0:13
Okay, let’s uh let’s get started. Thanks so much for joining everyone. Um, I’m going to turn it over. I’m I’m your host today, uh, Ryan Dougherty, the executive
0:22
director of Geo Exchange, and, uh, I have the honor of, uh, hosting John Thomas, the CEO of Water Furnace, for a
0:31
little welcome message. John, I’ll pass it over to you.
0:34
Okay, great. Thanks, Ryan, and welcome everybody and good afternoon. Thanks for taking an hour out of your schedule on
0:41
this September 1st to join us for the fourth session in the mission geo webinar series. And the topic we want to
0:49
cover today is managing peaks and power costs in the age of artificial intelligence. And today we’re going to kind of look at a subset of that and
0:57
we’re going to focus on rural communities across the country and more importantly the critical role that the National Network of Rural Electric
1:05
Co-ops play in providing reliable and affordable energy to their members across the country. You may be asking if
1:13
you’re not familiar with the geothermal heating and cooling segment, what is Mission Geo? Um, it’s a data-driven education initiative that is focused on
1:22
defining what we believe is the ever evolving role that geothermal heating and cooling can play as a strategic and
1:29
critical energy infrastructure in this time of a very dynamic trend set of how
1:36
energy is being consumed and the rate of growth that we’re experiencing. I won’t go into detail on that. The panel will dive into that a little bit further.
1:44
Again, my name is John Thomas. I’m the CEO of Water Furnace. If you haven’t heard of us, we’re one of many manufacturers and designers and
1:53
manufacturers of residential and commercial geothermal heating and cooling systems. We’re located in Fort Wayne, Indiana. We’ve got 380 employees.
2:02
And we’re not only proud to say that our systems are designed and developed and manufactured in the USA, but also made
2:11
right here in the Midwest. Um so you may ask yourself or we may be thinking why is this topic relevant of managing peaks
2:19
and power costs in the age of AI. In my view and what you see a lot in the news is we’re approaching an intersection on
2:27
the power grid of the collision of consumer and industrial load growth and the mega trend of data center
2:35
development that’s very energyintensive and this cycle is create creating demand stress on the grid in the coming decade
2:43
as the mo the experts are predicting that is unlike what we’ve seen since the 1980s.
2:50
And so this significant utility infrastructure, the good news is the development is underway, but that development has a cost and it’s
2:59
challenging consumers not only affordability but the reliability of the power that we all rely on every day. So
3:08
the next question is how does geothermal heating and cooling systems play a role in that? Well, we’re among some of the most durable, reliable energy
3:16
infrastructure available in the market today. And that can play a significant role in our view in reducing the very
3:25
electric utility infrastructure that’s being developed at a rapid pace at a very high cost of course required to
3:32
meet the next decade of demand. So that’s just meant to be a bit of a teaser of what’s in store for the next 45 minutes or so. And now I’ll turn it
3:41
over to Scott Stone who serves as an expert adviser for the Mission Geo Initiative. He is with Glen Co Strategies and he’ll serve as the
3:50
facilitator for our expert panel. So Scott, I will turn it over to you. Thanks John. Good afternoon everybody.
3:58
John, always good to hear from a a manufacturer in the heartland to keep us all honest. So uh you know today we’ll
4:06
be able to examine these challenges from from three perspectives. Um how electric cooperatives are are managing you know
4:13
load growth. uh what mission geos avoided peak analysis shows and then what policy responses are emerging and how they’re fairing uh politically.
4:23
We’re going to begin with brief presentations from our panelists and then bring those perspectives together best we can in a discussion I’ll
4:30
moderate. So to introduce our panelists, we are very pleased and very grateful to have Allison Hamilton with us today.
4:37
Allison is the markets and rates director uh business and technology strategies at the National Rural Electric Cooperative Association or
4:45
NRECA where she advises electric co-ops on power supply, retail rates, demand side management and a whole lot more.
4:52
Ryan Dockerty, president of the Geothermal Exchange Organization or Geo Exchange. And Ryan leads this national
5:00
nonprofit trade group for the geothermal heating and cooling industry. And we’ll speak to an analysis that Mission Geo
5:08
has been putting together on u geothermal heating and cooling as a grid resource. And then Scott Seagull,
5:15
partner and co-chair of the policy resolution group at Bracewell. Scott advises clients on where to start, you
5:23
know, legislative, regulatory, communications, strategy, and other uh approaches for energy, environmental, natural resources, infrastructure, and
5:31
and and many, many more. Very pleased to have Scott here, too. So, with that, Allison, let me first turn it over to you for the electric co-op perspective.
5:41
Okay. Thank you, Scott, and thank you, John, for that introduction. Let me share my screen. I have some slides.
5:59
Okay, you can all see that. Looks good.
6:02
Okay, good. All right. Um, uh, once again, I’m Allison Hamilton. I’m with the National Rural Electric Cooperative Association,
6:11
and these are some of the things I’m going to go over today. just an overview of NRCA and business and technology
6:18
strategies. Um, a little bit of an overview of electric co-ops and their history. Um, it’s actually kind of an
6:26
interesting story and then I’ll talk about some of the co-op priorities and the challenges with the load growth in the rural areas.
6:37
So, hold on a second. Um so uh NRCA is a trade association. We represent about
6:46
900 co-ops across the country. And um we are kind of unique for a trade association when we provide a lot of
6:54
different services for our members because they are you know shorter staffed than other larger utilities. We have benefits administration. We have
7:02
education and training. We you know our primary role is uh lobbying and advocacy. Um, and we have all kinds of
7:10
other services that we provide our members. And I work in the business and technology strategies department. And
7:17
we’re uh a unique team, multidisciplinary team. We have engineers, we have economists, we have
7:24
cyber experts, we have rate experts. And we connect our members with each other with research. We identify research
7:31
projects for them. And that’s where I work within this organization.
