A key initiative at the Center on Global Energy Policy is our Energy Journalism Initiative, which provides aspiring young reporters with a bootcamp to better understand the deeply complex issues of energy and the environment. This initiative is important because when journalism is at its best, the public’s understanding of these deeply complex issues is elevated. Few reporters meet that standard for excellence time and again the way this week’s guest does.
In this episode of Columbia Energy Exchange, host Jason Bordoff is joined by the award-winning investigative reporter for energy at The Wall Street Journal, Russell Gold. Some might remember reading his work during the Deepwater Horizon explosion and oil spill in 2010, which was honored with a Gerald Loeb Award and was a finalist for the Pulitzer Prize. His recent work has shed light on the bankruptcy of PG&E, which he calls the “first climate change related bankruptcy in history.” And he wrote the go-to resource for understanding the transformational shale revolution with his first book, The Boom.
Russell has now followed that up with Superpower: One Man's Quest to Transform American Energy. It captures the country’s ever-more urgent quest for renewable energy, and it tells the story of one pioneer who tried to make it happen. It takes us beyond renewable generation to the critical but often overlooked part of the grid: transmission.
Jason and Russell sat down to talk about Superpower, efforts to tie electricity grids together across the panhandle of the United States, and much more.
Interviewer: Hello and welcome to Columbia Energy Exchange. A weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Jason Bordoff. At the energy center, one of the initiatives I’m most proud of is what we call our energy Journalism initiative. Providing aspiring young reporters with a bootcamp to understand deeply complex issues of energy and environment. We think that’s important because when Journalism is at its best, the public’s understanding of these deeply complex issues is elevated. And few reporters meet that standard for excellence time and again the way my guest today does. The award winning investigative reporter for energy at the Wall Street Journal, Russell Gold. Some might remember reading his work during the deep water horizon explosion and the oil spill in 2011 which was honored with ______ [00:00:54] Global Award, finals for the Pulitzer Prize. His recent work has shed light on the bankruptcy of PG&E which he calls the first climate change related bankruptcy in history. He wrote the go to resource for understanding the transformational shale revolution with his first book “The Boom” and now he’s followed that up with “Superpower – One man’s quest to transform American energy.” It captures the country’s ever more urgent quest for renewable energy and it tells the story of one pioneer who tried to make it happen. It takes us beyond renewable generation to the critical but often overlooked part of the grid that is transmission. We sat down to talk about efforts to tie electricity grids together across the panhandle of the United States and much more. Here is that conversation. Russell Gold, thanks for joining us on Columbia Energy Exchange.
Interviewee: Thanks for having me.
Interviewer: Congratulations on the new book. I’ve read it, “Superpower – One man’s quest to transform American energy.” Like your reporting on the Wall Street Journal, your first book, “The Boom” terrific read. A great combination of expertise and a little bit of technocratic insight into how the energy system works. But also through narrative of particular stories. In this case, Michael Skelly. So, first, you know, you wrote about The Boom, fracking revolution that’s been so consequential for U.S. energy. And now a book about wind power. Why wind power?
Interviewee: Well, after The Boom is published and I was starting to look around. I wanted to write another book. I swear, I was thinking about what were the most consequential changes to energy? I mean, first we had fracking and then we had the rise of renewables. Falling price, the increasing ability of wind turbines to run at lower wind speeds and it was just clear that renewables were gonna have a major, major impact and reshape the market and electricity as we know it. And then you also had the in growing importance of climate, the climate discussion and the climate impact on the financial sector. So, essentially, I wanted to write about the energy transition and this was a great story to get into that.
Interviewer: And do you think it is, you compare the two, the shale revolution and then we have this renewables revolution. Shale has brought import dependence from 60% to zero. We’re gonna be a net exporter. We’re exporting gas all around the world. We are gonna be one of the largest renewables are growing quickly. They’re still small share of the total. Have they been as consequential and are they now?
Interviewee: I would argue, they have not been as consequential yet. But we’re probably a lot earlier in their development than we are with natural gas and with oil fracking. You know, by the time I wrote The Boom, fracking was essentially immature technology and there was a lots of money going into it. With renewables, right now, there is certainly money going into it but I would say at this point, it’s opportunity constrained. There is only so, you know, there is a lot more money that would like to get into renewables than there are good ways to invest. And part of that gets back to one of the reasons, I chose to wrote about transmission. You can go out and build the wind farm right now in the middle of Kansas, world class wind resource and you won’t make any money because there is no way to get that electricity to where it needs to get.
Interviewer: So, I want to come back and talk about where we are with generation and where we are with transmission. But first, tell us who Michael Skelly is?
