Weather Guard Lightning Tech

Key Takeaways from the Texas & Oklahoma Tour, IRA Debate

Joel and Allen discuss their Texas and Oklahoma wind farm tour, finding tight budgets and lack of technicians are causing operators major struggles. Then the team discusses whether Inflation Reduction Act incentives are effectively driving more clean electricity generation or creating misaligned incentives for hydrogen over expanding wind power.

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Philip Totaro: Joel wants to do a billboard. In Texas to advertise Weather Guard Lightning Tech, and StrikeTape. That’s a pretty good idea, but I got a better one. What if you did a TV ad, or like a, an ad you could post up on LinkedIn, but recreate the episode from the Twilight Zone, Terror at 20, 000 Feet, but instead of there being like a little monster on the airplane wing that William Shatner is all scared of, how about it’s just like lightning strikes that get, diverted by strike tape and then, but you recreate the ethos.

And then nothing happens.

Allen Hall: It could be good. William Shatner is still alive. He’s like 92. Yeah, he, I’m sure we could sign him up

Philip Totaro: to do that.

I’m telling you. This is actually, this is why I had the idea because his production company contacted me about six or seven years ago and they wanted me to do an infomercial with him.

And it was actually fairly reasonable price. So we should talk off air and look into this.

That’s a thing. Why didn’t you do

Joel Saxum: that? If we could get William Shatner to do a strike dig commercial. Come on. Phil, how much was it? Was it four figures? Three figures?

Three figures, that’s what I’m talking about.

We spent a lot on barbecue this week.

We’re trying to recover.

Allen Hall: Joel and I have been down in Oklahoma and Texas going to a variety of wind farms and meeting with the O& M folks, the site supervisors, just to see what’s top of mind there. Really great discussions. Some of the best discussions about Wind energy I’ve had in the last couple of years because everybody’s so frank about it and Joel maybe you can give top of mind what some of your insights were.

What are we chopped liver?

Joel Saxum: No. Just so we’re clear, the conversation with you guys are great as well. We’re, I don’t know. I’m not discounting those.

Yeah, no, but you’re not running a wind farm, Phil.

Not yet.

So if you take this whole thing as a loop it into one big ball. So Allen and I did this tour.

Allen is still on the tour. I’m back at home. But. We talk with these, you walk in the door at an O& M building, you’re in Texas and Oklahoma, they welcome us in. If the door is open, someone’s there, come on in, let’s chat. And people are willing to, I think part of it is, some of the wind farms we visited, they’re in the middle of nowhere, so they’re not getting a whole lot of visitors.

So when they see some people in general, they’re like, oh this is cool, people. But of course, we’re out there, we are visiting wind farms we know have lightning troubles, WeatherGuard, lightning tech, strike tape product, we can help with that. But the, one of the overreaching goals is just to go out there and talk with people.

We want to see what’s going on in the industry. What are they, what are the problems are running into daily from technicians to. Today we heard about bats and then we, pitch bearings and blade issues and only so much budget to do so many repairs. And we’ve, some wind farms, we’ve erased our bait, almost erased our blade budget, blade repair budget.

And it’s like April for the year. Just really interesting conversations, but for the most part, everybody’s willing to learn and interact and chat and share some successes, some failures, some things they’ve learned. And I guess from that respect, Allen and I have acted like bees buzzing around from flower to flower spreading pollen and information across Texas and Oklahoma in the last few weeks.

Allen Hall: A couple of things that kind of stick in the top of my mind from the last several days is the number of issues that operators are having on site with turbines, the list of really significant. Repair jobs is high. And so the technicians are just going from fire to fire in a lot of cases Some of them have been very proactive not physical fires.

No there have been some fires I saw some of those this week, but the other piece is that there seems to be like a little bit of An approach issue and maybe I viewed it as regulated assets and unregulated mark the assets. So the regulated market is the power company groups that run wind farms and then the unregulated ones are feeding the ISOs and playing the power market.

They have a diff totally different approach about maintenance and what they can afford and what they don’t want to pay for. And at full service agreements or their approach there is totally different. It does seem like the regulated folks have a better handle, maybe because they have more revenue to play around with to maintain the wind farms.

Unregulated folks seem to have more constraints on budget. Joel’s right. A lot of the blade budgets and repair budgets have been eaten up and it’s April. And the amount of money even today, Joel, at lunch when we were talking to a pretty good sized operator, the issue about blade budgets was crazy.

It’s pretty much all gone. And I, that’s a big driver for the marketplace right now.