7:38
So, and I like to talk a little bit about the electric cooperative story because I think it’s kind of interesting and I know there’s some people on this call that aren’t really familiar, but it
7:47
really kind of informs, you know, some of our pri priorities to this day. So, back in the 1920s when the urban areas
7:55
were electrifying, the farms and the rural areas were literally left in the dark. So, as part of the New Deal,
8:03
President Roosevelt created the Rural Electrification Act, and that provided uh lowinterest loans and technical
8:11
assistance to a growing movement of rural electric cooperatives.
8:16
And co-ops do have a unique business structure different than ILUS, different than munis. They are notfor-profit memberowned.
8:26
uh their board is uh elected by Democrat by uh a member consumers. Um most of
8:34
them are not regulated. They’re not regul rate rate regulated. They’re not regulated by a PUC. Um so that gives
8:41
them a little bit more flexibility and then they can be a little bit more nimble in their reactions to to industry
8:49
changes. So and they are more consumer centric. Um, a lot of times the co-op is the biggest employer in a community and
8:58
their focus is on safe, reliable, affordable, and locally controlled power. As I mentioned, they operate as
9:05
notfor-profit utilities, which means that if there are excess margins, they return that to their members in the form of capital credits.
9:15
There’s different types of electric cooperatives. There are distribution co-ops cooperatives that just deliver the electricity to the homes, the wires
9:23
and poles and um over time um initially the distribution co-ops started the movement and then they were looking to
9:32
pull their purchasing power. So then they developed generation and transmission co-ops. The distribution co-ops actually own the G&Ts and they
9:40
own the bulk power system. And then there’s federations and associations like NRCA um uh financial institutions, other
9:50
technology institutions that provide solutions and things like that for electric cooperatives.
9:57
Uh this is how electric cooperatives look today. There are 64 G&Ts, 830 distribution cooperatives serving about
10:06
42 million households and businesses.
10:11
These are some other sort of facts about electric cooperatives. They serve about 56% of the US land mass. You can see
10:18
here there a heavy concentration in the Midwest and the Southeast. Um they provide power to 92% of the persistent
10:26
poverty counties. And another important thing, they average eight consumers per mile versus about 32 for the rest of the
10:34
industry. So it is a little more expensive to serve that member at the end of the line.
10:41
Co-ops tend to be focused on affordability. Uh, one of the, you know, uh, in the other slide I mentioned 92%
10:49
persistent poverty. In this chart, you can see that one in four households served by co-ops have an annual income below 35,000.
10:58
So, keeping rates affordable is especially important for co-ops. and also also investing in the community,
11:06
investing in education, safety, community programs. Um, broadband is a really important rural initiative these
11:14
days because that really helps improve the economy and co-ops have a long history of
11:24
managing peaks uh for decades before the technology was really even available to do it as well as we do it today. Um, and
11:32
that’s because they didn’t have the incentives to build all the supply that other utilities like IUS do. So, in the
11:40
early 1950s, co-ops were among the first to control residential water heaters remotely to cut peak demand. Then in the
11:48
1970s and 80s uh they went more mainstream with some of the demand side management with the G&Ts actually
11:56
building programs for their distribution members like Mntanka building large interruptible load and water heater
12:03
programs. Then in the 1990s and 2010s programs started to really scale up. For instance, Great River Energy there in
12:12
the Midwest, they shift about 110,000 controlled water heaters. And then today, there’s a lot more going on, a lot more advancements in technology.
12:22
There’s time ofuse rape programs.
12:25
There’s Derms and VPPS platforms. And you know uh one of the the at the same as always it’s been to keep the prices
12:34
lower to keep uh uh the system reliable and to keep it affordable for all members.
12:42
So like everyone else we are in a new era of electricity demand. And I really like this quote from the Wall Street
12:49
Journal and it speaks to John’s earlier point. utility executives compare the skyrocketing demand with rural
12:58
electrification efforts or the advent of air conditioning. And I like that, you know, it mentioned rural electrification
13:05
and recognizes what a tremendous effort that was, but also we haven’t seen this kind of growth in at least a generation
13:13
or two. So there’s lots of energy planner planners and energy workers out there that are experiencing this for the s first time.
13:24
And for our members, it’s coming from all directions. We’re seeing it not just from data centers, but from manufacturing, from industrial loads,
13:33
oil and gas. So, um you can see in this chart the flat demand from 2007 to 2022.
13:40
And then starting in 22 2022, that’s when our members really started to see uh these data centers and these other
13:47
loads take off. Um, even our members, our large members like Novvec here in Lowden County, which is which is right near where I live and right near where
13:56
our offices are, you know, they already had a lot of data centers, but in the 2022 when the AI data centers started to
14:03
come, they really saw the growth explode and the growth isn’t distributed evenly.
14:10
I mentioned, you know, Northern Virginia, Dar Center Alley, um Texas has really been growing, but you can see
14:17
that these there’s areas here in the Midwest where there’s lots of co-ops in the southeast where there’s also lots of co-ops
14:26
and rural impact is growing. This is a chart from the Pew Research Center. um you know 877% of existing data centers
14:35
are in urban areas and um 67% of planned data centers are in rural
14:42
areas and our members are really seeing this growth. So why would you site a data center in rural America?
14:49
lower land and potentially energy costs, access to diverse sources of energy, including community solar, hydro, um,
14:59
all of the other all of the above strategies. Sometimes there’s tax incentives and economic development
15:05
incentives. There’s more space for scalability. Sometimes these data centers start with one building and then
15:13
grow to a multi-building campus. There’s a lower population density. So some of the things that are coming up uh with
15:22
the moratoriums and the backlash is the noise and the way the buildings look.
