Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the nationally syndicated Energy Mix Radio Show produced
by the Energy Network Media Group. The Energy Mix Radio
Show will give you an inside look at the energy
industry and how it affects you by talking with industry leaders, experts,
and government officials on the Energy Mix Radio Show.
Speaker 2 (00:16):
Welcome to the Energy Mix Radio Show, where we dive
into the latest trends, challenges, and innovation shaping the future
of energy today. I have two incredible guests joining me,
Jeff Miller and Brian Murphy from Eypower and Utilities. With
their deep expertise in the industry, will explore key topics
like gridmodernization, sustainable energy solutions, and the evolving landscape of utilities.
(00:43):
So stay tuned as we break down all of these
things and what is next for power and utilities and
how businesses and consumers can navigate the changing energy landscape.
So let's get started. Jeff and Brian, Welcome to the
Energy Mix Radio Show. Thanks for having us, Ken were
excited here, guys. I'm going to give you guys a
(01:04):
few minutes to talk a little bit about what you
guys specifically do with EY. Jeff, let's start with you,
what is your role and expertise.
Speaker 3 (01:15):
So as our EY parthenon leader for the America's Parthonize
basically our strategy consulting brands. So it's providing guidance mainly
to invest around utilities, around everything related to you. I'll
say business unit strategy, performance improvement, and activities around the
(01:38):
M and A market.
Speaker 2 (01:39):
Okay, and Brian, how about what do you do it Ey?
When we talk about power utilities and renewable tax.
Speaker 4 (01:47):
Here as the text leader, can I get to work
with our clients and that includes our regulated utilities throughout
the US, but also power generators, independent power producers with
a focus on electricity electric generation regardless of the source,
whether that's renewables or fossil fuels or nuclear, and get
(02:07):
the opportunity to work with these clients and figure out
the complexities of tax and how to navigate taxes across
that entire chain.
Speaker 2 (02:15):
Now, for the listeners who may not be familiar with EY,
can either one of you tell me a little bit
about Uy's background. I'm familiar with it. It's it's a
pretty big company handling multiple things. But I'd like for
you guys to break down EY for our listeners. Yeah.
Speaker 3 (02:32):
Sure, I'll start I mean, obviously, you guys, what are
the the big four accounting firms. We've our our service
lines include assurance, which is our auto practice, consulting, our
Parthenon team, and our tax team. Uh, you know, we're
we're a global We're a global firm and a global brand. Uh,
(02:54):
you know, serving, I would say pretty much, you know eight,
you know, probably not ninety plus versus the companies around
the world.
Speaker 2 (03:02):
And it's not just in renewables and more of the
powers utilities, but it also includes oil gas. You guys
kind of cover the whole thing. We talk about energy correct.
Speaker 4 (03:17):
As a firm, that's right, Kim, And as the tax
leader in powered utilities, I'm focused in that niche of
power and utilities in terms of electric generation, and Jeff
has a somewhat wider energy view in that consulting practice
of Parthenon.
Speaker 2 (03:35):
So, guys, today, I want to really drill down into
there's a lot going on when we talk about the
tariffs and how it's going to affect the energy sector
as a whole. You guys are specializing in a specific
area with Ey, so I want to drill down on tariffs,
the cost implications, how it potentially could affect consumers. How
(03:56):
is the industry going to balance growth with affordability, managing
rising costs, decarbonization goals and challenges, policies, regulations, the future
of renewable energy, investment, collaboration, innovation. So I hope we
can get all of these questions that I have for
you guys covered in today's show. But let's start with
the most pressing, which is the tariffs. What specific impacts
(04:21):
have terraffs been having on critical equipment like solar panels,
large power transformation and win components. And do you guys
also see particular regions where the market is being affected
more than others when we're talking about solar panels and
power transform transformations.
Speaker 4 (04:40):
Yeah, that's an awesome question, Kim and Jeff Fitzer. Right,
I'll start and then we'll come over the top with
any views. So I think it helps a bit if
I set the stage and then drill into that tariff question.
The outlook for US power demand is forecast to grow dramatically.