Interviewee: Sure, so the reason I chose to write about Michael Skelly was that he got into the wind business in 1999, right at the beginning of the mature industry here in the United States. I mean, in 1999, there were wind farms in the passes of California and outside palm springs but they were very, I would say, they were very immature. They broke down constantly. They couldn’t run when the wind was too low or too high. You know, ______ [00:04:41] of the skies. They just were in terrible shape. But 1999 is when you start to have companies like ______ [00:04:48]. When you had companies like Enron and GE getting into the business and then the European manufacturers coming in. All of a sudden, wind farms went from being a curiosity, went from being something that maybe you felt good about to being a real business. And Skelly gets into that point. He develops…
Interviewer: This is what year?
Interviewee: 1999-2000. So, he’s back by Zoka family of Houston. Builds up Zoka energy then renamed to horizon energy. That gets bought up by Goldman Sachs in a billion dollar deal in the mid-2000s and now forms the basis of EDPR, one of the biggest companies in the United States. Portuguese company. And for ten years, he is a major wind developer, one of the most, one of the major wind developers and then he turns around, gets out of that.
Interviewer: And he was doing this where? I mean, Texas is a huge…
Interviewee: In Houston, based in Houston. Although, it’s interesting, very few wind farms in, in Texas.
Interviewer: But you mean, that, yeah.
Interviewee: His company was not investing in Texas. Because his idea was he wanted, the local prices were high. And even at that point, prices were fairly low in Texas. So, he was developing wind farms in Minnesota, in California, Washington state, Pennsylvania, all around the country but not necessarily in Texas. But based in Houston, enjoying from a lot of the energy expertise in Houston. Then right about 2008-2009, he looks around and asks himself the question, look, I built, you know, I got into this building, 20 and 30 mega watt wind farms. By the time, I got out, I was building 2 or 300 mega watt farms. He asked himself what can I do? What’s the most important thing that I can do to effectively have a step change and to go into scale up again? And he realized that, you know, what he decided to do was tackle frankly one of the hardest challenges in the American renewable sector and that is transmission. How do you build big transmission? Because his great insight was and many people had this insight. There is an enormous resource in the country. The great plans are some of the greatest best winds in the world. Right next to in the southwest, you’ve got some of the best solar resource in the world. Except there is a huge problem.
Interviewer: Not where the people are.
Interviewee: Not where the people are, not where the industry is. So, how do you get that two places like the south east which was developing renewables, how do you get up in the PJM, into the northeast, how do you get it out to California? And his answer was interstate transmission using high voltage DC alarms.
Interviewer: Sounds easy. Just string a bunch of wires around.
Interviewee: Piece of cake. Well, there is something actually very easy about it. It’s off the shelf technology. Yeah, pick up the phone, you call ADD or Siemens or GE. You don’t have to invent anything new. The technology is there. And that’s one of the things I didn’t realize going into book, the technology to get to 30, 40, 50% renewables in this country exist already. We have the technology for wind. We have the technology for solar. We have the technology for transmission. That’s not the issue anymore. The question is how do we stitch it all together.
Interviewer: And so, to continue his story. So, he goes to build a bunch of wires around the country. Simple enough.
Interviewee: Simple enough. So, he sets out and he eventually starts working with it, he co-founds a company called Clean Line Energy Partners. And they start working on three and then four lines. And the premise is if one of the lines get built, that’s a homerun. You know, they don’t expect to build all four. And essentially, they are all doing the same thing. They are coming from the middle of the country, coming from the Oklahoma panhandle, western Kansas, that area to the south east or up into the Chicago area or out west. And amazingly, you know, he raises about a $100 million to do that. I mean, it’s a lean startup but it’s incredibly well financed. And over the course of next few years, he goes out and gets essentially fully permits for transmission lines and this was what was so fascinating to me. I…
Interviewer: Did he had purchase agreements at this time, I mean to get that kind of financing does he have to go out and figure out who his buyers are gonna be?
Interviewee: Well, that, no, he did not. And that’s ultimately, what became a really interesting issue. I thought that the big hurdle is gonna be permitting. How do you get the permits to bill a transmission line from western Oklahoma, all the way across Oklahoma, across Arkansas, across Mississippi.
Interviewer: Across a bunch of states who might not be benefiting from the electricity this line is carrying.
Interviewee: Absolutely, yes. Well, they might not see themselves directly benefiting. And so, and using the energy policy act of 2005, he eventually gets the department of energy to partner in with him. Provide eminent domain, if necessary where he can draw and have a lease. And during all these sometime. So, this is, let’s just say, 2010 to 2017 all these is going on. During all these time, he’s negotiating with south eastern utilities. The TVA, duke, southern dominion, all these utilities looking to find buyers and what’s amazing is if you look at what they’re offering to sell the power for. It starts off at $70 a mega watt hour. Not the best deal. Then it goes down to $60. By the time, he get down to term sheet, so looking at $30 and $40, they end up sub $20. They are offering 500 mega watt blocks of power, 20 years deals at below $20 a mega watt hour. This was and remains to this day some of the cheapest electricity that’s being offered in the United States. So, this feeling was of course, we are not gonna have a problem. We’re sitting here offering clean energy. Oh, and then it also happens to be some of the lowest priced energy available. Of course, we are gonna find buyers and they were getting a lot of positive feedback, especially the TVA was saying, yes, we are interested, you know, negotiating except…
Interviewer: And he’s doing this as I remember with eight years of White House deeply interested in finding ways to promote more clean energy.
