Ep. 26 - Nuclear Truth: Safety, Cost, and Reality

A new data center can arrive in 18 months and pull as much electricity as a mid-sized city. The grid that has to serve it might need 10 to 15 years just to permit and build one major transmission line. That gap is where today’s energy fights are headed, and it’s why Pat O’Brien sits down with Gary Moody of Arkansas Advanced Energies to get painfully specific about what’s broken and what could actually work.

We start with the surge in AI power demand and why tax incentives for data centers miss the real issue: speed. Then we zoom out to the bigger grid problem. If the U.S. needs to double transmission capacity over the next decade, the current permitting and regulatory setup can’t deliver it. We talk about permitting reform, NEPA timelines, reserve margins, and why a more connected national transmission network could unlock cheaper wind and solar across regions the way the interstate highway system unlocked commerce.

From there, we tackle the emotional stuff without the moralizing: nuclear energy safety, why no single resource is a “silver bullet,” and why coal fades fastest when its real health and environmental costs are priced in. We close on the incentives that shape your electric bill, including how utility regulation often rewards spending more instead of saving money, and what everyday listeners can do to push for smarter energy policy.

Subscribe, share this with someone who cares about power bills and reliability, and leave a review. What’s the one grid rule you would change first?

Transcript

Welcome Back And Big Claims

SPEAKER_00 0:07

Welcome back to the Radical Moderate Podcast. I'm your host, Pat O'Brien. And back this week is Gary Moody with Arkansas Advanced Energies, the vice chair of that organization. Welcome back.

SPEAKER_01 0:22

Thanks, Pat. Glad to be back.

Data Centers And The AI Power Surge

SPEAKER_00 0:25

So in last week's episode, uh, for those that might not have heard it, I was lobbying for you to be appointed the czar of the energy grid, unlimited budget, unlimited authority. In the seven days since the episode dropped, no one has responded to that. No one has said that that was going to happen or was a good idea. So we might need to temper our expectations a little bit here. But what I want to get into this week, we were deep into the grid, and I want to kind of build out on that and talk about some of the choices that we have in front of us and whether those are actual choices or real choice, you know, or fake choices. And I mean I'm talking about everything from different types of power, nuclear is something I want to talk about. But you know, you talked about permitting and this sort of thing. But if you would, I'd like to start with data centers. You touched on that in the last episode. You mean I think you mentioned how a data center can spring up in like 18 months and it could be the size of a Conway, Arkansas, which is like 75,000 people. And that's just not part of the planning. Data centers, we all want AI, right? Like we all, or I do. Um, a tremendous amount of power. I'm sure it creates a lot of issues. So start there. How does how does a data center relate both to the grid and the index costs and I know not everybody's forum? So so go with that.