15:26
Well, if there’s less people, there’s less people to object.
15:30
And uh a data center data centers can be an economic boost for rural communities.
15:37
This is from a community. This is a slide I borrowed from Coobank, which is one of the big lenders that works with co-ops. You know, they saw their
15:45
construction employment up. They saw their hospitality and food service employment up. Um, business and
15:52
professional services up, expanded fiber broadband connectivity, which is a really important in rural communities.
16:00
Um, and some of our smaller members, you know, one of these data centers can come in and, you know, double or triple their
16:07
load. And while that’s a little bit daunting, you know, our members are are evaluating these loads and their number
16:15
one priority is protecting their members. They want to make sure they cover the potential stranded investments. So they’re requiring
16:23
letters of credit, deposits, parent guarantees. Also for the data centers to pay upfront for sub substation,
16:31
distribution costs, contribution and aid of construction, and to ensure these deals are transparent. negotiated
16:38
separately and that the data center is upfront with the community about the risks about what they can bring to the
16:45
community. So, I think that’s all I really have. I am around for questions
16:52
and I’ll stop sharing my screen now and I think I’m handing it back over to Scott. Right.
16:58
Yeah. Great. Thank you, Allison. We’ll definitely come back to uh any number of of those points and and next up is is
17:06
Ryan. uh and we’ll will shift industries from from uh rural electric co-ops to geothermal heating and cooling and the
17:14
mission geo initiative which has among other things sought to break into the numbers and look at how this technology
17:22
can benefit the grid in terms of load shaving and in terms of helping to maintain if not not reduce rates and in
17:29
this era of hyper sensitivity to affordability uh that starts to take on greater significance. So Ryan, all yours.
17:38
Thanks a lot, Scott, and and thanks to John and Allison for leading this off. I thought it was great how Allison
17:44
reflected on the history of the rural electric cooperative industry. Uh and for many on the line today, I think you
17:53
may be familiar if you are familiar with the history of the geothermal heating and cooling industry with some of the uh
18:01
the background and the interconnection between these two industries. It was NRECA who in the early 80s was very much
18:11
partnered with uh the International Ground Source Heat Pump Association, our sister organization, who I should give a a shout out today for uh letting us use
18:20
their platform for this webinar. IGXPA when they were based at Oklahoma State University in Stillwater uh worked with
18:28
NRCA who sponsored the first ever installation manual which you can still buy uh a rather outdated copy of. I if
18:37
you’re going to get a copy of an installation manual, get the newer one, but you can if you want a historical document, they do have those available
18:45
on their website. Um, and it was really the the co-op community that was the lifeblood of this industry throughout
18:53
the 80s and 90s. And and why was that the case? Well, it had a lot to do with the load profile of this equipment.
19:01
Allison talked about some of the strategies and technologies that are being deployed today to address peak
19:08
challenges, VPPs, deers, other demand response uh
19:15
techniques and technologies, uh great rivers load control program using water heaters.
19:23
It was in the 80s that co-ops recognized that geothermal heat pumps were a tremendous boon to their business
19:31
because of the performance characteristics of this of the systems of the technology. [snorts] They
19:37
inherently lower peak demand and they build winter base load. This is uh uh
19:45
known commonly in the utility business as load factor improvement. It makes the
19:52
cost and the ability of utilities to provide consistent, reliable, affordable
19:59
energy that much better. And so it was on the backs of the the rural electric cooperative community that this industry
20:06
really built itself throughout the 80s and 90s. And to this day, Allison referenced the nearly 900 cooperatives.
20:14
We have been scanning these co-ops uh over the last year or two and and well over half of them still have at times
20:22
very significant incentives for geothermal to this day. Well, what’s transpired Allison showed that line
20:30
chart for the last 15 to 20 years load growth has been fairly flat. That value proposition for geothermal isn’t what it
20:38
once was. But that dynamic has changed very very rapidly in recent years. What’s old is all of a sudden new again.
20:48
And so it was with that trend that transition in mind that we decided to launch this initiative mission. And at
20:57
the core of that initiative is an assessment of the grid value of this technology.
21:04
Let me quickly show a slide that some of you may have seen before. This sets the stage a bit.
21:12
We’re in a we’re in a uh a period of significantly increasing peak demand.
21:20
The chart on the right is from the North American Electricity Reliability Corporation.
21:27
The forecast for load growth change day in and day out depending on whether there’s been a new moratorium on data centers introduced, who’s making the
21:36
judgment. But I would say NERK is a pretty good barometer. Their their analysis is probably one of the best and
21:42
they they predict about a little over 150 gawatts of new demand largely
21:50
attributable to data centers coming online over the next decade.
21:56
What are we going to do as a as a society, as a country to meet that demand? Well, there’s a lot of tools on the table. I think Allison pointed to
22:05
some of them. Uh the reflexive solution would be to simply build more power
22:13
plants to build generation capacity to meet the demand. That would be all well and good
22:21
if it didn’t jack everybody’s electric rates up and if there there was actually the option to quickly build these power
22:31
plants. But that is not the case. We are seeing the new generation uh supplies in
22:39
in a real big crunch right now. Not to mention the ability to site and permit
22:46
new transmission and distribution equipment.
22:51
Uh it’s a tricky situation and I think more and more hyperscalers, grid managers,
23:00
utility executives are looking to the other side of the equation to find a solution and a path forward.
23:08
How do we generate how do we put more demand on the grid without necessarily
23:16
significantly scaling generation? Well, you do it through increased headroom and
23:22
you do it by deploying technologies like geothermal.