Joel Saxum: Yeah, you, we ran into some people where it was like yeah, we’ve got a couple, we’ve got a couple hundred grand. for these 100 turbines for the blade repair budget. Like you get into one, one big repair or you know a week where you get a crew winded out or weathered out on site and you’re gonna eat through a huge portion of that budget.

And the grand scheme of things, if you’re doing 20, 000 repairs, that’s only 20 repairs across 300 blades. That’s not going to cut it. You’re not going to be able, there’s no way with that amount of money, you’re going to be able to keep up on the damages that you have.

Allen Hall: So the there’s really budget.

The budget constraints are real and it’s becoming more and more of an issue. The concerns about the OEMs there’s really two players in the United States right now if you talk to operators, it’s GE and Vestas. Those are the two. We heard nothing about Nordex, zero about Siemens Gamesa, which was awesome.

I was shocked about that. Siemens Gamesa was seen by a lot of the technicians and the site managers as being old technology. That everybody has moved on since. Which is not what Siemens is doing, but that’s the impression that I think, that Wade Aulo they’re having. And that is, Changing the landscape, I’ll call it of how wind is going to develop in the United States.

Two big players popping out right now, GE is trying to write the ship from what I can see, and just talking to operators, and Vestas is trying to sell into sort of GE’s marketplace. Now that has implications. Way beyond the United States because what does happen in the United States sends a trickle over to other places.

This I think, and my concern coming out of this is OEMs are getting killed right now, money wise. Operators, there are not a lot of operators making huge sums of money here. Everybody is really tight on funds. Everybody is trying to get their operations as lean as they humanly can. And that means.

People and budgets, just general budget. So if you look at some of these sites where they should have a lot more people, it’s a handful, it’s crazy low. It’s amazing. They can even participate at a level to keep the wind turbines up. Joel?

Joel Saxum: Yeah. Some sites where, you know, 90 turbines here, 120 over here, the sites an hour and a half apart, one site manager that runs both of those sites or one site manager running three sites, we’ve, we even saw that.

Which is crazy. The same thing too, like Allen said, we’ve talked to some people over lunch that just a couple of engineers for a thousand turbines that I just, I don’t see how you can keep up with that. Rosemary, when you guys were working, I guess you’re in the design and blades and things of that sort.

Did you ever hear any of these whisperings or stuff, stories from the field about this kind of, these kinds of things?

Rosemary Barnes: No, actually not so much. People are. You don’t, I don’t know, it’s not enough to just talk to individual. Wind farm owners, operators, and get a picture because, I would have talked to, I don’t know, I would climb it maybe one or two different farms per year.

So that’s the number of, pieces of information you get. And one of them in particular just, loved everything about our turbines compared to the one that he had before. And so I had nothing but amazing things. And. That doesn’t mean that’s the true picture, but yeah, I think that, I don’t know, this is a case for, overall data being what you probably need.

And the other thing is that, people tend to go with the same turbine over and over again because you obviously you learn how the quirks and how to manage it and that sort of thing. And so I don’t know that there’s that many people out there who are actually working. Intimately with a bunch of different yeah, operating systems, to be able to really get good information about the difference.

I guess that, technicians that move around, they will definitely get a sense and, You hear stories about, about good and bad things, but I wouldn’t say that from, yeah, my experiences, I really gained the knowledge that I would need to make a broad judgment like that.

Joel Saxum: Yeah. And to, just to qualify this statistics, N equals 30 for a sample size, right?

We didn’t hit 10, we didn’t hit 30. We did. Yeah. At a minimum, we didn’t hit 30 wind farms. I think we hit nine or 10. And this is more. Qualitative than quantitative. This is just the feelings that we got from talking with people. Some of it is quantitative, the numbers and such, but I guess that would be That’s more inside baseball numbers wise on budgets, so Phil, you guys don’t actually You don’t have visibility into that level of information, do you?

Philip Totaro: Yes and no. There’s a couple of different sources that we track, both, talking to asset owners and operators, as well as regulatory filings that they make. When a company like MidAmerican has to file FERC reports on a quarterly basis or, operators in Michigan, for instance, have to file with the state regulatory authority up there.

Sometimes those things leak out into the public domain if we can, search for it and find it. through Google or whatever choose your favorite search engine, then, it’s fair game. So what those documents tend to contain is information about not only their operations and maintenance budget, but also if they’ve ever done You know, repowering or other major correctives that go beyond kind of their standard anticipated budget for a project site, that’s something that they have to disclose to FERC or other regulatory authorities.

So again, it’s not 100 percent of all the wind farms everywhere in the country or in the world, but we at least have enough data to be able to give us an indication of what’s happening to your point, though, Joel, we have seen and heard things like this. And in fact, we got. Some outreach from a prospective customer that we’ve been talking to about developing a tool that would literally help them identify and prioritize their budget for not just blader pairs, hopefully, but their entire O and M budget, which we do have very good visibility to O and M budget as a whole, we know how much each company spends on.