Interviewee: Certainly under secretary Moniz, there was enthusiasm and going back pre-inauguration of President Obama, there was a meeting in Chicago to determine what the bill was to jump start the economy.
Interviewer: Yeah. The American recovery act.
Interviewee: The recovery act, thank you. And one of the things that is brought up that then, I get senator Obama soon to be President Obama said was well, to these long distance wires and the objection was brought up, I believe by former EPA administrator Carol…
Interviewer: Carol was the executive energy ______ [00:11:11] at that time. She was the main White House energy person.
Interviewee: She said look, it’s too, you want to have this be an effective stimulus. You need to be able to get the money out the door quickly. This is gonna take too long. And essentially that idea was shale. So…
Interviewer: The recovery act was about timely, targeted and temporary. So, how do we think about getting clean energy goals but we got to spend the money quickly.
Interviewee: Absolutely. So, even back then, so this clearly was an administration that was interested in clean energy. But if you look at how long it took, for about three or four years in the early years of the Obama administration, this project languished. It was very typical.
Interviewer: Let me ask you about that because you identified as you know, the recovery act had to be spent quickly and it was this debate at the time about, you know, things that might be important from a climate change standpoint but couldn’t be done quickly enough.
Interviewer: Which falls on which side of that. But you just said this line made all the economic sense in the world. So, why does the government need to spend money at all?
Interviewee: What this line and green line needed was eminent domain. And that was a huge stumbling block eventually. They, the investors, they realized that they could probably get 95% of the line, right of ways for the line on just, you know, on deals with landowners. But they needed to be able to have a small percentage to be able to, to get eminent domain. And the energy policy act of 2005, anticipated that. I mean, this wasn’t the ask wasn’t for something that didn’t exist. It was in the law. No one had ever used it before.
Interviewer: The law. Just to be clear that it gave the federal government the authority to…
Interviewee: Partner with a private enterprise so that the federal government had to assess whether this was a needed project, a project that would enable more renewable energy and if it meant those, then it could partner with it and provide an eminent domain. Didn’t provide any money. Just eminent domain.
Interviewer: States don’t like that.
Interviewee: Well, as it turned out, states didn’t like that. And that was one of the huge stumbling blocks. Now, two states were fine with it. Tennessee was fine with it. Oklahoma was fine with it and broadly speaking, it was Arkansas in the middle that was the first to raise an issue and this was one of the mistakes and you know, one of the things that I think is important to write about is a great story here about an entrepreneurial startup, about trying to accomplish something big. All of which is really important in this era of energy transition. We need more people like Michael Skelly thinking big. Thinking how do we build this. But there are also lessons to be learnt here. One of the lessons that needs to be learnt here was originally, the line, basically just went across Arkansas. Later on did made an adjustment to the line at the ______ [00:13:46] department of energy and they dropped down. Offering 500 mega watt offering. I believe is in Pope County Arkansas. Now, you could argue that when the power goes into the TVA, power being the way it is in the AC system, some of that is gonna ultimately flow back across the Mississippi and it’s gonna be enjoyed by the good people of Arkansas entity. So, there was certainly benefit and one of the things ______ [00:14:12] I think, very smartly was make sure that the factories to build the steel and build the towers were both based this Arkansas. So, there was sort of economic benefit that was gonna be derived here.
Interviewer: And so, what does that tell us about what the main barriers are to… I mean, was this a political problem fundamentally, that you just needed to, that your stakeholders find out?