23:27
Our analysis, which uses the National uh Lab of the Rockies Restock and Comtock
23:34
building modeling platforms, looks at the potential of increasing
23:41
deployment of geothermal to 1% of buildings on an annual basis over the course of a decade. If we were able to
23:49
do that, we would significantly decrease pressure on the electric grid to the
23:56
tune of over 62 gawatt. We’re calling this the 10% impact assessment.
24:03
You can find out more information about this on our website missiono.org. What is 62 gawatt?
24:12
You may have followed the construction of the Vogal nuke reactors in Georgia which recently came online.
24:20
The third and fourth reactors uh which were $30 billion each. 62 gawatt is is
24:27
about 50 of those. This is well over half of all projected data center demand increase. And a
24:36
little back to what I like to keep in my back pocket. This is equal to or greater than all of the solar panels we have
24:45
ever installed on tops of buildings in the United States. And this is just a very straight line analysis uh using the
24:54
existing scenarios within comtock and restock. If we tweak that analysis to
25:01
uh focus on conversion of air conditioning and air source heat pump units, the savings are even greater.
25:12
Mission GIO will be continuing to dig in and expound on these findings. Recently,
25:20
we have attended the uh National Association of Regulatory Utility Commissioners Summer Policy Summit in
25:28
Minneapolis where we exposed a number of utility commissioners to our analysis.
25:34
They’re eager to dig in and learn more.
25:38
We recently attended the uh America American Council on Energy Efficient Economies summer summit in California
25:47
where we presented a white paper on our findings and it’s clear that there is significant interest in the potential
25:55
for geothermal to meet this moment and deliver savings and increase capacity to the electric
26:04
grid. Uh, I urge everyone to tune in to missiono.org.
26:09
We’re going to be continuing to do these webinars and uh expose people to our uh
26:16
findings and additional analysis. Um, happy to dig into the analysis further and I’ll pass it back to you Scott.
26:25
Thanks Ryan. you know, m much appreciated and great to see, you know, numbers and hard analysis get behind stuff that I think uh, you know, folks
26:34
in the industry have always known, but now get a chance to see and especially at a time where where it can really start to matter. So, Scott Seagull, um,
26:44
I believe it was Winston Churchill who said, “You can always count on Americans to do the right thing after they’ve exhausted every other option.”
26:52
So we’ve heard now from Allison and from Ryan big challenges uh good options,
26:59
technologies, solutions, but um you know just how many uh other options might we exhaust before we start
27:07
to light upon some clarity given that you know it’s hard to to walk 10 feet in any direction without hearing someone
27:14
talking about data centers and and all they implicate. Um curious what you think. All right. Thanks, Scott. Um,
27:22
and, uh, it’s good to be talking to my friends, uh, in the co in co-op land a little bit because I’ve worked with, uh,
27:31
with people on this call or, uh, or your colleagues on a broad variety of issues,
27:38
everything from energy tax credits, cleaner act reforms, efficiency, uh, standards and policies. Uh, and of
27:46
course, I’ve also worked with the geothermal heat pump industry for many years as well. So, I’m in the middle of my own little ven diagram, I guess. And
27:54
uh it’s it’s great to speak to you all today. I I want to start with a proposition that might seem a little counterintuitive. The AI challenge that
28:03
uh that Scott was talking about is not simply where are we going to find all the electricity. Uh the useful question
28:09
is how do we serve some very large loads without letting their peaks dictate the
28:18
cost of the entire power system. So this is a question of question of electricity at the margin. It’s not a question of generating all the electricity needed
28:26
for uh for power systems. And as Ryan uh indicated that that distinction is
28:34
enormous for electric co-ops because we spent decades with relatively flat uh
28:40
demand for electricity and as uh Ryan cited the NERK data. Um you know that era is over. Uh NERK is is forecasting
28:50
that summer peak demand will grow by 224 gigs over the next decade. So we’re talking about a significant growth pattern. But there’s some extraordinary
28:58
uncertainty beneath those numbers. And this is a point we haven’t raised yet, but is so important about why demand side solutions are so important. Uh,
29:08
EPRI back in 2026 uh estimated that US data centers represent roughly 21 to 22 gigs of
29:16
coincident peak load in 2024. But for 2030, so just six years later, there’s a
29:24
wide range of possibilities from 45 in the low case, 71 in the midcase, 94 in
29:30
the high case. EPI makes an important uh point about this for the power sector, which is announced megawws are not the same thing as actual peak demand.
29:42
projects get duplicated in the cues.
29:44
They ramp up gradually. They contain outside resources. They may have substantial operational flexibility or they may not. So, the rule for policy
29:53
makers and the power sector should be do not build a 20-year power system based
29:59
around a press release. Now, the the good news about installing, and I’m going to get this a little bit more uh in a moment, but the good news about
30:08
geothermal heat pumps is that they are a good idea whether the additional demand materializes or not because they pay
30:16
dividends both in terms of the ability of a co-op to manage demand, but also to the consumer. So, and that’s very
30:24
different than uh building out infrastructure which may or may not be needed depending on how much of the data
30:31
that Ryan put on the table actually materializes. So, the first thing I would say is the policy landscape to answer Scott Stone’s question has
30:40
changed dramatically. Until fairly recently, federal and state policy was overwhelmingly about getting these data
30:47
centers built. I think as anyone who’s read the paper recently knows today the emergence emerging bipartisan policy is
30:55
better summarized as build them but protect everybody else along the way. So at the federal level, you know, President Trump launched the rateayer
31:04
protection pledge back in March. You saw Amazon, Google, Meta, Microsoft, a a whole bunch of others agree to bring,
31:11
build, or buy new generation. And by July, the White House had sort of spread that pledge around to utilities, to co-ops, to developers, public officials.