Operations of maintenance each year within plus or minus about 10 percent for their assets again, unless we have the actual numbers that they report but even for the ones where we don’t, we’re, we’ve never had anybody tell us like we’re way off, but they all want to do exactly what you just suggested, get more lean and get more efficient with the way they’re spending their money and they want to be able to identify.

Are there repairs that we should be undertaking now before they escalate into more serious repairs later? But the reality is they still, even if we develop that tool and they were using it, I don’t know that it would actually make enough of a difference, sadly. Not to undercut what we’re doing, but the reality is they just don’t have enough resources to cover the plethora of issues that they have.

Allen Hall: This is where I think ESEG comes in and I had a number of discussions with site managers, site supervisors about ESEG because that’s the place where in terms of understanding the global effort or even localized effort in regions of the United States, like what is everybody working on and how are we going to manage these repair budgets?

They’re talking about those things generally at ESIG because that’s the place that you don’t talk about them at ACP or any place like that. It tends to happen at ESIG because that’s a, it’s a operator only forum, no manufacturers, no outside influences, it’s just operators. That, that has had, I think, a good effect on the industry.

Yes. But what I’m hearing is a little bit different. Now, you go into a place to discuss everybody’s problems. Is fine. I think what they’re having trouble doing to lower costs is finding solutions or finding out what the next wind farm did to fix this problem. That communication is weirdly stunted.

It’s not, it’s like they view each other as competitors and they’re not competitors in any sense. I don’t, and maybe it has more like a Rosemary mentality when she was at LM where they didn’t talk to Vestas about blade design. Do two adjacent wind farms, are they competing for what?

Joel Saxum: Yeah, but that’s the concept.

Allen Hall: Yeah, and we’ve heard that from engineers. We can’t talk to the competitor.

Philip Totaro: Joke aside the developers compete with each other. But once you get to the point where it’s an operating asset, no, you don’t. And that’s what confuses me too, is everybody goes back and says NDAs, we can’t talk about this set or whatever.

We can’t talk about our problems. We don’t want the insurance companies getting wind that we have more problems than what we tell them about, because then they’re going to raise our premiums. So that’s actually a large part of it, to be perfectly honest. But it’s, yeah, they don’t they don’t talk to each other.

We’ve, I’ve tried for six or seven years. I’ve even offered people money to give us access to not even their raw data. I’ve who turns down free money? But we’ve offered people money to license some of their asset performance or benchmarking data so that we can put it into the.

The overall platform that we have where we can look at any market and look at the performance of all the different assets, but we can only go down like an inch deep there’s, miles and miles of additional information that would be relevant for investors for yes. For insurance companies, for other people that, competing developers that want to see we’re already advising developers on.

How much did somebody else pay for the same make and model of Turbine, and did somebody else get a better deal than you just did? So that’s a thing we can do. We can’t tell them, when somebody else that has the same make and model of Turbine on their project site, they’re operating at P50 or above and have been for 10 years versus these guys who, have more or less the same site conditions and similar capacity factors and stuff like that.

They had a performance drop off after five or six years and they can’t recover back up to the same level that somebody else is at. That is absolutely something that could be solved with data sharing, data licensing, exchanging knowledge and information. Again, we’ve offered people money to do this. We’ll pay you royalties if you share information with us that we can get other people to also, subscribe to.

Joel Saxum: There’s an even easier way this is what Allen and I, of course, spend a lot of time in the car together, and I’m thinking man, we’re driving along between, San Angelo and Abilene, and I’m like Half of these people that run these wind farms either live in San Angelo, Big Spring, or Abilene, okay?

Why not have a happy hour where you guys all go have a beer together and share your problems? Or like in, I guess if it was me, and this is, I’m saying if it was me, I’m not in that position, so I don’t know, but it’s pretty easy to look around you for the two hour radius and see, Okay, there’s four other wind farms that have the exact same turbines that I have that were COD, basically the same date.

They’re probably seeing the same problems I am. Why don’t I give that guy a call and see what he did about his pitch bearing issues or his, blade repair. What’s he taking for lightning strikes? Or her over here, what is yaw pucks? I don’t, but nobody’s doing that. They’re siloed. It’s the competition thing.

That’s a competitor. No, they’re not.

Allen Hall: That’s where the podcast comes in. Because basically, every time I run into a site manager that has an issue, I said, oh, we had an ex person on the podcast that talked to that. Just go look it up. And you can pretty much find any Solution or company in wind has been on the podcast.

