting for the power grid. We found that there's about 50gigawatts worth of them, 90% of all behind the meter data center projects thatwe were able to find in our latest report, they were announced in the lastyear. And so if you, if you blinked, essentially, you would have missed this.And I think for solar and wind developers, especially and battery developers,when they're paired with these projects, this is a huge threat, because youneed the grid to deliver that power from one region where you found yourinterconnection request and got your land permitted, and then you need todeliver it to the data center. If people are going around the grid, that's amarket that could start to decline. We found that 30% of data centers that areplanned are now behind the meter, and that's up from zero a year ago. So ifthat trend continues, and it's half suddenly, that market's been cut in half ina way that maybe a lot of

 Nico Johnson 08:22

folkshave missed. I'm curious your thoughts around the nature of the kinds oftransactions that are taking place with big tech and incumbents like intersectand bright night like particularly intersect, which just had their acquisitionannounced. What is the tech company trying to solve for when they are buyingthe development pipeline, but not the operating assets.

 Michael Thomas 08:44

Yeah,it's a great question. I wish that we had intersex intersect power CEO up here.I know you've interviewed him recently, and maybe you can shoot him a text and

 Nico Johnson 08:54

tellyou, but

 Michael Thomas 08:57

I thinkpart of it is probably using the real competitive advantage these companieshave. If you look at the balance sheets, essentially just the cash that Googlehas, it's phenomenal, right? It's like in the hundreds of billions. If you lookat their income statement, they've got nearly $100 billion a year of cash flow,of profit, more than Saudi Aramco, and so that enables them to get debt at amuch cheaper rate than a relatively in these terms, smaller company likeintersect power, even though it's worth $5 billion we just saw Google issued100 year bond. Yeah, nobody, I can't get 100 year mortgage rate. You know,Trump's talking about 50 year mortgage rates, but I can't spread that out. Butif you're Google, you can, because there is this huge balance sheet behind it,so that gives them cheaper debt and cheaper cost of capital build projects.That would be one of the things I would imagine.

 Nico Johnson 09:50

Yeah,yeah. It's interesting to me that it seems to be as well like they're avoidingthe regulatory hurdle of owning. And operating assets and taking advantage ofthe speed to acquiring pipeline. It's just it's complex, because most of thesebig developers have already turned projects on. They've already got stakesright in the marketplaces. I'm curious if the data set shows where frictionpoints exist that developers or other operators in the marketplace areunderestimating, yeah, there's definitely

 Michael Thomas 10:25

a lot offriction in the market right now. Some of it, folks are aware of others, notyou know, I think permitting and siting has been a long standing one that wesee year after year. I think increasingly the cost to connect to the grid, orthese grid upgrade costs, is an issue. And that's, you know, this failure tobuild a large and growing transmission network in America, it's fallen from1000s of miles built per year of high voltage lines to hundreds. And so we didan analysis looking at miso market in the Midwest and South and found that thecost to connect to the grid, just based on these studies that come back, it'snow more than 500,000 per megawatt. Put that number in perspective, it costsgenerally, like one, 1.5 million per megawatt to build a project. So you're adeveloper, you're trying to build a project, and you find out that 30% of yourcost now has to go to upgrading the grid. You're going to cancel that project.And so unsurprisingly, we saw that miso in 2024 that market grew by 100% thisyear. It was flat, no growth. And so I think that's largely because of that,that grid there, especially in the south, there's a

 Nico Johnson 11:35

lot ofconversation around this in the developer community, because it's essentiallythe last person onto the node, who has to absorb that cost? And then it becomesa question of, well, how does the utility determine the interconnection queuepriority, and why is it not the first person that connected, that created allthe congestion and left very little bandwidth so such that we need to upgradethe node? Why don't they have to shoulder any of the burden? Yeah, these arestill constraints that I wonder if there's constraints that are structural,meaning they're not going to change, or they're temporary.

 Michael Thomas 12:09

What doyou think? Yeah, I think some of these are structural, in the sense that maybeour politics can be sort of structural, like, are we going to get to a placewhere we pass a federal permitting bill that allows us to cite transmissionlines. Unlikely. This is a big challenge. And so if you view that asstructural, some of the kind of gridlock in Congress, then I think that pointsto one answer. They're not, you know, requirements. They're not imposed byphysics, right? Like, if you look at Europe, they are building their grid out.They're planning it. They're, you look at China, they're, of course, they'vegot total central control and building that out and ahead. I think it requiresleadership. I think it requires great policy. Requires having the rightpoliticians in place in Congress, right and so supporting those candidates thatare going to support energy abundance, and actually building the capacity thatwe need to meet this growing demand. I think that's probably the most importantthing

 Nico Johnson 13:07

for thedevelopers that are listening, who are maybe earlier stage developers, and aretrying through your data to follow the money. They're trying to determine, whatare asset owners interested in, where it what markets are interesting to enter.What data would you point them to on what to prioritize next from a marketposition, technologies, to scale, risks, to manage, et cetera.