31:21
Roughly 80% of US electricity deliveries of 263 million Americans now subject to folks that are agreed to rateayer
31:28
protection. FK of course has moved in that same direction on June 18. I’m sure all of you saw FK issued the show cause
31:36
order for all six jurisdictional RTO’s and ISOs asking them to justify or reform their rules for connecting large
31:45
loads. And states are moving even faster. you know, they’re closer to the people and when the people are, to use a legal term of art, pissed off about data
31:53
centers, the states are going to move a lot faster. So, Texas Governor Greg Abbott directed regulators to ensure data centers fully fund infrastructure
32:02
required to serve them. Pennsylvania Governor Josh Shapiro, other requirements say that qualifying data
32:11
centers should essentially bring their own power, pay associated costs, protect water and air, etc., etc. And New York,
32:18
as you know, famously has imposed a a uh a one-year statewide moratorum. Georgia is a slightly contrary example to that.
32:27
Its PSC approved large loan arrangements intended to protect existing customers and recently reiterated that with its most recent agreement for a large data
32:36
center there. So, it’s not a question in from a public policy perspective of no data centers and it’s not a question of
32:44
build data centers at any cost, but it’s a question of show me how existing customers can benefit. And this is definitely being reinforced, Scott, in
32:52
the midterm elections. The political change shouldn’t be underestimated.
32:56
You’ve probably all seen this Gallup poll that indicates 70% of Americans oppose construction of an AI data center in their local area. Although candidly
33:05
only 8% can identify if a data center is actually being proposed in their in their local area. Uh Annenburgg found
33:12
this month local opposition has risen about 12 percentage points in just four months. So that shows a high degree of resonance and that sentiment is now
33:19
affecting campaigns. the uh national Republican senatorial campaign committee privately has warned AI companies so
33:27
privately that we read about it all over the trade press uh that data center opposition has become a serious vulnerability particularly in some
33:34
states like in the Ohio Senate race as an example so affordability isn’t just a regulatory issue okay it isn’t a matter
33:42
of pledges and and fk uh uh open dockets but every unexplained transmission upgrade every proposed rate increase.
33:53
Every story that suggests a household is subsidizing a hyperscaler is now potentially a campaign advertisement.
34:01
Right? So that leads us to the answer cannot simply be to build more. We need more generation and we need more
34:09
transmission. That is absolutely the case. But those assets as Ryan pointed out they take years to bring online. The faster opportunity is to ask how much
34:18
demand can be shaped, shifted, interrupted, avoided during the relatively small number of hours that
34:25
drive system investment peak hours. And that creates a bunch of practical levers you’ve that are beyond the scope probably Scottstone of this discussion,
34:34
but things like large load tariffs, interruptible service to the extent a data center can agree to that. uh
34:41
colllocated behind the meter resources which I think Ryan talked about um the grid operating more efficiently through
34:50
grid enhancing devices much discussion of that upgrading for example of transmission but the fifth tool in the toolbox maybe
34:59
ought to be the first tool in the toolbox and it’s so often overlooked which is reduce the other loads that are
35:06
creating the same systemic shock at peak load times.
35:11
Right? That brings me to geothermal heating and cooling in a pretty powerful way because geothermal HVAC is a peak management resource. It
35:21
is not just a me a mechanism for heating and cooling. It’s not just a fancy form of energy storage. It is a peak
35:29
management resource strategy. When people hear geothermal, they frequently think about our hot rock cousins, you know, geothermal electricity production.
35:39
But for co-ops, the more immediate opportunity is ground source heat pumps, network geothermal heating and cooling, which is
35:47
something that candidly electric co-ops along with water heaters and other technologies have been pioneers in advancing. So heating and cooling are
35:56
major contributors both summer and winter peaks. Airsource HVAC equipment be also becomes least efficient
36:04
precisely when the grid is under the greatest stress. So this is why we speak of this in terms of peak uh of of peak
36:11
load. So that means geothermal is not essentially just an efficiency measure.
36:18
But for the power sector, geothermal HVAC is a capacity resource located behind the meter. Every bit as much as
36:25
other behind the meter resources should be considered. And you know the data that Ryan was citing is pretty impressive stuff. They’ve plused it up.
36:33
They’ve done the math for you. And uh I’m not going to repeat it here, but I’ve always found the Oakidge uh work to be interesting in this regard. DOE’s
36:42
pathways report also interesting. And all of these resources can be found uh on the mission geo or the uh GEO
36:49
websites. Um the conventional imagine imagine just a co-op. Imagine a
36:58
co-op uh that has a 100 megawatts of perspective data center demand. The conventional wisdom is where do we find
37:07
another 100 megawatts? But the better integrated resource question is can we add generation to secure say 10 to 20
37:15
megs of hyperscaler uh you know flexibility. Can we install storage? Can we improve existing transmission lines through GEDs?
37:26
Can we remove another 10 to 20 megs from the co-op’s existing HVAC peak through geothermal and perhaps other forms of
37:33
efficiency? Also, that’s the real question. It’s a stacking of resources to address peak demand that results from
37:43
this backdrop of AI increase in demand at the macro level. So, it’s not any one of those single things. And this is why
37:52
Mission Geo’s mission is so important because nine times out of 10 we have this conversation and it’s a question of can we build another power line or can
38:01
we build more generation when in fact it’s a more nuanced question. It’s a stack and an important part of the stack
38:08
is geothermal and geothermal efficiency because you could remove another say 10 to 20 megs of the hundred you might need
38:16
to add. So that’s significant and important. What does it mean for co-ops?
38:22
I believe co-ops are in an unusually advantaged position in this environment because they approach
38:30
oftentimes they approach the problem from both sides of the meter. When a large load arrives, I would ask the following questions. First, is the load
38:39
real? CEG the EPRI data that I discussed above. Number two, what does the customer actually need?