Plus, he has Rosemary here to fill us in and all the new tech stuff. But even just connecting, right? And the weird thing is that Joel is right. They don’t tend to reach out to one another. They’re having a hard time figuring out where the resources are. And even our podcast, even though we’ve We have crazy listener numbers at this point.

We’re not universally heard. So it doesn’t necessarily help the person who’s never heard of us. We have to go spread the word sort of wind farm by wind farm. But I think when We do get that information out there. It does click. It’s a really good feeling actually. If you’re, if you’re, if you go to a site supervisor and they’re saying, Hey, we’re having X issue.

And Joel next to me goes, Oh, I’ve seen that issue on the three other farms. I’m going to give you the names of these guys to go and talk to so they can get this resolved quickly. That’s huge. That’s huge for the industry. Now we’re just two knuckleheads driving around in a truck. And if. Somebody else, if more people did that sort of interchange, it’d break down the barriers, like Phil was right.

If we break down those barriers and just start picking up the phone and calling one another, we’re not competing at the operations level. We’re competing at Rosemary’s level, or LM’s fighting, Siemens. Sure, I got it. That’s a little trouble here. And Rosemary I know, you’re isolated from us in Australia, but I will tell you, Rosemary our numbers on the podcast are a stupid high right now.

They have just skyrocketed downloads per day on audio platforms have gone nuts. And that’s a good sign.

Rosemary Barnes: Is that because I’ve been missing a few episodes?

Allen Hall: No, it seems it’s,

Philip Totaro: We like you here. We like you here.

Joel Saxum: So what this leads to, guys, is I need Phil and Rosemary, I need you to get on my back with this one.

Driving down I 20 in Dallas. It’s the wind capital of the United States. There’s 15, 000 turbines within a couple hours of there. It’s Trying to convince Allen to let us get a billboard. Put Rosemary’s face right on it. On I 20. So we did catch we, we did, You could either look at the tour that we drove on as a wind farm tour, Or a barbecue tour, because we did catch a quite a few of those places.

Allen Hall: I am so full of barbecue. Oh,

Rosemary Barnes: no.

Allen Hall: And Dairy Queen. Those are the two. Barbecue and Dairy Queen. Meat and dairy. I know they don’t go together, but man, they sure do taste delicious together.

Joel Saxum: I think that looking back at this, I do not envy Any one of those site supervisors and the fires that they have to put out and the budgets that they have to work with and the problems that they have every day.

It’s a tough job. When you’re driving around and you’re looking at these things and you go are those turbines curtailed? Or do they have an issue? Or what is the issue? And you can look at and see some yawed certain ways and other ways And you’re trying to piece that together as you’re driving.

And then you talk to one of the guys and say, yeah, I’ve got 120 turbines and 24 of them are down right now for blade or gearbox or main shaft or this or that. It’s Oh man, what a jugglies. Oh, it’s not bad. We’re doing pretty good right now. That’s a struggle, man.

Allen Hall: Yeah. I do not envy those people.

They are working really hard. It’s. It’s good to see that they’re, that they have the right people in the right slots because it is a tremendous amount of work. I will say having a lightning eye driving through some of these wind farms where you can get relatively close to the turbines.

There is a lot of lightning damage, way more than I thought. It’s shocking how much money the industry is paying to fix blades that have been damaged by lightning. And that needs to stop when I think we can probably help there. But I just didn’t, I knew it was bad. I didn’t realize how bad it was.

Philip Totaro: So the Department of Energy actually just released a new study talking about how, there’s a huge need and a huge, pool of talent out there that is interested in wind energy that, the Bureau of Labor Statistics and the Department of Commerce, everybody in the United States certainly has said wind turbine technician jobs are like the number one thing for the past few years, wind, solar, et cetera.

But the reality is, this goes back to what we were talking about at the beginning, is with a finite amount of budget and companies wanting to operate lean they can’t afford to hire the, all the technicians that want a job or are even qualified for a job. That’s the reality of where things are right now is we’ve got You know a mismatch in terms of and frankly, look, this basically comes back to PPAs have been too low with higher PPAs.

You gives more margin to the independent power producers and the owner operators. They can hire more people. They can fix more stuff. And frankly, higher PPAs attracts more investors as well. So we’ve got a vested interest in being able to, yes, reduce overall costs on average, but a race to the bottom on, on LCOE and on PPA prices is not always gonna net the best financial results for the entire industry.

Allen Hall: Hey, Uptime listeners. We know how difficult it is to keep track of the wind industry. That’s why we read PES Wind Magazine. PES Wind doesn’t summarize the news. It digs into the tough issues and PES Wind is written by the experts so you can get the in depth info you need. Check out the wind industry’s leading trade publication.