I think we all seeing these forecasts over the next
(05:02):
five ten years very steep curve, and particularly from now
till twenty thirty. That demand is driven in large part
by electrification you know, electric vehicles, advanced manufacturing, AI, data
centers are US utilities are going to need to meet
that rising demand for power, and they're going to have
(05:24):
to embrace all technologies to get it done. It's combined
cycle natural gas, it's the renewables. We'll talk about solar
and wind, it's nuclear, it's nascent technologies. It's going to
take all of it to meet this curve. And so
with that said, if I look at last year as
a data point, around eighty percent of all new generation
(05:46):
in the US was solar and storage. And we also
know that if a utility decides today to build, say
a combined cycle natural gas plant, it's going to take
a while. It's going to take five to six years,
I think is kind of a consensus. But renewables like solar,
they can be deployed much quicker, much more rapidly, So
they're an important part of this story. I think getting
(06:09):
to the tariffs and focusing on solar, the vast majority
of the supply chain for solar comes out of Southeast Asia,
whether that's wafers or solar cells. Over ninety percent is
really coming out of Southeast Asia. Somewhere around seventy five
percent China alone. So other technology like wind, combined cycle
(06:33):
and natural gas, they're dependent on imports as well. But
part of that supply chain is you know, near shore,
I think is the right term, coming from countries like
Mexico well where the rates the tariff rates are not
quite as high as we're seeing in Southeast Asia. So
my view, Kim, is that the longer these tariffs are
(06:53):
in place, the more likely it is that power prices
are going to increase, wholesale price are going to have
to increase, and ultimately retail prices to the customer are
going to have to go up. Jeff, I know we've
had conversations and we've been hearing things from major US
utilities about how they're handling the tariff and how they
(07:15):
expect the tariffs to kind of manifest into their cost
in the near term. Anything you've earned the last few
earnings releases, it's worth sharing.
Speaker 3 (07:24):
Yeah, I think it's been interesting that if you look
at some of the larger investor on utilities, you know,
they've been really locking in deals with suppliers and have
some ability to withstand and manage through the tariffs without
passing costs onto customers. So I think the question is
how much of an impact. And you know, we've seen
(07:44):
you know, folks talk about anywhere from half of half
a percent to less than five percent in terms of
the implications. But those are utilities that have significant buying
power and are either able to you know, either have
you know, stockpiled some level of inventory related to turbines
(08:05):
or panels, or or they've got relationships and they're able
to pass those costs onto suppliers. When you start getting
into the smaller mid size utilities, I think you'll see
a lottle You'll see that a lot that that'll be
a lot more challenging, and you'll probably see newer term impacts.
You know, generally though we're still talking about twelve to
(08:26):
eighteen months for solar and storage to be deployed, and
a lot of the equipment for uh you know, uh
for plants that are that are in process has already
been has already been locked in. So you know, will
there being in will there be a long term impact,
you know, without a doubt whether or not, you know,
(08:48):
how do we weather that storm over the next you know,
twelve to thirty six to forty eight months is going
to be interesting to see.
Speaker 2 (08:55):
I'm curious. I want to get to the regions that
are being most effective.
Speaker 4 (08:59):
Also, I want to.
Speaker 2 (09:00):
Ask you both Trump administration changed a lot of things
around into what is they look as renewed as far
as power sources and what they're looking at to invest in.
And I know that solar and wind have been a
component that has been affected in probably more of a
negative way. But how does this impact that industry, Like
(09:23):
will we continue to see it growing the way it
had been growing or has the Trump administrations change from
one administration to another? Are they being affected these industries
as well due to the changes that are happening in
the Trump administration.
Speaker 3 (09:39):
Yeah, I mean I think the UH UH you know,
I view the UH you know, the opening up of
UH and the general tone of the executive orders towards
the oil and gas industry as being you know, something
that will you know. I think the intent is how
do we manage to keep boiling and gas prices low
(09:59):
and pass those onto customers? So I think the intent
of the administration and in that respect, UH is is
I view as a big positive. And I also view
as a positive the ability to UH to grow the
natural gas industry just given the fact that we're going
to need baseload supply to support the data centers and
AI investments UH that Brian had talked about previously.
Speaker 2 (10:22):
UH.
Speaker 3 (10:23):
From a when you look at the overall landscape, though,
I think the all of the above strategy will have
to be the case in terms of what we see
for the deployment of different power generation technologies UH, solar
and storage UH and and when to a great extent,
can be brought on much more quickly than than gas,
(10:44):
uh than natural gas fire plants. So we're going to
continue to see a push around those despite uh, you know,
any tariffs from the administration, and you know, to a
great extent, you know, the the utilities look at the
need to provide you know, reliable power and they're going
to defall to uh the sources supply that actually get
(11:07):
them there and UH. And then the challenge comes in
what will the cost be over the long term? UH?