Interviewee: There is one thing that we haven’t talked about and it really is the politics of this. So, ultimately there is one other factor that came to play and that was the fact that Tennessee Senator Lamar Alexander, fundamentally did like not wind turbines. He did not like wind turbines off the coast of ______ [00:14:53] where he had a house. He did not like wind turbines up on the ridges above Knoxville where he also had a house. He just did not like wind turbines. And when you’re the, I believe was the senior senator of ______ [00:15:03] Tennessee and you’re negotiating with the Tennessee authority, a federal agency which needs to get borrowing permission to expand the ______ [00:15:12] base from the federal government. You need to make sure that Lamar Alexander is on your side. Lamar Alexander was very clear he did not like this project. Whether it’s, you know, part of why he didn’t like wind. You know, I tell the story in a book of appointees to the Tennessee valley authority board of directors who would go up to Washington to make the rounds, will go into Lamar Alexander’s office and he’ll bring out this giant poster and it would show ______ [00:15:37] stadium at the University of Tennessee with a big wind turbine put right on the 50 yard line. He would tell people look, this is what it’s gonna look like and how big it is. What we had here was a giant renewable energy project for about three to four gigawatts of wind generation in the Oklahoma panhandle. Carried by a single DC line into the Tennessee valley authority. Lots of economic benefit potentially in Oklahoma, in Arkansas where there is going to be hundreds of jobs created by this. And ultimately a single senator deciding he didn’t like the project. I think, you can also argue and it was very clear to me having done extensive research that it would also have helped drive down cost for customers at the Tennessee valley authority, the wholesale price was lower than what they were generating, than what the wholesale price was when they were burning coal or even natural gas. So, it would have lowered the overall price. I think, you ask me what’s the issue here. I think one of the problems is that we have gotten so political about energy that we are failing to look at the social and economic benefits.
Interviewer: Would you think, it’s about, we’ve gotten political, meaning, you know, people are entrenched in their camps and if you’re supportive of hydrocarbon sector, you’re sort of, you have to be against renewables or vice versa or is it, you know, people supporting wind. They just don’t want to see it from Cape Cod and people don’t want wires going over their head or over their land either. It sounds like, tell me if I understood from your book this made huge sense. It’s technically feasible. It’s economically feasible. It all makes sense. The barrier was people didn’t want a bunch of wires going across, you know, their land especially if they weren’t beginning a lot of the electricity or the jobs from it. So, that’s like a stakeholder and political problem.
Interviewee: There were dozens and hundreds of community meetings and they were clearly were some people who were upset by the idea of this. I would argue and I spend a lot of time with a couple of the main antagonists who were very vocal against this. I don’t think at the end of the day, it was a ______ [00:17:52] issue. It wasn’t, I don’t want to look out my window and see a line here. Because when you and I spend time with them. You drive around in fort Smith Arkansas and other places. Beautiful country. There are a lots of transmission lines. Valleys are criss-crossed by transmission lines. It’s not that there, it’s not that there is this untouched natural world. I think the key was is that there were a group of people who were looking around and who were not benefiting from the economic recovery after the great recession. Who are not enjoying the recovery, the stock market surge and here was an outsider coming into their community and they basically said why are we being asked to make any kind of sacrifice for you. There was no sense of polity. There was no sense of hey, there is a greater good here. You know, as this is gonna benefit everyone. That broke down. And there was no political leadership making that argument either.
Interviewer: And you also, I just want to, other barriers that existed, I just, I thought, I remember, it was pretty interesting. I forgot, it was 80 years ago, 100 years ago, the utility in Arkansas set up a system of rules that created this bizarre, circular thing that Michael couldn’t…
Interviewee: Not just Arkansas. Almost every, when we set up these utilities across the country, and we deregulated some of them but there is still a lot of regulated and semi-regulated utilities. We made a deal with them. We said, look, you’ll get a monopoly franchise. You’ll get to essentially develop this area and you can go to Wall Street and borrow from it and you get to, you know, charge rates, you know, to customers and get a guaranteed rate of return. But you’re gonna have this monopoly and that was written into the law in Arkansas. They eventually over gain that. They were able to overcome it by making the case like look, it doesn’t, there is literally no way for an outsider to come and build here. But all these took time and took money.
Interviewer: And the issue was to build a transmission line, you have to be utility but you can’t be utility unless you have…
Interviewee: If you don’t have customers or you don’t have. Right, it was a Catch-22. Absolutely. To build a transmission line, you need to be a utility. But you can’t be a utility, unless you own assets in Arkansas. But you can’t build the assets, unless you could keep going, you know. It’s completely circular logic. They overcame that. But that cost money and it takes time. And there is one thing, you know, we talk a lot about current change and energy transition. One of the parts of the conversation and like I’m saying this as a Wall Street Journal reporter that often is forgotten is that all this is gonna take a lot of time and money. Especially money and it’s gonna require investors. Investors don’t like a ten year project with a lot of regulatory risk and that’s what we’ve set up. We’ve set up a long that we’ve turned transmission projects that these extensive projects that have all sorts of regulatory risks and it’s very difficult to finance that. Now, let’s take a couple of steps further down the road. As a policy, as a nation is that really what we want that we cannot make the kind of infrastructure investment that will benefit us 20, 30, 40 years down the line.
Interviewer: And part of it is people who have been trying to interest on one side of either or opposed to one type of energy and in favor of another types. But part of when I read your book, thinking about someone who is sitting in a policy position where some of these was happening is just a reflection of how like government doesn’t work as well as it should. Well, even if the government is trying to be supportive, you know, people always say the Obama administration wasn’t supportive of oil and gas and try to block pipelines, even though thousands of miles of pipelines got built while the administration was in place.