PESWIND at PESWIND. com.

All right. So on my travels over the last couple of days, one of the items in the back of my head was how is the IRA bill influencing what I’m seeing right in front of me? There are obviously some wind farms repowering going on, but when you talk to the operators are really on lean budgets.

And I didn’t think that would be the case because of all the incentives in the IRA bill. Plus, GE is in trouble, right? GE just really had severe layoffs at LM, plus a year or two ago, they had some About 40 percent layoffs internally on the GE side. That’s not good. And that’s an indicator of issues. Another one Onyx Insight was sold like, is that healthy?

We also saw today that the CEO of Polytech is stepped down and we’ll take a board position and bringing in new leadership for Polytech. And I always think of Polytech as the gold digger. Dana’s standard for sort of new technology. Those to me indicate that the IRA bill and how it’s constructed, or maybe it’s how it’s being applied are not having the intended results that it is.

We’re not making, creating healthy systems. I’ll say for operators to exist in, for developers to exist in, for OEMs to exist in. Where is all the money going? Rosemary, you get to watch it from the outside. What do you think is happening?

Rosemary Barnes: I think, so I’ve heard obviously I’m not in the U. S.

and I can’t find the motivation to become intimately familiar with U. S. tax law to properly understand, what’s going on. But I have listened to a lot of podcasts and read a lot of articles about this. And I think one thing that I keep on hearing that just doesn’t ring true to me is that, this is all carrot and no stick.

So there’s no losers here. And I think that is really wrong. When you have overly generous subsidies for one technology then it’s going to cause that technology to be used for. Places that you, for applications where it doesn’t really make technical sense and that, that is a distortion and there will be a loser from that scenario because you, The technology that should have been used won’t be.

And so what I’m talking about is really excessively generous subsidies for hydrogen, which mean that doing all sorts of crazy things with hydrogen rather than just rather than just electrifying, make clean, renewable energy, electricity, and use that electricity as electricity. You have like blue hydrogen projects where it’s from, fossil gas and then it’s captured.

And then, there’s so many subsidies you can get. And actually I would refer listeners to a different podcast if that’s all right, that I can occasionally plug a different podcast, but Michael Liebreich’s Cleaning Up podcast has a really good episode on this, episode 126 with Marco Alvira and it’s called Subsidies Everywhere All At Once.

And there’s a quote from this guy that I’ve just pulled up here. You get a subsidy for capturing the CO2, you get a subsidy for producing the renewables, you get a subsidy for producing the hydrogen, and guess what, we may even be able to get additional subsidies in Europe. So yeah in that situation, he mentioned subsidies for renewables, but it can work without any renewables happening at all if you’ve just got a, yeah blue hydrogen project.

Capture the CO2 and get a subsidy for that. and then you do something with your hydrogen. You can, even in some cases I’ve heard people saying it makes sense to produce hydrogen just continuously, just as bulk power supply, not for energy storage, but just for power supply. And I think that, everyone’s in a frenzy trying to take advantage of as many of these subsidies as possible.

And you can layer them to the extent that if you’re making ammonia or, methanol from your hydrogen, the subsidies form by far the bulk of the the value of the product the subsidies are more valuable than actually the money that people will pay for the product.

So it’s just really really a big thing. And if you believe, that the hydrogen economy has to happen, that, we need to massively ramp up hydrogen over the next decade. Then probably something like this needed to happen to, kickstart things, but the issue is that it, yeah, it doesn’t, it isn’t just positives, positives all the way around, because instead of, using your electricity generation sources, your clean electricity generation sources efficiently, You do this like thermodynamic vandalism where you try and convert, gas into hydrogen and then hydrogen into ammonia and then ammonia back into hydrogen.

Like every inefficient transformation, there’s another subsidy that can be harvested along the way. And it just, that’s not good for the energy system as a whole. It’s good for the hydrogen industry. And I would say that it’s still up in the air how extensive the hydrogen economy should be and will be.

Yeah, people are, gradually uncovering the technical problems with individual applications and realizing that actually there are alternative solutions for nearly every case that are a lot easier than, Yeah, trying to do all of those conversion processes and ending up with, 10 percent of the energy that you started with at the end because of thermodynamics.

So yeah that’s my take on it.

Philip Totaro: Don’t tell Twiggy.

Rosemary Barnes: I like a lot of stuff that he’s doing, but no, they’re hydrogen. He’s just, they’ve just actually, I think started production at their huge electrolyzer factory in Gladstone, Queensland. And turned out to be even bigger than expected for this starting point, but.