 Michael Thomas 13:30

Yeah, Ithink the most important things are going to be really looking at like, howmuch revenue can you get, and what's the cost, what's the timeline? And so youbreak that down, I think the states where demand is growing a lot, those aregoing to be important. So we found an analysis of all these different gridsacross the US. There's 70 of them, not just one grid. Arizona is the topfastest growing grid. A lot of folks hear about Texas. Texas grew by about 5%last year, Arizona grew by 8% and so it's been this phenomenal growth that iscreating a market dynamic where there's a lot more demand for your solarbattery project. I think paying attention to some of that, paying attention, ofcourse, to just grid connection costs, where can you connect? How manydifferent projects have been proposed in an area to try to identify thosedifferent opportunities where there is that spare capacity on the grid. That'skind of the great challenge for developers and and then, yeah, I think gettingcreative about where you build projects is is important. But yeah, that's someof the data that we're looking at. So you're also

 Nico Johnson 14:36

trackingwhere projects are being built. Does the data suggest, in terms of wherecapital is actually flowing, what patterns are emerging, yeah, terms of whereprojects are

 Michael Thomas 14:46

beingbuilt across the country,

 Nico Johnson 14:48

or even,or even, what kinds of projects or technologies that seem to be sort of DarkHorse winners here? Yeah, I think the biggest

 Michael Thomas 14:55

winnersof the last few years have been solar and batteries. So in the last year, in2020, Five we found that more than 80% of all capacity added to the grid wassolar and batteries. We're seeing that start to change. Gas is becoming morepopular, but really nothing compared to solar and batteries. Growth and andthen we're also seeing a lot of growth in these smaller markets that peoplehaven't paid as much attention to, like, what? And some of those are the statesthat have passed good permitting reform bills. So Illinois has seen steadygrowth. Michigan has seen steady growth. Michigan is an important example,because we talked about permitting and this, you know, molasses pace ofpolitical change. Well, Michigan realized, hey, we've got to plan this. Wecan't let a small group of very local people prevent us from having affordableelectricity. They brought that permitting up to a higher state level, created abackstop so that if a county commission was blocking projects kind of unfairly,they would permit those at the state level, yeah, and since then, they've seentheir solar and battery capacity additions grow significantly. I think it'stripled since the last couple of years. Illinois and New York have done similarthings. I think tracking some of that policy is also really important, andlooking at what's coming,

 Nico Johnson 16:12

Michael,you spend a lot of time tracking the First Order impacts what happens when inpermitting and megawatts deployed capital that is going into specific markets.I'd love to hear your opinions around the second order effects upstream ordownstream of these assets. What should we be thinking about as this datacenter wave scales?

 Michael Thomas 16:34

Yeah, Ithink in terms of data centers, one of the second order impacts that's going tobe really hard to predict is you've had this growth. That's the first order,these huge projects coming into communities, first order. The second order is,how do people respond to that? How does the political system respond to it? Sowe're seeing this huge wave of backlash, ton of local opposition to projectsthat we saw in solar and wind and batteries. What's interesting is thatpolitically, it's much different, right? You get people across the politicalspectrum, everyone from the most progressive person to the most conservativeperson, for very different reasons, and then I think the politicalramifications and backlash has also been very interesting to watch. I can'tthink of maybe a single policy that Bernie Sanders and Ron DeSantis agree onthey are both pursuing bills that would try to limit the growth of data centersor rein them in. Bernie Sanders passed or didn't pass. He proposed an all outmoratorium on data centers being built in the country. And Ron DeSantis inFlorida has been pushing a lot of bills and been kind of antagonistic. And so Ithink that's really interesting to want to watch is what are the politics of AIand data centers look like? And I don't think that they're going to fall on thetraditional partisan spectrum that we've seen solar and wind fall on.

 Nico Johnson 17:52

Well,certainly, energy is a moneymaker, and a lot of energy assets have beenconveniently located in GOP territory. So I think when it comes down to it,it's kind of like when you when you see, well, it's with anything when you seethat your jurisdiction is going to be drastically affected if you decide to puta moratorium somewhere, you're not likely to stand behind it,

 Michael Thomas 18:21

yeah,but what's interesting with that is that even in some of these places, there isa huge amount of money flowing in, and there's still that political opposition,still opposition. And so I think you see a lot of politicians start to getworried about where they might fall. You know, Michigan, their governor triedto help get a really big open AI data center in the state. She's a Democrat.She faced a lot of backlash from her own party and from her voters on that. SoI think it's it's going to be interesting to watch it unfold. I'm certainlycurious, just because it is so new, it's wild times.

 Nico Johnson 18:54

We'll betalking about it, obviously, here on the podcast, but I know you'll be coveringit in much more detail, first at clean view and the data, and secondly, tellingthe world about it through LinkedIn. Is LinkedIn the best place for folks

 Michael Thomas 19:07

to findyou? Yeah, I think, you know, it's strangely become my social media platform ofchoice. I kind of feel like I got pushed away from all of the differentplatforms, or just, you know, they've all become so toxic ways. I do still poston X or Twitter. You can follow me.

 Nico Johnson 19:24

There noblue sky.

 Michael Thomas 19:27

Youknow, I'm not as active on blue sky. Dave Roberts heart, I and then I think thebest place, if you want longer for more nuance, you don't want just a couple ofcheeky sentences, is my newsletter. So I write a personal newsletter everyweek, roughly, it's called distilled. So Google distilled. Michael Thomas,that's probably one of the best places, fantastic.

 Nico Johnson 19:48

I hopethat you also will go Google distilled. Michael Thomas, thank you so much toeveryone here in person at intra solar 2026 for joining us live at the hubstage. Michael, thank you for taking time out of your busy schedule. To swingby. Thank you, Nico.

 Michael Thomas 20:01

Iappreciate it. Hey.

 Nico Johnson 20:02

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