Interviewee: And hundreds and hundreds of, I mean, there is more…
Interviewer: You’re trying to do, getting the government permit for oil and gas pipelines for wind transmission lines or for myriad other things. It’s just hard because government is kind of a cumbersome bureaucracy.
Interviewee: So let me tell you the story of you probably know this, Pacific Intertie which is, we have a few large DC lines that we built in the United States. One of them is the Pacific Intertie. It starts up in the Columbia river basin up in Washington, Oregon and it goes down sorts of cuts across the Nevada desert. And then just outside of LA and ______ [00:22:10]. That was built in the, proposed in the 1950s, 1960s. It was a JFK project. Kennedy and then later LBJ, president Kennedy and Johnson completely got behind this project. They log rolled this project. You know, they brought in governors, they brought in utilities and said, well, how do we make this happen? And it got built. It wasn’t easy but it got built. The benefits of that project, I mean, this is a 100 year asset or more. The people of Los Angeles, the people of Southern California are enjoying low cost, otherwise would essentially be squandered because we had built aluminum manufacturing, a lot of the industry around the Columbia river. But there was still access to hydro. What that excess hydro do? It is now used to run air-conditioners in LA. So, when we build these, there are large fights around them but once we build them, they have benefits, that accrue for decades and decades and decades.
Interviewer: So, what do we do about this? I mean, we have candidates now running for president who are doubling and tripling down on the ambition of the Obama administration net zero by 2050, there is how many trillions we’re gonna spend etc., etc., the green new deal framing. And we can’t even build lines as you’re telling your story. What lessons did you learn about how we overcome these barriers because we know that this is the minimum we are gonna have to do, not to mention 20 other more difficult things to try to decarbonize.
Interviewee: Engagement in leadership. And that’s whether it’s a democrat or republican. Either needs to be continuous engagement and leadership on this. There needs to be a sense like well, this is what we need, this is what we are going to do. And there needs to be almost baby-sitting of these projects. You know, I would argue that the main line that I focus on the book and to go to Oklahoma to meant this. The Obama administration never was certainly in favor of it but didn’t push it through as quickly as it could have. It took too long and then ultimately, they left it for the Clinton administration, except there was not a Clinton administration. The Trump administration gets in and Tennessee valley authority essentially washes its hands to this project. So, there needs to be continuous engaged leadership and it needs to be, I mean, we are gonna have these projects and I would argue, this is not, I want to make sure, this is not a partisan cry. This is a, this is recognition that if we build this infrastructure, here are the benefits. Cleaner energy, abundant energy and less expensive energy than we have right now. One of the things that’s amazing to me and I spend a lot of time crunching the numbers about the Tennessee valley authority. The wind that was being offered and this was subsidized but even if you move the subsidies, the wind that was coming in to the Tennessee valley was less than the cost of operating a coal plant. So, we have to ask ourselves. Do we want to continue running more expensive electricity and let’s put aside that you know, do we rate the flag for coal or do we rate the flag for renewables. I’m not interested in that. And let’s also recognize that closing down a coal plant maybe, it’s only 2 or 300 jobs but that’s a very focused 2 or 300 jobs in one particular city that will, but has the potential to devastate our community and the larger county. So, let’s recognize all of that. That’s the kind of leadership. That’s the kind of three, four, five things we had, two, three, four, five steps. All right, we are going to build this transmission line and the knock on efforts are gonna be x, y and z and let’s just make sure that those are taken care of. This is all perfectly legal under the law. The question is whether it can get done or not. And I don’t see alternatives. You know, one of the things people say, we’ll build more regional, you know, we don’t need big transmission lines because we can build lots of solar and rooftop and distribute it. I just don’t think the technology, I don’t think is there to run this country on distributed energy right now. Grid and distributed energy are a part of this but they are not the solution. A transmission backbone, a transmission backbone that can move both power around is gonna be one of the things this country needs as we transition to using more and more electricity which is what we are talking about doing.
Interviewer: Yeah and I would just say it’s hard. I mean, my memory of this is that, there was intense interest in the administration and swat teams that were developed at the cabinet level to focus on specific high priority infrastructure projects. Moved in through official, movement through the army corp and these things are hard and it should be.
Interviewee: It is hard but it’s worthwhile. You know, this is what makes them worthwhile. We do not because it’s easy. We are doing it because it has incredible benefits.
Interviewer: Is there something you thought after writing this book about kind of where this change is going to come from in terms of the project developers? This is an individual entrepreneur. You said, maybe the utilities have a lot of clout and power. Maybe they’re the ones that have to be given the incentives to drive the change. What’s gonna unlock the capital that’s gonna flow into this? Do you have thoughts about all of that?