Doubling The Grid And Permitting Delays

The Case For A National Supergrid

SPEAKER_01 1:55

No, I I I appreciate that. I think it's data centers are quickly emerging as a very complicated issue, right? And a very hot button political issue, right? No one wants to live by one. It's kind of like a landfill, right? But we need it to exist, right? We all want to be on our smartphones. We all want to have access to all of the data that's available at our fingertips, right? We want podcasts to exist, for example, right? Where do all of those things are stored at data centers, right? And and beyond that, like I think, you know, some of the current global conflicts are showing us like the importance of AI and data as a national security issue, right? Bluntly put, I think the idea that we can just not build them like some have advanced, well, we should just put a moratorium on these. I don't think America can afford to do that, right? We need to win the AI race. We need to can, you know, part of our our national identity has been as innovators. We need to continue that. We just have to figure out how to solve the hard problem of where to put them and how to power them, right? Um, and there's also a unique moment here in terms of the energy space, right? Where frankly, uh, if there are any like uh state business development people listening in, please quit giving away tax incentives to data centers. It's not a money problem, it's a speed problem, right? And so we're still using the old like things to induce people to come in, right? Like of giving them a tax incentive. I've talked to a lot of data center people, they don't want a tax incentive, they want a guaranteed fast interconnection so they can get up and running. Time is money to them, right? And that's uh that's a place where we can frankly do better, right? Um, so so there's a lot of issues around it and a unique moment. I would I left last week talking about the grid. I just want to underscore the the size of the investment that's needed, right? DOE did a 2001 study and and NERC has backed it up. That's the National Energy Reliability Council, right? Uh, even in this administration, it's backed it up and said we need to roughly double the size of our grid in the next 10 to 15 years and probably triple the size of the grid after that, right? Which means we have to build it two to three times faster than we ever have, right? Um, and yet we have a regulatory environment where that's impossible, right? I I mentioned last week it takes uh 10 to 15 years on average to construct a transmission line in the United States. Um that that can't continue to be the thing, right? There's a permitting reform bill in Congress right now. There was one in the last Congress that couldn't quite get over the hump. Um, and look, a bunch of my friends on the on the environmental left uh opposed it because they don't want to shorten the timelines, right? To like sue a project under under, you know, what we call NEPA, right? Um or under any national environmental standards. Um and and I understand that, but like we're in a period where like just being against things is not a good enough solution. We have to figure out how to be for things, right? Um, if you care about climate, we're gonna have to build a lot of things, right, to to decarbonize the you know the economy, right? You can't not build your way to a clean economy. Um, you can't not build your way to to um a 21st century economy that relies on a ton of data, right? So I think shifting that that whole narrative of not like you can't just oppose things, you gotta figure out like how to do something. Uh, and I think one of the big ways to do that is to leverage like that the data centers, those players, the metas, uh, you know, the the Googles of the world, they've got capital and they want speed. So let's let's figure out a way to allow them to deploy their capital to help all of us do these things faster, right? And I and I think one big way to do that uh is is like I mentioned this idea at the end of the last session of um creating a national imperative or a national strategic importance piece of the grid, the super high voltage, like Dwight Eisenhower did with the interstate highway system. I think we need to do the same thing with the grid. And instead of just relying on ratepayers to pay for it at the hyperlocal level, where the concern is, you know, how do we best maximize efficiencies inside of one utilities footprint or a small group of utilities footprints, to looking at it at a macro level, right? How do we maximize the usefulness of transferring power from the East Coast to the West Coast, right? Or or from Ohio to Arkansas, like we needed to do during URI to keep the lights on, right? How do we build out that system? And the benefits of that, Pat, is I mentioned this idea of a reserve margin in last week, right? We've got to keep these reserve margins right now. Each service area has to have a root, right? They have to have a reserve margin, right? Well, if you spread that out, um you spread out the base, right? Like I I've used this, I like to eat strawberries. And where I live in the wintertime, we don't grow strawberries, right? So where do my strawberries come from? They come from California. Why? Economics, right? That's where they can grow them. It's cheaper in the winter to grow strawberries in California and ship them to me, right, than it is for someone here locally to build the greenhouses and all the required infrastructure it would take to grow winter strawberries here, right? Kind of the same thing with the grid, right? Like if you build out the grid, you maximize the economies of being able to access generation wherever it is, right? If you want wind power from the Kansas plains where it's very, very cheap, you can bring it. We've all heard stories of California having to like curtail solar power, right? Uh in the pick because they've got so much solar, right, that they literally can't use it all in the peak of the day. Well, I would love that, right? Like I would love to be able to take advantage of that virtually zero marginal cost resource here, but right now they the grid just can't support that kind of functionality.

Who Controls Power And Why

SPEAKER_00 7:54

Well, here's what I'm hearing from you, uh which goes with an opinion I share, is sometimes in in this country, sometimes we act as a community. We we have a school board and and and it's hyper-local, as you say. Sometimes we act as a city, sometimes we act as a county, sometimes we act as a state, sometimes we act as a region. But if the United States of America is at war, we don't act with those things. We act as a country. And the United States military is funded by everyone. And and you know, in World War II, there was a draft. I mean, I don't know that you had to really draft anybody, everybody just went voluntarily, but sometimes we act as a country, and it just seems like that that we haven't been doing that with the grid and with uh tri, you know, electricity, et cetera. And and I I understand the reasons why, but I think what you're saying is what that leads to is yes, you have maybe some political authority over things, you had some regulatory authority, Texas retains regulatory authority, they're not part of a federal system, but the economics suck, and it's just bad for the whole of people. And economics, I think my argument would be economics are gonna win the day every single time, or you're gonna be in a totalitarian country like a Cuba or a China, where like we don't care about economics. We just do you do what you're told. So is that basically what you're saying? Is we just need to act as a country on this issue.