Yeah, if you look at all of the announced hydrogen or the electrolyzer production plans. They’re a lot more than the actual uses of hydrogen that people are planning, which is very close to zero. Yeah, it’s an issue. And I think that’s why it’s turned into this kind of like bit of a religious fight.

Because you do really have to be a true believer in the hydrogen economy to think that these sorts of, gigantic actions from governments. The smart thing to do because it’s not like the rest of the energy transition is just, going swimmingly and taking care of itself like wind is not going swimmingly and in the US and it’s struggling to a lesser extent elsewhere, but still struggling.

And if you look at any of the scenarios for net zero, they all have a lot more wind in it than we’re on track to actually install. I would say government should be figuring out. What are the roadblocks and helping us and so often mundane things, all the things we talk about on this podcast, it’s, it’s port upgrades, it’s ships, it’s cranes, it’s the right kind of steel to make chains for, whatever.

It’s, it is exact kind of things that governments could be supporting, but instead they decide to pick winners for technology of how the world’s going to look in 15 years time when they’re not, people making the policies are not the ones working in industry. And in any case, it’s really hard to know what what’s going to happen over the next decade or two.

So yeah, I, to me, this is my main problem with how the energy transition is going is this kind of misallocation.

Allen Hall: Rosemary, I think you’ve highlighted the key point there. They’ve chosen winners and losers, and that makes it hard, especially when hydrogen came into the mix. If they had designed the IRA bill to produce more electricity, just leave that as a goal, and to distribute more electricity, regardless of the creation source or the way to get it there, right?

Let’s just say we’re just going to be ambivalent about it all. We’re going to try to electrify the United States in simplistic terms. So instead of having a CO2 goal, we have an electricity goal. So what’s happening now is we focus on the CO2 goal, And then we dance around the CO2 goal with all these marginal technologies.

I’ll call them instead of saying, Hey, the way to attack this is to just go for electrification as much as we reasonably can, I’m going to incentivize. Everybody to electrify. And make that the goal and let the businesses and the creators go out there and do this thing to make electricity and deliver electricity.

I think that gets rid of some of the issues that we’re having, which is like a lot of money’s getting diverted to things that don’t really change the outcome. The CO2 level, if that’s your goal. It isn’t going to change very much.

Rosemary Barnes: There’s some other examples of that too, like all the CCS incentives, which are the carbon capture and storage incentives, which I don’t disagree with incentivizing that per se, because I will have a much easier time of this energy transition if we can get that working reliably and cheaply for the purpose of taking CO2 out of the atmosphere.

But the incentives are to do with how much CO2 are you capturing? Not. How much CO2 has gone into the atmosphere. So you can get the incentive regardless of whether the project overall puts CO2 into the atmosphere. If you had to say, Oh, okay I previously wasn’t going to extract this gas.

That’s from a, like 50 percent methane, 50 percent CO2 reservoir. I was going to leave that alone, but now I can get paid for all that CO2 that I capture. If I capture, half of it, that’s a lot of money. The other half is now in the atmosphere, the incentives don’t care about that. Like it’s a lot cheaper to capture a small fraction of CO2 than it is to capture a lot.

Of course you’re better off taking a really big source with a lot of CO2 in it and capturing a small percentage of that. That’s like the smartest way to farm that subsidy. I think there’s just too many examples of where the end goal isn’t really clear. What are you actually trying to achieve?

Yeah, and this is where, obviously I’m not a US political expert, and I know that it was very hard to get anything through, and people overall are very happy with it, so it’s probably really easy for an Australian to be like your tax bill’s stupid when we’re all grateful that you got this through.

Overall, it’s a net benefit for sure, but there’s pockets of it where it’s not.

Allen Hall: US and Australia already have limits on emissions, right? The United States has had them since the 1970s. They’ve changed over time. But basically. Making a coal fired plant in the United States is pretty much impossible, right?

Because of the emissions limit. So there is a Framework there like emissions wise you’re not going to putting something that’s going to create a lot of emissions, right? So you’re talking about nuclear. No, we traditionally don’t. You don’t? You must. You must have some emission limit. So you’ve chosen winners and losers?

Rosemary Barnes: No, it’s just that the economics of renewables just smash coal power plants.

Allen Hall: No. China disagrees. China will disagree with that.

Rosemary Barnes: China’s a different story because they have got a lot of weird incentives to build coal and use coal preferentially. So it’s not a fair fight in China. I wouldn’t recommend using China as a good comparison for how any non authoritarian government was going to operate.

No, in Australia, truly, we had the whole last decade we had, you could not have a more coal loving government than we had our previous prime minister to the one we’ve got now. He literally, Got the coal lobby to lacquer a piece of coal for him so he wouldn’t get his hands dirty.