Interviewee: One reason, I don’t see utilities jumping into this is because these are by their nature interregional, multi-state. You know, you have utilities, even utility like AAP which operates in multiple states very rarely is gonna have all the, it’s gonna have the coverage area. Next era, doing a great job, lots of renewables. A big player in Florida. If it builds in Oklahoma, you know, where is the benefit? So, utilities are not set up to do this kind of interstate type work. So, I don’t, you know, there are some very specific policies challenges here. I did not get into write this book to be sort of a policy white paper. I wanted to write about the experience of somebody, an entrepreneur, a developer who is out there trying to do the work because frankly, we are gonna need dozens and dozens of people like him going out and doing the work. You know, I think one of the big lessons, I’ve learnt coming out of this was that this is incredibly difficult work. But it’s also incredibly rewarding, I mean, many of the people, I interviewed who worked on this project told me that they, they quit other jobs to come. They didn’t regret it for a second and they go back and do it again. This is very rewarding work and people feel very passionate about that. Even if at the end of the day, it doesn’t succeed. You know, I should say the clean line experience, I mean ultimately their investors ran out of patience. But two of the major projects that they develop look like they’re actually gonna go through. One was sold off to ______ [00:28:46] in Chicago, the green belt express that goes from western Kansas out to Chicago area, that looks like it might be built. And the western spirit out in New Mexico, Arizona looks like it’s gonna get built. Got bought out by PNL. So, maybe part of the answer is that, you know, developers, utilities need to partner together and I’m not sure, I have the exact answer for that. But I can tell you that if we don’t come up with the answer, we’re going to ultimately be saddled with a slower transition, to cleaner fuel and more expensive electricity which will have an impact on the economy.
Interviewer: And you talk about Michael Skelly’s career that has been sort of purpose and mission driven all along and now…
Interviewee: Although, he would say, you know, he’s not sort of a sandal and sock wearing kind of mission driven.
Interviewer: He’s a businessman.
Interviewee: He’s a businessman. He was out there to make money, absolutely.
Interviewer: And now I ask because now, he’s working for one of the leading financial institutions that’s trying to put capital.
Interviewee: Yeah, he’s an adviser, senior adviser to ______ [00:29:44]. So, his job now is to try to find more projects, more Michael Skellys and connect them with capital.
Interviewer: Would you say, it’s not a policy white paper. Would you have thoughts on sort of, do we need the IT, solar ITC, do we need the wind production tax credit or the economic surveyor, we have to deal with these other?
Interviewee: We don’t need the production tax credit them. That’s, I don’t think anyone expects that to come back and frankly the prices have come down far enough. Solar ITC, I think we are heading in the same direction. I don’t think, we’re gonna need this or ITC for very much longer. The price is, they can be generated are really impressive. Especially, when you’re talking about building in the places where the best natural resource. What we will encounter, if we don’t have the transmission or essentially, you’re not gonna be able to build, you’re not gonna be able to build renewables as quickly as you might have otherwise and you might have developers who look at this great wind resource out in the global panhandle and I’m gonna build a wind farm out there and then realize, they cannot move, you know, they built this world class factory and there is, you know, the roads, the transmission analogy won’t be able to get, electrons out and so, you end up losing money. And we have already seen that. There are a lot of projects, there are a lot of developments and if you look at a map of the United States on a windy day. The prices of power in the windy places are incredibly cheap the LMP’s. Because they can generate lots of power. They just can’t get it anywhere. They can’t get it and then meanwhile two states away the price of power can be ten and twenty times as high. This is a market, I mean, this is a market efficiency issue. And you know, I personally, again as a Wall Street journal reporter, I look at that and say wow, you’re telling me that there is an abundance of energy out there, clean renewable energy. That’s a really rock bottom prices. Well, let’s get to it. Let’s figure out a way to get to it.
Interviewer: And what does that mean that, you know, you wanted to write about this because of the stunning progress that has been made in bringing down the cost, increasing the deployment of renewables for what you wrote about in your first book which is the Boom. You told the story of when people were struggling to figure out exactly what the shale revolution was all about five, six years ago and at a time when I think, shale was initially understood as largely a national gas phenomenon. We understand now that it’s hugely an oil phenomenon as well. And there was a view among many, including Mayor Bloomberg when he spoke here at the launch of the energy center that this could help displace coal and have climate and poll using benefits. People are questioning that now in part because of the way you wrote about in your second book which is what’s happening to renewables. So, when you look back on the Boom, what, how does the world look different today and maybe where did you get right and wrong in that book?