SPEAKER_01 9:32

I think that's right. Yeah, and I think part of the problem is sort of the diffuse levels of authority over the system, right? So like generation is controlled at the local level, right? Um, we have several counties in this country, Pat, for example, who have just banned, I think the last count it was like 2,000 counties have banned one kind of generation resource or another, whether that's solar or wind or or or whatever it might be, right? So we have like a lot of places where you just can't build it, right? They won't allow it. Um we we've got we've got examples of that cropping up. So so you have local control over, you know, where generation goes, right? Uh then you got like statewide jurisdiction over a a lot of like how the utilities run and operate, how their rates are set, who pays for what, right? Um and that's exchange that that regulation is an exchange for a monopoly service territory in a lot of cases, right? So um you have regulators doing right what the market can't do, right? Because you and I can't go and choose our electricity provider, right? We're assigned one. And so, and we pay the rates that they say we pay, or you don't, right? Like, um, and so those regulators have to replace the market forces, right? Uh, and drive improvements. Otherwise, there's no incentive to improve or to cut costs or to be better connected, right? Uh, and I think that is one of the biggest in our whole system, one of the biggest misalignments between incentives is how we compensate utilities versus uh so where their incentive is aligned versus where the public incentive is, right? Uh and we can dive into that, but I don't want to lose my train of thought uh as to bigger. And then you've got at the you've got FERC, and and FERC is over the interstate transmission component, right? So they have jurisdiction over transmission tariffs that will when these when these groups form and the RTOs that I mentioned, the regional transmission organizations. Uh, once you're multi-state, FERC has jurisdiction. So, so yeah, it's all of these different levels, right, of overlapping jurisdiction that control not only how the system operates, but then you have the whole environmental regulation side of how you have to go to build new things, right? It's virtually impossible to build a new hydropower plant in the United States today. Virtually impossible. Very, very difficult. You mentioned you wanted to talk about nuclear. Very, very difficult to build nuclear. In fact, the last few times we've tried have been complete boondoggles, right? Um, with huge cost and time overruns because they run into all these regulatory barriers, right?

SPEAKER_00 12:08

Um let me do let me just I want to I I do want to go into alternative including nuclear in a second, but let me throw this out. If this podcast is about nothing else, it's about throwing out radical, wild ass, crazy ideas. So and maybe something happens with them. I I as you were talking about the lack of authority, it it kind of made me think, and we can Google it later, but it to my recollection, the word energy is not used in the United States Constitution. And why would it be? Because they they didn't have electricity or at that time, and so but there's a process to do something about it, and you can have an amendment. So not don't don't assess the chances of an amendment passing because we know how hard that is. But if someone, if we could agree upon an amendment that would give the proper authority, create the rules that would make all of our lives better, would a constitutional amendment that gives authority and and draws uh you know, gives clarity would do you think that that would be helpful to accomplish the mission that you think needs to be done?

SPEAKER_01 13:26

I think, yeah, absolutely. And and I've had it's really weird because I'm typically a big proponent for states' rights, right? Like, um, but there is absolutely an interstate commerce piece here as the grid has grown, um, and as we have become more sophisticated, I can't think of a single input that um the economy relies upon more than water and electricity, right? Like if you go if you don't have reliable water and electricity, you can't do much, right? Um, and that's where we are. And I mean, looking into the future, if you were to look in a do you think we're gonna be more or less reliant on electricity? Right? I would think almost everyone would say more, right? Right, as the more things become digital, right? And the digital world grows. Um, so like why not improve it, right? And we did some of that around like the TVA, which is right next door to me, right? Like that was created to solve a problem uh where big swaths of the country just didn't have access to electricity, right? And the federal government had to step in and create a whole um author, the T the Tennessee Valley Authority for that purpose, right? To provide electricity to those residents because the local jurisdictions just weren't positioned to be able to get that done. Um, there's a couple others uh uh on the West. Um you have the Bonneville Power Association that does similar, right? Um, but but yes, absolutely I think consolidating more authority, whether it's at DOE or at FERC or some combination of both, uh is gonna be critical, right? Because at some point, like you just need someone to say, get it done, right? And and and we're and we're reaching that point because I don't know if you're aware of this. There's there's another RTO um called PJM. Uh it was Pennsylvania, New Jersey, Maryland. It's now a bunch more states than that, right? It's the largest one in the country in terms of total load, right? Um, it's huge. Uh and we had uh Governor Josh Shapiro and President Trump sign the same letter asking PJM to please get its act together, right? Can you imagine like how few political issues there are in the country where you could get like those two together to sign a joint letter on something? But that is sort of like where we are because as people are tuning into these issues that I've been pointing out, right? Um they realize like governors are realizing like I don't really have very much control over this, right? Donald Trump is realizing like we don't have full control over this, right?