They, lacquered it in this thick coat. So it was nice and shiny and black and he brought it into parliament to talk about how good coal is. And this was like, not that long ago.

Allen Hall: Yeah, but that doesn’t drive people crazy. That doesn’t drive long term policy, right? Long term policy in Australia has been shifted to renewable energy very quickly, regardless of temporary diversions.

Rosemary Barnes: Almost nothing. We had a coal, we had a price on emissions for a couple of years, two governments ago, so that was around 2010 or something plus or minus a couple of years. There was an emissions trading scheme. It lasted for one or two years. Then it got repealed. They lost government over the negative attack over it that got repealed and there was very close to zero like there was no like genuine in good faith climate policy for the next government on that there were some attempts By one of the Prime Ministers.

Allen Hall: What do you think’s different, what do you think’s different for the United States and Australia at the moment then?

Rosemary Barnes: Economics are a bit different. In Australia you couldn’t, honestly, Australia, out of all the countries of the world renewables just make the most economic sense. We just have so much wind, so much sun, we, it’s so constant and consistent.

I just did some analysis of I read through some analysis of 42 years of weather data. Huh? And, looking at Dougal flouter, the periods where there’s no wind and no sun. And in Australia, like there’s, it’s really rare to see one that’s widespread over the entire the entire grid.

And when they do occur, they’re like, in the order of hours long. They’re not days long, but certainly not weeks long. When you look at the data, like it’s just, we can easily just build heaps and heaps of wind, heaps and heaps of solar and get most of the way there with a little bit of energy storage.

Allen Hall: But that’s a system design, right? We’re all, at some level, systems engineers. Even Rosemary. He’s a composite expert.

Rosemary Barnes: He’s more of a systems engineer than I am.

Allen Hall: I was wondering how long that was going to take. Yeah, but you see what I’m saying? You get the result of the system you create, right?

And the system that Australia has created produces this result. The system that the United States has created is yielding this really weird Output right now where OEMs are struggling.

Rosemary Barnes: Yeah. I think that US has had more messing with it. If you want to compare systems, compare Texas to Australia, we have a really similar electricity market design.

And it’s basically designed to, just let the market talk the price of electricity varies wildly. And when the, when it’s scarce, the price goes up a lot. And that incentivizes people to invest. And the fact is that the economics of renewable energy in Australia have, has been the cause of why we’ve gone from, like zero to 40 percent renewables in a decade or two.

It’s not because of incentives or anything and coal power plants are closing because they can’t compete with the way the electricity market is now with all that variable renewables in the mix. It means that it, it’s very hard for a coal plant to operate, even an existing one that’s already built because you have negative or zero cost electricity all day.

Most days now, and then. Prices spike really high in the evening. So a coal power plant that wants to take advantage of the high prices in the evening has to actually operate through a lot of that negative price events in order to be able to ramp up in time. It’s just, the technology just does not suit the way that the electricity market is now, and it’s only getting more and more like that as we get more renewables.

We haven’t needed to have a big, a big push to increase renewables. If we’d had, we would have gone faster and that would be nice, but Australia is unique like that. It’s not like you could say, Oh, Australia managed to do it without a lot of intervention. So everybody else can and should like yeah, Texas, California might be similar, but the rest of the U S is not.

It’s not going to be like that.

Allen Hall: Joel, what’s the population of Texas right now? It’s 27 million, 28 million. Population of Australia, 17 million?

Rosemary Barnes: No, it’s 20, 20 something.

Joel Saxum: So this is a, and this is going back to Allen a few minutes ago, you said something about incentivize just the electricity buildup rather than all these other different things.

In Texas right now, ERCOT is forecasting in, by 2030, they need another nine gigawatts of power on the grid for peak summer demand. So right now their peak summer demand is like 82, 83, 000 megawatts, right? And they’re forecasting it’s going to hit 90 by 2030. So that’s just in the next few years. So next six years, they need to build nine gigawatts of power.

That’s 3000 turbines. And and so again, from our travels, we saw a lot of curtailed turbines. Part of the problem is you got all this dang power resource and stuff out in Lubbock, like HVDC to Dallas. Like you need to get that power from there. And get it into the cities because there’s four main, six main load centers in Texas.

You have going west to east, El Paso, Midland, and then you have Austin, San Antonio, Dallas, Houston. Houston is, they’re doing two gigawatts of offshore wind right now. They’re bidding on it right now. And they’re in discussions about it. It’d be the best place to build wind, my opinion. But there is, but in the Texas, in the ERCOT market, you’re seeing a ton of solar being built.