And then you look at the tariffs and the executive
orders and say, is this say, you know, what's going
to happen as we go from one? You know, when
when there's a two to four year plus impact on
uh UH you know outprice impact and you look at
(11:28):
the timing of you know, what happens post this administration.
Speaker 5 (11:31):
Uh.
Speaker 3 (11:32):
You know, I think long term, you know, the trend
towards decarbonization will continue. It's driven by you know, companies
and UH and consumers as as much as UH governments.
So you know, there's no way around you know that continue. Uh,
the decarbonization I I have you know, my UH, the
(11:54):
the statement that I use quite a lot is the
decarbonization trains has left the station. We're down a path
as an economy, and we're going to have to figure
out how how how we adopt in that uh and
the resulting changes in the energy mix.
Speaker 6 (12:08):
UH.
Speaker 3 (12:08):
But we're still looking at you know, so solar wind
storage from a renewable standpoint, UH predominance and natural gas
and eventually development of nuclear of the nuclear industry.
Speaker 2 (12:22):
Right well, I was going to say that I think
that you know, all the above. As Sarah a Week
which just concluded a couple of months ago, there was
you know, great awareness that due to these data centers,
which we'll get into that a little bit later on
in the show, and just the need for more power
and more energy everything has to be looked at because
(12:44):
we just simply do not have enough. When we returned
from break, I want to talk a little bit about
particular regions and markets that might be effective more than
others due to the tariffs and cost implications, but we
got to take a quick break. You're listening to the
Energy Mixed Radio show, and we'll be right back. And
we're back. You're listening to the Energy Mix radio show.
(13:04):
My guest today is Jeff Miller and Brian Murphy with
ey guys. Before the break, we were talking a little
bit about tariffs and how they are impacting solar panel
power transformers and win components, which I think everybody is wondering.
We've seen a defunding of particularly these energy sources, but
(13:27):
yet we realize that we have to look at all
forms of energy to just basically supply our needs, especially
what's coming down the pike and in the future. With
a lot of defunding to these specific areas solar and
wind components, how do you with the Trump administration and
how do you guys see them being able to continue
(13:49):
if they were not really being financially supported and propped
up by the government. Does that really moderate anymore? You
mentioned earlier that the train has left the station. So
are they Have they grown enough to be able to
stand on their own two legs and be able to
continue to build as we've been seeing. What are your
thoughts for the future for energy and UH and win.
(14:12):
I'm sorry for solar panels and wind, Brian, I'll jump
I'll jump in and start with this. So I think
our view is that, you know, a lot of the
solar and wind investments, given the price of those technologies
have con come down, will stand alone without without the
(14:34):
support of the tax incentives. At the same time, there
are a lot of projects that were on the edges
that probably will not make as much sense. So, you know,
the the growth and solar and when will continue. The
pace of what it would have been with IRA will
probably not be the same as as what was previously forecasted,
(14:54):
But you're still looking at critically part of the UH
of the nations evolving energy mix will be solar, wind
in combination with gas and eventually in nuclear right Jeff
or Brian specifically, are there any regions or markets that
(15:15):
are being more affected by the tariffs when we talk
about these type of energy sources than others. Who's getting
the hardest hit by tariffs and specifically looking at solar panel,
wind and power transformers.
Speaker 4 (15:28):
Maybe I'll answer that Kim indirectly to a degree. So
I in terms of regions of the country that are
going to be impacted, I agree with Jeff that you know,
we meet in all of the above strategy and in
the long run renewables sustainability agenda that's left the station.
But in the short run, some of these executive orders
(15:50):
and tariffs, they do have immediate implications and consequences. So
I'll pick a technology, will pick offshore wind. And so
one of the executive orders really targeted the permitting process
for offshore wind and for all intents and purposes, has
kind of halted that sector. And so you think about
the regions affected by that, and that takes you up
(16:11):
to the Northeast. It takes you up to you know,
that northeast quadrant of the North Atlantic and New York
and Massachusetts who had somewhat robust plans for offshore wind
development in that region. And then you think about you know,
wind onshore. Some implications, but as we talked about in
the SU supply chain, probably not as much as the
(16:32):
indirect impacts to solar on the short run for the
Southeast Asia markets really being the core of that supply chain.