Nuclear As One Tool In The Bag

SPEAKER_00 16:12

Yeah, it it's a beast that no one no one can tame. So I so we've made two big takeaways already in this uh appearances you've had. We're gonna name you czar of energy and grid. We're just waiting on somebody to respond to that. And we we may need a constitutional amendment to kind of get our shit together, basically. Um, we're gonna talk about ways to generate energy next. But before I do, I was thinking about from my young days of getting involved in politics, and somebody came and made a speech, and they were talking about roads and why roads were good, which seemed, you know, intuitively like that would that made sense. They made a comment, you've probably heard it before. There's not a Democratic or Republican way to make a road. You know, and I think one of the takeaways here is there's not a Democrat or Republican way to build the electric grid, etc. Now, having said that, there's lots of partisan debate, or at least ideological debate, I would say, around the way that we generate things. So I I want to go to nuclear first. In my book, uh, which kind of inspired this podcast, but I wrote it over 10 years ago at this point. I looked at uh countries that had gone all in on nuclear and scaled up pretty fast. And some of those in Europe, for example, have had second thoughts. But I just I keep searching for the energy source that makes the most sense, and I come back to nuclear, and my solution is not, you know, people are gonna say it's expensive and all that. I'm like, then make it less expensive and safe. But am I wrong? Like, is nuclear a bad idea or is it just part of the mix? Like, let's talk about that.

SPEAKER_01 17:56

Yeah, no, it's a great question. Do you play golf? Okay.

SPEAKER_00 18:00

Uh I grew up on a golf course, and uh, when I got into Sonic 10 years ago, I basically gave away my uh gave away my clubs because I was so embarrassing. I'm a metaphor guy, right? I'm sure you're going somewhere with that instead of just gigging me about how terrible it is.

SPEAKER_01 18:16

I'm going somewhere with this because if you play golf, you don't play golf with one club, right? That's right, you have a bag of clubs. And why, right? Because different clubs are better in different situations, and energy generation is the same way. I think one of the big problems in the energy debate writ large right now is that people fall in love with or in hate with different kinds of genes, it's become tribal, right? What kinds of generation resources are popular, right? Um, it used to be that renewable renewables were pretty popular across the board, and then Trump gets elected and has a vendetta against wind because they built one close to one of his golf courses, right? Uh and and has is now, if you see the polling, like big swaths of Republicans are now anti-wind. They can't really tell you why, uh, but they are, right? Uh, and and similarly on the Democratic side, right? Big swaths of Democrats have have have become anti. And we we need to quit looking at them as moral equivalencies and start looking at their tools, right? They are tools, they are a means to generate electrons. Um, and in almost every case, we're just turning magnets around with a wheel. Uh, but that's that's neither here nor there. Um, but that's my advice is don't fall in love with the generation. I don't think there's resource, I don't think there's a silver bullet out there. I think the best, most resilient, most reliable, lowest cost system we're gonna have is one that takes advantage of the best tool for that circumstance. In places where you have hydro, hydro is the best, right? Um, we certainly shouldn't be tearing out hydroelectric plants. That's insane, right?

SPEAKER_00 19:50

Um in places where you have access to the colour. Where do you stand on coal plants? Where do you stand on coal plants? Because I know that in the environmental community that that is just that I mean, I don't know that anybody's building them anyways now, lots of lawsuits and all that, but it should we be using coal or it should we just retire that industry?