Interviewee: Well, you know, it’s interesting. First of all, fracking was a technology issue. They needed to figure out how do you force water, chemical based water underground to crack open the super dense rock. And that was a technology issue. So, part of what happened with fracking that we had not seen with renewables is solving that technology problem. Once the technology problem was solved, building pipelines has been an issue but not an insurmountable issue. Because we have decades and decades of law in eminent domain, establish. You can build the pipelines, you need. You know, then you switch over to renewables, what’s the analogy? Because that’s where the technology but there is that pipeline.
Interviewer: Technology has improved. The size of the turbines, using data science to help maximize that.
Interviewee: It could be that breakthrough technology. What really happened sort of going back to 1999 is that there was Kena Tech is a perfect example. Kena Tech was building incredibly high-tech wind turbines that move with the wind and all of a sudden and they went bankrupt. The next generation that came through, a lot of the Danish turbines realized these things don’t need to be high-tech. They just need to be durable. They just need to stand up you know, and continue producing. You don’t need to capture every little nuance of wind but you need to make sure they don’t break down. So, that to me was not a technological change on the same lines as fracking. But to get back to your question. I went back recently and we read an essay I wrote around the publication of the Boom in 2014 and I said, look we have this incredible technological benefit. We can access gas and now as you say oil that we were never able to before. But here are a couple of things we need to do, to make sure we don’t squander that opportunity. One was control the leaks both underground and above ground. Make sure that we are building wells so we are not leaking into the ______ [00:34:19]. Make sure that when the gas comes out of the ground, we are not leaking it and here we are five years later and guess what methane capture and methane leakage remains the big issue. So, there were, you know, I’m very happy that I wrote about in the Boom fracking because it’s this incredibly important technology. I think it’s very frustrating that five years on, we are still talking about certain problems that we still have to fix this. You know, you raise the issue of the Arkansas people who felt that they were being imposed upon by transmission lines. One of the strongest memories I have of reporting the Boom was being in Sullivan county Pennsylvania, North central Pennsylvania and interviewing this one guy who had moved out from Philadelphia, moved that really, really small town and he said, look people are coming to me and saying you need to make a sacrifice for the country. You know, the sacrifice is being estimate was he’s quiet that he had moved out into the country for was being interrupted by trucks, by camps and people keep saying, you need to make a sacrifice. They said, why am I the one being asked to make a sacrifice. I’m not getting any of the benefit. Why am I being asked to make the sacrifice?
Interviewer: It is one of the differences that in many cases, not all, but in many cases, landowners where shale was booming were benefiting economically from this. It could be a private ownership in mineral rights. And maybe that was one of the things that didn’t exist for building these high speed lines.
Interviewee: Look, I mean, you know, out in the Oklahoma panhandle those ranches or landowners were very well ______ [00:35:53] to build wind farms out there. Who wasn’t as well compensated where the landowners were, the transmission lines went through. You know, I would argue that having a transmission line running through your county is not an enormous imposition. In the book, I interviewed local member of the Sierra club in Arkansas and he lived outside of Russellville home to Arkansas, one of the nuclear energy nuclear plant. About 20, 30 minutes outside and we are seeing there is beautiful house that he had built, right above the creek and he said, you know, you drove out from Russellville today, one day, I did the same drive and I counted the number of transmission lines, distribution transmission lines are drove under and it was a hundred. And I couldn’t believe that. Because I hadn’t paid attention to any of them. And when I drove back that night, I counted and I sort of lost count after 20 because he was absolutely right. Transmission lines are just part of our landscape. It is clearly a part of what we have right now. And so, I don’t think, personally, I don’t think the imposition of having another transmission line is an enormous imposition. I have transmission lines outside my house where I live.
Interviewer: Greatest engineering achievement of the 20th century.
Interviewee: It’s part of the sacrifice we all make for guess what, turning on our air-conditioners and having them run 100% of the time.
Interviewer: And there is a couple of minutes left but I want to ask you about this because in addition to writing great books like the Boom and Superpower, you’ve, we’d be running about transmission lines in another context recently which is what happens when transmission lines come down in areas that are subject to wildfire. So, you’ve been writing a lot about what happened to PG&E. Can you tell our listeners what you think happened there and are our utilities prepared to deal with some of the changes that we are gonna see climate being one of them but not the only one.
Interviewee: Well, yeah, thanks for asking about that. So, I would argue and I argue this, here on the Wall Street journal that PG&E is really the first major corporate bankruptcy, we’ve had due to climate change. I don’t think PG, I mean there is a lot that went wrong with PG&E and you go back and you know, this is the company that had the St. Bruno natural gas pipeline explosion. They’ve got decades of issues.
Interviewer: Clearly of safety culture issue.