Solar and battery storage. Allen, we can speak to that. Battery storage and data centers. Yes, we saw data centers. So many data centers. Crazy. In the middle of nowhere. Data centers that are, like, the size of, and I know this is a weird, very American measurement system, but the size of a Walmart. Yes, maybe two Walmarts.

Big data centers. Massive. We’re driving up and you see them from a mile or two away. You’re like, wow. What in the hell is that thing? It’s the side of the road, right by a transmission line. It’s a data center. Data centers and battery storage spots.

Philip Totaro: But there’s a couple of reasons for this.

And let’s go back to the original premise here, which is whether or not the IRA bill is working. It’s probably not working as well as intended for wind. Or even solar power generation. One, because of the interconnection queue issues. Two, because just like Joel mentioned, the fact that they have a lot of companies that want to build data centers or have data centers in Texas, and a lot of them want to be able to have energy storage capability built in, the battery storage folks have been going gangbusters with not only build out of capacity, but also the domestication of production.

And a lot of the IRA incentives. are going towards battery storage these days. And the reason for that is, especially in the market like Earcot, not only do you have these data servers and these type of applications, but you’ve also got a lot of folks that are financial traders who are getting behind a lot of these battery storage facilities to hedge.

And they love, there’s nothing more than they love than hedging and, energy trading and market balancing because it gives them an opportunity to make a lot more money off of, these disparities.

Allen Hall: Yes, it does, which I think is part of the problem, right? We try to make this arbitrage market all the time in electricity.

And I don’t think that’s the smart way to go. It’s like a subprime loan environment in renewables. It’s weird. And you hear discussions about it, and God forbid other podcasts are talking about renewable energy. But when you hear investors start talking about derivatives on electricity prices, that’s scary, right?

That’s how we get to Enron. That’s how we got to the home loan crisis several years ago. That’s not a place to be doing gambling, my opinion, but you have to have some incentive, financial incentives to exist in that marketplace, but you’re playing these crazy games where you’re hedging markets and you’re hedging what the wind is tomorrow.

I get that somewhat, but then you’ve got these derivative products, which are all make believe, right? That this is totally gambling when you’re in the derivative market, particularly electricity market, where you’re, you see this influx of money and just shuffling around. Is that what we want to create here?

Do we want to, do we want to have a grid that works or do we want to have a lot of financial money people betting on tomorrow’s wind market to me right now, we seem to be making these financial instruments for electricity grids. Instead of building the grid out. But that’s a function of the system we created.

It’s not a function of the people that are participating. Yes, you can do it. It’s absolutely legal to go do absolutely. Sure. If you can find a place to go make some money, go for it. But the result is that comes at a consequences that like Joel has pointed out, West Texas has a lot of electricity.

East Texas does not. That hasn’t been fixed yet.

Philip Totaro: Allen Hall for Energy Secretary 2025.

Joel Saxum: Hey, I’ll run for ERCOT if you run for Energy Secretary. That’s a deal. I’d like to see you run ERCOT. That would be great. Can you imagine Joel’s office?

He’d be wearing cowboy boots. It would be great. That’s right. Yeah, the Texas flag painted on his truck. This would be awesome. I would love to see that.

Allen Hall: You see what I’m saying, Phil? It does seem like we’re spending a lot of time and effort on things that don’t matter.

Philip Totaro: Yeah, I mean it matters to the finance guys, but the reality is it’s the, but this goes back to if we had more Transmission availability, then we wouldn’t have so many, it’s because people are just going to glom onto whatever opportunity exists.

And it’s it’s easier to put battery storage onto the grid right now, because the interconnection queue isn’t as long as for power generation, because storage is, a grid smoothing, capability that also has the option to arbitrage. Once it’s there, once the energy storage capabilities built, you can do a lot of other things to it.

Allen Hall: And our friend Candace with Everpoint services, if you don’t know them, they have a great interconnection, which is live and you can throw batteries on there right now. So if someone gets wise, one of these finance people gets wise and when it’s install batteries, you have a perfect Avenue to do it.

You ought to call Candace Wood up at Everpoint and make a deal because that’s what Joel. I saw that all over the place. Yeah, if you have the interconnect you have gold You’re producing cash. You’d like a Chick fil A for electricity. That’s what you are.

Joel Saxum: Minus the little Christian kids standing in the heat

Allen Hall: with the tablets.

That’s going to do it for this week’s Uptime Wind Energy podcast. Thanks for listening. Please take a moment and give us a five star rating on your podcast platform and be sure to subscribe in the show notes below to Uptime Tech News, our weekly newsletter, as well as Rosemary’s YouTube channel, Engineering with Rosie.

And we’ll see you here next week on the Uptime Wind Energy podcast.

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