SPEAKER_01 20:09

We should retire coal responsibly because of the environmental impacts. That's what I personally believe. Now, I think you do that as a responsible plan. You don't um you don't turn it off and then figure out what you're gonna do, right? Um, because I do think look, we used to burn a lot of whale oil for electric power. We don't do that anymore. Why? Well, the market moved on, it became quite expensive, right? Um, and so I think if you the answer to me there is always economic driven. If you force the coal industry to pay for all of the externalities, all of the external costs that are caused by burning coal, then it becomes very uneconomic very quickly, right? So you don't have to ban coal, right? You just make sure that the economies are truly aligned, right? And if so, if coal producers and and and power companies that rely on coal had to pay for all the asthma cases and all of the the various health-related issues that come from it, right? Um, then then it would quickly become not cost effective. Um, so I'm a big fan of like just monetizing those external costs. Um and then because you're right, like I think once you get those things aligned, like people act very rationally, um, right? Um, so that's that's where I am. Um natural gas, uh, you know, can be a great tool. It's also very volatile from a price perspective. Nuclear, once you have it up and running, is is the opposite. It is very flat cost. Like we you know exactly what it's gonna cost. The only problem with nuclear is the ramp up time and ramp down time is extremely slow, right? So once a nuclear plant is up and running, you don't want to take it down, right? So it provides a good base layer, but it's not very good for meeting those those peaking instruments, right? Because you can't just switch it on and switch it off. Um

SPEAKER_00 22:00

So let me on nuclear though, you you said the only problem is is what you just described. Some people are gonna say safety is a problem. Yeah. How how concerned about safety at a nuclear plant are you? And it is it as simple as, well, if there's an earthquake, that's a problem, or or like where are the how concerned should we be? Say on a scale of one to ten, ten meaning so concerned we shouldn't build it, one meaning there's a you know a chance, but it's low enough that it's worth the the the output. Where do you rank safety of nuclear plants right now?

SPEAKER_01 22:41

For me, um, and and I say this living fairly close to one one of the ones that scores the lowest on its annual safety reviews of all the ones in the country. Um I'm about a hundred miles away. Um a two. Okay. It's something to be aware of, but I think I mean, when's the last time we had a nuclear incident in this country? All right, or any country. Yeah, right. Like um, the safety protocols are have been proven to to work. And particularly as we are looking to doing smaller, more modular nuclear reactors, that risk of a meltdown and the the negative potential for a huge negative output shrinks as well, right? Um, the Navy's been putting these things on boats for a long time now, right?

SPEAKER_00 23:29

Yeah, that's a that's a great point. Nobody you never hear about that, and yet there's nuclear reactors out there. I I I'm gonna go back or I'm gonna pivot just slightly, but I do appreciate uh the golf analogy and the different bag uh clubs in the bag. So I think what you're saying, just on nuclear specific, you're good with nuclear where it makes sense. You're not it's not the only club. We don't you don't want to put all of your eggs in the nuclear basket for any variety of reasons. Is that an accurate statement? That's right.

SPEAKER_01 24:06

Um, that is absolutely okay.

SPEAKER_00 24:08

And then coal is the only one that you think basically, if we're just gonna let economics and true cost, you know, rule the day, coal's the only one that you think isn't gonna make the cut.

SPEAKER_01 24:18

I would ultimately ultimately, I think that all carbon generating resources will eventually not make the cut. Okay. I do think we are advancing. Like if you look over the the last 10 years alone, um how the market's changed, like um wind provided 40% of the power last year for the entire SPP footprint, right? And that's not a small area, that's 14 states, right? Um, and people don't realize that, right? Like, um now could it provide 100%? No. But that's a big chunk for one resource that is has zero polluting, right? As battery technology has improved, once we once we crack the code on long-term storage, um, the ability to collect the free marginal resource of wind and solar, tidal and geothermal, right? Um I think that you will see they that they will eventually, as they scale, they will drive these other things out of the market. Now, that being said, I think that the market approaches the right way, right? I say uh right now we are in a power deficit, meaning that it is hard for us to build enough power. Like we are at a point where um growth is being constrained by um by our ability to build power, right? Um, and quickly that's becoming more and more the case where people who are looking to build energy-intensive energy uh industries, whether that's a new steel mill or an aluminum plant or uh anything, they have to look at like can I get cost-effective, reliable power and how long will it take me to get it? Um so if you look at that, I look at energy a lot of times as an enabler of economic growth, right? And so I want to be able to it, I want for it to not be a constraint, right? I want other things to be the constraint on economic growth, not our ability to produce the electricity.