Interviewee: Absolutely. I mean, I could you know, I could you know show you about a half dozen different reports in last 20 years where people have talked about problems with the safety culture. What happens with PG&E is that they had transmission lines that they had built very long ago which they had not particularly well kept up with and they failed to realize the risk profile had substantially changed. They were operating under the, well, what’s the worst that can happen. There is a lot of rain, there is a mudslide and one of the towers falls down. But we’re not gonna have a problem because nothing will catch fire. They failed to realize that climate change had turned their territory into an absolute tinderbox. PG&E failed to realize that they could not have even a slightest failure because the risk of a single line coming down which is what happened outside of paradise California was when the single line came down and they would have dozens and hundreds of lines causing fire each year. But the forest have become such a tinderbox that it just went through an inferno and in short the entire town. 85 people died. I mean, it was a complete tragedy.
Interviewer: So, are we gonna see more utilities facing this? Are we, I mean, our utilities prepared to deal with the change in climate?
Interviewee: I would argue that they are not. You know, there is a lot of infrastructure around the country whether it’s transmission lines, whether it’s sewer systems, you know, whether it’s cities built on the water that are not prepared for what’s coming. I think utilities of south east and the north end of pacific northwest might have to deal soon with exactly what PG&E is dealing with. You know, look PG&E wasn’t the first. In Australia, they’ve had transmission lines causing wildfires. San Diego gas and electric had to deal with that. So, we need to start looking as utilities across the country and trying to assess what is the risk we are facing. How vulnerable are the forests and what needs to be done?
Interviewer: One of the ripple effects of the PG&E case for renewables more generally for grid stability.
Interviewee: I don’t think there is really an issue of grid stability. With the renewables, very specifically, there is a really interesting question right now and that is where the PG&E goes in and tears up a lot of the very high cost renewable contracts that they signed 10 and 20 years ago because California political leaders were encouraging them to do that. If you look at some of these contracts, they are paying, $80, $100 per mega watt hour. Incredibly high prices. So, if they rip all those up, there are gonna be a lot of companies that are gonna be financially hurting. ______ [00:41:00] keeping a close eye on that. Beyond that, I don’t think there is a huge lesson to be learnt. I don’t think that, you know, the issue, look if you’re going to build, here is the bottomline. If you’re gonna build a transmission line, you will need to make sure you’re taking care of it. You can’t just put it out in the forest and forget about it for 10 or 20 years. Now, I think PG&E might take issue with my characterization of forgetting about it. But the same, at the same time, we reported on this, we’ll continue to report on this. There were a lot of problems that PG&E knew about and didn’t directly address. I think, just you know, let go for year after year.
Interviewer: Just to close, I am sort of interested in your perspective on this energy Journalism initiative, Columbia as you know have trained young reporters and help them understand the energy sector because great reporting just helps all of us have a better dialogue and understand energy and the level of depth you can go into in books like this or even the investigative reporting you did around PG&E is hugely important and informative but seems more and more rare. I mean, the kind of role you have investigative reporter to look into energy issues at a time when users are cutting budgets. Just reflect a little bit on like, on your job and what that means for how we are gonna, what kind of reporting we’ll have about energy moving forward?
Interviewee: Well, first of all, I can say, myself incredibly lucky to have a job to be able to do this kind of investigations to have supported my news room and the editors and that’s just wonderful. We’re seeing a change in how we are funding this type of work. And I think, we need to continue accelerating that. A number of because we seem to be heading in two different directions. The old model of selling advertizements and placing articles against advertizements in that shot where we know, where that’s going. So, we seem to be kind of emerging with two models. Go find yourself a friendly billionaire to buy your paper, sort of the Washington Post model, the Texas monthly just a couple of days ago was bought by, I believe the daughter of a big pipeline billionaire in Houston. That’s one model of the Atlantic bought by Steve Jobs’ widow or a non-profit and a sort of internet based non-profit that’s gonna be doing more investigative work. Your Texas tribune etc. So, I mean, I, I’m encouraged, I see a lot of interesting investigative work. I get my news about what’s going on in the border right now from the Texas tribune and non-profit news room. So, hopefully, we’ll continue to see that and hopefully, there will be more money flowing in to sort of help us get through this valley of debts, you know, to borrow from venture Capitalists where we go from one business model to another. I think that’s important and yeah, I don’t think news rooms and news gathering is dead. It’s not gonna go away. We need it. People still read it. People still get engaged by good stories. I think we just need to make sure we have the right funding models and the time to get there.
Interviewer: Well, we all, as an energy center that has as part of its mission helping to improve the quality of the public dialogue about energy, the kind of work that you do is really valuable. So, thanks for doing and thanks for the book. Thanks for spending time with us today. For more information about the Columbia Energy Exchange and the Center on Global Energy Policy, visit us online at Energypolicy.columbia.edu or follow us on social media at Columbiauenergy. I’m Jason Bordoff. Thanks for listening. We’ll see you next week.