38:49
Don’t assume that they need 100% uh 100% of the time they need the max load. Uh they don’t need 100 they don’t necessarily need 100% firm service.
39:00
Number three, who bears the stranded cost? Contract terms should be very specific on this matter and I think most
39:08
co-ops, most IUs are getting much more sophisticated at ensuring that that’s the case. Fourth, what resources can the
39:17
customer bring? Are they bringing generation? Are they bringing storage?
39:20
Are they bringing backup power? Are they bringing flex flexible computing or new generations? Or are they able to use old
39:27
generations of chips that are perhaps more energy efficient?
39:32
And five, the fifth question, what demand can we remove elsewhere? And this is the question that is frequently not asked. So what demand can we remove?
39:44
That’s the question that I think geothermal heat pumps very nicely along with weatherization, thermal storage.
39:50
There are other technologies there. I don’t want to sound like a broken record here, but there are other technologies that also essentially remove demand at
39:57
peak. All right, but geothermal heat pumps is a great way to approach it. So bottom line, I don’t think I’ve spoken
40:05
over my time, so I’m gonna end it right now. And I’m going to say first AI load growth is substantial but forecasts
40:13
remain extraordinarily uncertain and as a result of that a plan when we’re planning for growth we can’t plan
40:20
blindly around announced megawatts. We have to embrace technologies which are no regrets technologies like frankly demand side controls like geothermal.
40:31
Second, the political compact, and this gets to the policy question, has changed. Data centers increasingly need to demonstrate that they pay their own
40:40
way and preferably that their arrival will benefit existing consumers. And the thing about spreading
40:48
a geothermal heat pump technology is it benefits the existing consumer. The consumer feels heard because their concern is their power bills will go up.
40:59
And what better way to demonstrate that that is not the case than by making more efficient technologies available to them. Right? That that directly answers the question they present.
41:10
Saying you’ll build another power plant does not directly do that because it has high capital costs associated with it.
41:16
And third, capacity is not only something that
41:22
power providers build. Capacity is also created by changing when and how
41:29
consumers consume electricity and that’s what this discussion is about. So the bottom line is our challenge with policy
41:38
makers is to show them they have more tools at their disposal than perhaps they uh that they understand. And that
41:46
one of the important ones and one that NRCA members have for many years understood is that there are technologies that go directly to your member customers.
41:57
Technologies that they can benefit from in a direct fashion which affect their uptake particularly at peak times.
42:04
Geothermal heat pumps a great example of that. There are other examples as well.
42:09
All right, Scott, I’m gonna turn it back to you.
42:11
Thank you, Scott. Um, and thanks to to Ryan and and to Allison. We’ll shift now uh to a little bit of discussion and
42:19
I’ll I’ll I’ll um want to come back to Allison who who’s who’s waited uh uh patiently for for the rest of us um with
42:27
a couple of you know just a few co-op focused centric uh questions. But you know high level I mean I I’d make three
42:34
quick points. One is um you know we ought to think about reconvening after midterms because uh whatever might be
42:42
true from a financial standpoint, from a numbers standpoint um could very well need to be reconsidered, you know, once
42:51
the the the the pol the, you know, political contest has has run its course and um and and and do this do this all
42:59
again. Um the the second thing I think is um you know just how much I think
43:07
Scott to your point you know when something uh gets in the news a lot or you know my dad used to always have this thing about how do you know the stock market’s in a bubble it’s when the taxi
43:16
driver starts giving you stock tips and just the level of exposure you know to to of data centers suggests that while
43:23
obviously u you know there is there is clearly a very strong underlying signal I think Scott you emphasized Well, that
43:30
um just what exactly we’re we’re preparing for and what to expect isn’t something that can, you know, go off of headlines. It really has to that, you
43:38
know, requires a lot of diligence to to work through. Um and so, you know, Allison, I I wanted to ask within the
43:47
perspective of a of a rural electric cooperative, you know, where and and I thought Scott made a good point. And by
43:54
the way, this is not a debate. No one has to actually debate Mr. Seagull here.
43:58
offer counterpoints. Uh we would I I’d be wearing a uh I’d be dressed differently if that were the case. Um
44:06
and uh and probably have a car running outside just in case things went bad and I needed to make a quick getaway. Um but I thought, you know, the point about how
44:14
um you know, a co-op has can have perspective on this from both sides of the meter. you pointed out in your slides, Alison, there’s actually a lot
44:21
of good the kind of development and economic activity a large data center project can bring to a rural area. I
44:29
think um on the one hand, it goes without saying, of course, you’d want to make sure that everyone’s interests are looked after. The trick is how best to do that, by what process, and so forth.
44:41
I’m wondering what you’re seeing at NR NA in terms of how this has evolved. Um, we know at a political level, you know,
44:49
I mean, um, Scott could probably pull in the high, you know, in double digits if he ran for governor just on that speech
44:56
in some, uh, you know, in some states, uh, which is a bit unusual for such an empirical, uh, uh, talk, but um, you
45:04
know, how much do you see that changing and then what ends up ultimately being useful to inform good decision-making given the long tenur nature of a lot of these these judgment calls?
45:15
Yeah. Yeah, and I think you’re right. We we might have a different conversation after the elections. Um, definitely. But
45:23
I do think that early on and I mean, if you go way back even to before the pandemic, some of our members were
45:30
getting cryptocurrency minds, you know, um, and things like that. And that’s why I started paying attention to this topic and they were, you know, you know, this
45:38
is like 3 to five megawws. And they were like, “Oh my god, you know, call the CEO. You know, this is a big deal.” and and they were kind of interested in how
45:46
they could serve this load and it has kind of evolved as I mentioned it started really exploding around 2022 to
45:53
okay maybe this is something that could be good for our community and some of them actually from the get-go said we we don’t really want this type of load it’s
46:01
too risky but it has kind of evolved into all right this might be something that’s good for our community it might
46:08
improve our roads and schools and community programs but we really need to ask the great questions and we really
46:15
need to be careful and make sure that our members aren’t footing the bill for these data centers. And of course, affordability has always been a thing uh
46:24
for electric co-op. So, that’s always something that they are um making sure that they keep their eye on.