Broken Utility Incentives And Final Takeaways

SPEAKER_00 26:14

Well, uh a hundred percent. I also think that you know, let's let's meet let me talk to people who would consider self a Democrat or on the left. The people who you hear uh the constituency that you hear Democrats talk about that they love the most and they want to be the most successful are people who are living paycheck to paycheck. You know, half the country is kind of in that res situation. They don't they have$500 or less in a bank account for an emergency. I quite frankly don't look at my power bill at my home that much. I do at my businesses, I much more, you know, grind on it there because it doesn't matter. As a percentage of my income, it's not a problem. But I, you know, have had employees in my history and known people who are like, Pat, I can't pay my electric chip, you know, and so a 10% increase to them is a very real thing, and they're making choices around that. And I think it's one thing about the debate I've never understood about environmentalism in regard to energy is like the people who need the most stability around cost are the people who you've said you you want to represent the most. And so I'm gonna we've got a couple minutes left. I want to hit another topic or two or give you some time to to summarize these things, but let's just take oil, for example. I I don't know if you have you seen Landman, the see this with Billy Garner for the Yeah, I thought that was pretty fascinating of the way they contextualize things, and I don't know how much of it's all true, but it it makes you think. And like you said earlier, my thing is hey, this is what we have. If you can do something better, please go do that. But don't come attack me and say I'm a bad person for using the thing that has revolutionized the world and created the most prosperity ever. I don't need your morality here. You know, don't tell me to turn my car off when I go inside to pick up my dry cleaning, you know, right? You're not gonna get anywhere with it. And so, as we've got uh just a couple minutes left, whether it's a takeaway about, you know, how could AI help with this, or whether it's a takeaway of like just speaking directly to people who are feeling more informed than they were when you first started uh on this episode, what is what is the first step, Gary? What is the next step that you would urge people to do, even if it's just make yourself more informed than you were before?

SPEAKER_01 28:50

Yeah, I and I I alluded to this earlier, and I I want to really wrap here because I think this is where people need to dig in, is that um the incentives, the way we regulate utilities in this country is largely broken, right? They are very, very powerful. Um they make campaign contributions literally to every single member of these state legislators. In many cases, these regulatory there are I found that the more regulated an industry is, the more they contribute around that regulation. And utilities are 100% regulated, right? Um, because they have that monopoly power. Uh, but oftentimes, even public service commissioners, even the public officials that we count on to represent us will say we are outgunned by them. They they have the lawyers and the experts and the folks doing the research to come in. And we're over a barrel. They're telling us if we don't allow them to do what they want to do, that they can't guarantee the lights will come on. Right. And what am I gonna do? Right? I don't have the data available to disprove them. But the interesting thing is because of the time period when we when we crafted these regulations, we aligned the we incentivized utilities to spend money, right? So the way they make their money, it's not a pure profit margin like you and I might think about, but they get a guaranteed rate of return on investing in their capital stack, right? So when they spend$50 billion to build a nuclear plant, right, then they get a guaranteed annual rate of return that is set by that commission. Uh in most cases, it's somewhere around 10%, right? Guaranteed, right? You and I, as our ratepayers, are going to cover that. Whether that investment makes money, doesn't make money, whether it runs 80% of the time or 20% of the time, doesn't matter. Once they get to invest that capital, they earn a rate. So um so there's there's a misalignment there, right? They're invested to spend money, I got you, not save money, right?

SPEAKER_00 30:48

Um, I I see what I see what you're saying, and and I think we're gonna kind of let that be your last the last point. I I've learned a lot, which is kind of one of the personal reasons why I want to do this podcast. I think I think you know, my last takeaway is that energy is not just a policy issue that you know that should be tribal, ideological, et cetera. It's foundation of modern life. I'm not going backwards. I'm not I'm not gonna start using candles and that sort of thing. So I think uh I want to Gary say thank you for for being on the podcast uh these past two weeks. And uh I my last comment is that this country needs to be a lot more serious and a lot more informed about the energy choices that we have talk to talking to people, engaging in discussions with elected officials. And and if if we do that, I think I think we'll have a lot better outcomes. So thank you for listening this week. That is the POV of POBS.