So then you said, well where was the solar being deployed?
And I think you're going to get up a proportionate
responsive impact. Whether that's California as the leading state for solar,
(16:53):
but Texas is a second in solar, and Texas, which
probably hasn't talked about enough, number one in wind. It's
number one in combined cycle natural gas and oil and gas,
but it's number one and wind, and it's a close
number two in solar. So I think those are markets
that are are going to be looked to for significant
(17:13):
build out of generation and these shifts in the short
term of the cost structure and the supply chain going
to probably hit those markets first.
Speaker 2 (17:21):
Very interesting. Let's talk about the consumer. When do you
all anticipate an increased cost of like equipment and it'll
start reflecting you know, you mentioned that it's going to
continue the prop the you know, the the growth might
be at a slower pace, But do we as consumers
starts seeing increases in our utility bills and things like that,
(17:44):
and so you know when and are there any measures
that are being taken to you know, try to figure
out how do we, you know, avoid the cost to
the consumer.
Speaker 3 (17:57):
Yeah, I mean customer affordability is front and set in
every dialogue that we're having with our clients at this
point in time, and it's and it's an ongoing challenge.
And it's a challenge because the growth in data center
demand and how we actually bring uh, you know, bring
new assets online and that's that's generation as well as
(18:19):
all the T and D infrastructure that needs to be built.
So I I think there's a couple ways to look
at it. One, UH, if you look at some of
the larger investor owned utilities, they've they've locked in supply
and locked in some of their supply chain costs. Uh
for they've got a better capability. Two uh to not
(18:39):
pass along costs in the near term to customers. Uh.
You know, once we get to two to four years out.
I think, let let's see, uh, let's see where we
are with respect to tariffs, Let's see where we are
with respect to UH to to supporting some of the
infrastructure developments. So that's uh, you know, that's one way
(18:59):
to look at it. That this second piece is just
how do we actually develop the you know, can we
actually add to our system in ways where in areas
where they're slack and you've got the ability to do
that potentially with some of the larger spread out utilities.
The Northeast is it's particularly problematic just because you're not
(19:22):
citing as many data centers in the Northeast, or you
don't have as much growth and you've got, you know,
the push around effort electrification in those markets. So I
think it's going to be there's a broader capability in
the i'll say the southern part of the country in
order or to hopefully to support it sustained potentially in
(19:44):
the Midwest as well. Brian, anything else that you've got
to add, I think you.
Speaker 4 (19:50):
Hit it, Jeff. It's really the larger utilities. They have
that unique advantage, whether it's you know, they have established
supply chains, access to inventory, they can negotiate probably a
lot stronger with their vendors for the equipment and for
kind of sharing that risk and sharing cost. I think
all that said, though, if the longer the tariffs continue,
(20:11):
the longer this period is that they're in place, whether
you know, whether that's a year or two years, whatever
that duration is, I think we'll see some slow generation
development and higher prices.
Speaker 2 (20:22):
Overall very interesting. We're going to take another quick break.
When we return, I want to get back on the
demand for electrification, the data centers and manufacturing, and how
do we balance all of this growth and then of
course maintaining affordability to consumers. How are we going to
(20:43):
provide all of this? Let's look a quick break. You're
listening to the Energy Mix Radio Show and we'll be
right back.
Speaker 5 (20:49):
Attention, small and medium sized business owners. Are you feeling
overwhelmed with back office tasks like payroll, workers, compensation, federal regulations,
safety laws, employment standards and benefits. Don't worry. Unique HR
has your fact. For over thirty years, our team of
qualified professionals has been providing people centered solutions to help
businesses like yours navigate the heavy burden of running a
business and managing their workforce. We're the PEO with a
(21:12):
pulse and we are just a phone call away. Call
us today at three six one eight five two six
three ninety two. Unique Hr the partner you can trust.
Speaker 2 (21:22):
And we're back. You're listening to the Energy Mix Radio Show.
My guest today is Jeff Miller and Brian Murphy with
ey Brian, let me go to you and ask you.