46:34
And Ryan, um, coming back to you on, and I’m gonna make as nifty of a segue as I’m careful capable of making on affordability.
46:44
um how much right now do you feel um you know mission Geo’s work has been able to make that connection and what might you
46:52
look forward to in terms of uh future analyses or other efforts to really connect to this idea that you know if
46:59
you put affordability at the center then the policy choices whether it’s longerterm incentives or more specific
47:07
directions in terms of how projects should be organized and developed start to become more clear. curious your perspective on that and and what kind of
47:16
feedback you’ve gotten on on the affordability message so far and uh and what you see going ahead.
47:23
Thanks, Scott. Great question. For a long time, geothermal has sold itself on
47:30
the cost savings to the building owner, to the homeowner, and that’s that’s absolutely appropriate. It is the most
47:37
efficient form of heating and cooling in existence. And while burdened by a
47:44
higher upfront cost, it pays for itself over time. What’s not to love about that? Uh I think that the sort of cost
47:53
calculus has changed a bit and this is something that I’ve increasingly woven into my argumentation and to some extent
48:01
I think it’s carried the day for us in some arenas.
48:04
If you install geothermal at your home, you’re not just doing yourself a favor by reducing your ongoing energy expenditures.
48:14
You’re benefiting your neighbors. They should all be thanking you and patting you on the back for your choice to install geothermal,
48:23
even if they don’t have it in their own homes or businesses. And why is that?
48:27
It’s because most rate increases are driven by capital expenditures on the part of power producers
48:36
which are largely driven by increased demand. And so there are I I I failed to
48:43
reference them in my earlier remarks, but I would remiss if I didn’t point to the case of CK Energy,
48:50
a small cooperative in Oklahoma that when faced with a peak demand crunch,
48:57
looked started doing the analysis, looking at the cost of building a peaker plant and took a a leap of faith based
49:06
largely at the urgent uh at the persuasion of Boyd. Lee, who was at that cooperative at the time, and he
49:14
convinced them that they could build a power plant in reverse, that they could install durable infrastructure
49:22
that would avoid their need for a peaker plant at a lower cost than actually building the plant. and their their
49:30
program has been nearly miraculous in in in the savings for their member owners
49:37
and the increased margins, the increased reliability and business performance of that uh cooperative.
49:45
Uh other utilities I’m thinking of uh Central Hudson Gas and Electric that introduced what was known at the
49:54
time as a geothermal rate impact credit, a grick. This is there’s not many utilities offering bricks because very
50:03
few utilities have actually done the analysis on what is known as an inverse
50:08
cost shift which is you as a geothermal homeowner, a geothermal system owner
50:16
paying more than your fair share for your use of the electric grid. And so this is an an investor owned utility
50:24
that saw fit to return those that overpayment in the form of a a check to rateayers
50:33
because of the benefit that they were delivering to the grid. This is at the core of mission GIO. And I think if we
50:41
can convince policy makers, utilities and regulators to truly value the grid benefits, not just to system owners, but
50:49
to the all of the rateayers and members uh on an electric grid. I think it go a long way toward addressing our concerns around affordability.
50:59
So Allison um to just swing back in in your direction one other perspective I want to make sure mindful you know we’re
51:07
at we’re at six minutes so uh Mr. See, prepare listen for the cavalry uh call.
51:12
Um but but Allison, um uh you know, the um the whole there’s a data center
51:19
project coming to town, you know, now sort of resembles when the circus used to come to town when people like John were were were young enough to uh enjoy
51:28
that kind of thing. Um what about in in in territories where there’s not some
51:35
giant hypers scale data center project but instead there are more ordinary demands on load. um how how do you feel
51:45
those co-ops are able to grapple with you know whether it’s just you know regular demand from um you know more AC
51:53
or or more heating and cooling because of uh hotter or colder weather um from the fact that you know if you have teenagers uh you have to install
52:02
multiple power strips in their rooms because they bring home every day a new device that needs to be plugged in. Um, and you usually have to then order
52:09
another charger because they’ve lost the charger that they they were supposed to have. Um, what you know, even take away kind of
52:18
this sort of mega trend, you’re still seeing, you know, demand pressures that are distinctive from say, you know, the
52:25
past 20 20 plus years. Um, how have how do you feel co-ops are characterizing th those issues? What plans are worth
52:33
making? and um you know what what starts to come to the four as a as a solution that works for for everybody.
52:41
I think that’s a really good point. Um and uh I think that you know our members have been very active in this sort of
52:48
beneficial electrification movement and you know since the pandemic they have seen a lot of growth in residential load
52:55
and a lot of communities because people don’t have to be close to urban centers anymore and they have seen increased EV loads and they have seen increased
53:03
electrification of heating and things like that and so they’ve always kind of welcomed those loads and tried to manage
53:11
those loads. that’s just been part of their playbook since, as I mentioned on one slide, I think since the 1950s and
53:17
then more so in the 1970s and 80s. Um, but that’s something that they’ve been promoting and realistically probably
53:26
right now only about 30 or 40 of our members have operational data centers
53:32
and of that probably only a handful maybe a dozen maybe have hyperscalers.
53:40
So we hear about that very often but we are still hearing from our members about increased load from other from other
53:47
sources and that kind of load they like and and those loads unlike hyperscaler are are flexible are manageable and so
53:56
they have experience with that and they welcome that.
54:00
Yeah. Do you um do you see um you know just more broadly across the sort of across the power sector across the grid?
54:09
Do you see any any um you know interest in attention among among generators you know converging on a specific mechanism
54:18
or tool to try to u address this? you know, do do you see the potential for anything to start to become standard, whether it’s any of the things that that
54:27
Scott Seagull rattled off or or something else that’s that’s distinct to co-ops or maybe not distinct to co-ops that, you know, IUS, merchants, and
54:34
others might might start trying to to run as well that, you know, could um whether it’s on the demand side or
54:42
whether it’s um uh ways to balance the need to build new generation with um you know, limited, you know, uh funding or
54:49
or or um or components. uh equipment to do so. Anything you feel is is truly converging that we should be looking out for?
54:58
I think that there’s been a lot more talk of I say orchestration, you know, and like derms and BPPS and sort of
55:05
multiple technologies that can be orchestrated and less just on I mean, you know, the term BPPs a lot of our
55:12
members don’t really like that term. Um, but having, you know, homes with multiple devices like a thermostat, an
55:19
EV, um, maybe even a a battery or something like that. How can they orchestrate all of those things and what are the effective ways to do that?
55:26
That’s something that we talk about a lot.
55:30
All right. I appreciate that. And Scott, um, so we could go into a second hour, uh, to prognosticate about midterms and
55:38
what it means. in 90 seconds. Um, the two most plausible outcomes post
55:46
November, to what extent do you feel that will change the either change the
55:52
discourse around data centers or lead to um, you know, you know, specific measures, actions or or other policies and programs being deployed as a result.
56:04
I know this is not possible to do in 90 seconds. So, it’s really just whatever can be scaled to that slot.
56:10
Sure. Uh, a couple things. First of all, the question of what the two most likely outcomes are is is itself in play, I think, at this point because, uh,
56:18
there’s data that indicates the Democrats have a pretty good shot of taking back the Senate. I wouldn’t have said that previously, but you have to go
56:26
race by race, and my my old friend Nate Silver has done that, and he suggests that it’s more likely than not that the Democrats take back the Senate. the
56:34
house I think is has basically well a lot of prognosticators saying it’s foregone conclusion. So let’s make the assumption that there’s a complete flip
56:43
in the congress. One of the early priorities I think for members of Congress are going to be the restoration of some of what was lost uh when it
56:52
comes to energy. Um and that means uh clean energy incentives. Um and uh since
56:59
the Democrats and the Republicans will have shared leverage, the president will want for the last two years of his uh
57:08
time in office to have a government that is open. So he he is going to of necessity have to deal with the
57:15
Congress. there’s a good chance that a lot of these credits and uh other policies will be revisited and that that can have a salutoy effect on dealing
57:24
with sufficiency of both clean power generation and also peak load management like we’ve been talking about. Um, I’ll
57:33
give you a real world example of just moments ago, Scott Stone, uh, actually lunchtime for me. Um, I was meeting with
57:43
some of the Senate Finance Committee Democratic staff because I think it’s probably about the right time to be meeting with them at this point. And um
57:50
I said, you know, I’m about to go give a presentation where I’m going to talk about the fact that there are other
57:57
tools in the toolbox to manage uh data center demand uh that are that don’t involve building necessarily new
58:05
transmission lines or new or new power or uh or new generation where there can be a disagreement over what the generation portfolio ought to look like.
58:12
And I mentioned geothermal heat pumps and they said, “Well, don’t we have a credit for that?” I said, “Well, you did.” So, so, uh, yes, there are credits
58:20
for that in the commercial context, but, um, what would you guys think about using that and tying it to addressing
58:28
peak demand? And they, you know, let’s put this way, no one ever agrees to anything until it’s time to agree. But
58:35
there is an openness to that. So, in many respects, data centers have forced a lot of uncomfortable conversations
58:43
because even without data centers, we would still have load growth. We have low growth because of onshoring and manufacturing, electrification of
58:51
households and small businesses. You mentioned some of these things, you know, uh electric vehicles, not not quite the uptake that they thought it
58:59
would be, but it’s it’s there. And so we we would have load growth anyway, and we’d have to be answering some of these questions. Somebody have to pay for it,
59:05
right? So, um so this is now a time to have all the tools in the toolbox on the table. Maybe this fight over data
59:14
centers has forced us to have that realistic discussion a little faster than we might otherwise have had it. So maybe there’s a a silver lining there.
59:24
Well, let’s end on that. And I note, by the way, we didn’t lose a soul while we were talking about the midterms in this little overtime here. So, sorry for
59:32
everyone who’s being made late to a meeting. Now we’re losing people. Yeah.
59:36
All right. I’m used to it. Um, I’ll just say thanks uh uh to Allison, to Ryan, to John and and to Scott. Um, thanks to all
59:44
who’ve made time uh for this today and who’ve been engaged in these kinds of issues. Would love to keep talking. One
59:52
of the things that I think is important is, you know, these webinars are less about um, you know, reading everyone uh, uh, you know, the the the truth, you
1:00:00
1 hour
know, but rather provoking discussion as we all try to figure out and and develop uh, a better sense of what’s going on.
1:00:06
1 hour, 6 seconds
So, we’ll we’ll keep at this. Thanks to all mission.org. This will be posted.
1:00:12
1 hour, 12 seconds
There’ll be some other stuff there in the future. And Allison again as our as our guest uh in uh in geothermal world.
1:00:18
1 hour, 18 seconds
Really appreciate it and so fundamental to have NRCA’s perspectives represented.
1:00:22
1 hour, 22 seconds
So, thanks all. Have a good rest of the afternoon. Bye everybody. Thank you. Thank you.