I want to talk about balanced growth and affordability. I
mentioned earlier Sarah a Week there was a lot of
discussion there about how important AI is for the energy
(21:43):
industry as a whole, didn't matter if it was oil,
liquefied natural gas, electrification, utilities, AI data centers, and the
importance of us staying ahead of China and making sure
we grow quickly, make sure that we also protect ourselves
against cyber threats. But we've got to grow, grow, grow, grow,
(22:03):
grow Now we have tariffs, and so with the rising
demand for power being driven by electrification, these massive data
centers and manufacturing, how do you see utilities balancing the
need for growth and maintaining affordable rates to the consumer.
How are they going to do all this? Because that
was the one thing that Sarah Week really couldn't answer,
(22:24):
was we need to do it, but we don't know
how to do it except just be real careful that
you don't fall into a cyber attext. So everybody was
kind of scratching their head at Sarah Week of like, well,
we think we've got a plan, or either maybe it
was that nobody was really discussing what their plan was
due to strategies, but it was very obvious that we
(22:45):
have a huge demand coming. How are we going to
handle this? Tell me what ey thinks? What do you think?
Speaker 4 (22:53):
Kim? It's telling that the Serah Week conversation seemed to
come back without an aim answer. That's very insightful to
how steep this challenge really is, how difficult it's going
to be to solve that mix, that balance of generation
and affordability. What I see is that utilities are going
(23:15):
they already have been on this journey, but they're going
to become even more vigilant around all of their operating
costs and trying to really dial into how do you
really take out unnecessary cost and make sure every dollar's
spent smart. And they're going to have to become a
more dynamic with what they call their Integrated Resource Plan
that IOP, that's their forward look of what does our
(23:38):
capital spend look like over the next five years, where
are we going to invest in our system, whether that's
TND or generation. That's going to become a lot more robust,
many more iterations to make sure their connectivity with their
regulators is tight, and that they're in lock step making
sure that every capital project, every dollar they undertake, that
(24:01):
it's the right one at the right time. Because to
your point, that balance between security, safety, reliability, those are
critical and have to be in balance with affordability. You
can't just put one forward at the expense of the other.
Speaker 2 (24:18):
Correct, Jeff, Do you have anything to add on to that,
because it seems like we're in a mad dash rush
to stay in front of other countries and to own
this space. But as Brian said earlier, how we have
to manage it carefully as well and make sure that
everything makes sense, especially when we talk about profitability.
Speaker 3 (24:36):
Yeah, and I think the utilities are looking at both,
you know, how do we reduce a O and M,
How do we manage our capital budgets in a way
that you know that improves the efficiency of that spend.
And then on top of it, it's looking at how
how do we support the growth in We're embarking on
(24:56):
a period of you know, we've gone through a period
of twenty to twenty US years of pretty much flat demand. Uh,
and now we're talking two to five percent growth, you know,
coming from data center with data centers being a big
part of that historically within the industry, growth was a
great way to actually manage costs for the customer. So
(25:16):
we look at spreading more killowt hour you know, uh,
you know, uh, you know, when you when you increase
the denometor in the equation of dollars per kilo what hours,
you could hopefully reduce costs to the customer. And I
think utilities are trying to figure out how to actually
manage the dollars in such a way to enable that
(25:37):
to happen. And I think to the point that Brian
made the non answer that you heard from SERA week
is pretty much where utilities are trying to figure out
and model that as we speak. And I don't think
anybody's gotten to a point where they've got a really
good answer, but but I think we're we've got an
idea of what the challenge is. That's lane that the
sitting out in front of us right.
Speaker 2 (25:59):
Well, we're going to take another break, but turner drill
down into the rising equipment cost and the strategies as
you mentioned earlier, about how are they doing it very carefully?
And I want to drill down a little bit more.
We got to take a quick break you're listening to
the Energy Mixed radio show, and we'll be right back.
Speaker 5 (26:20):
The Texas Oil and Gas Association Safety Group is your
pipeline to discounts, dividends and industry expertise. It's a value
added benefit from Texas Mutual Insurance Company, the state's leading
workers comprovider. At Texas Mutual, they know the oil and
gas industry, which means you'll have access to expert resources
and information that make your business better. As a Safety
(26:42):
Group member, you'll also save about twelve percent on your
workers Comp premium, and that's just the beginning. While Texas
Mutual policy holders can earn an annual dividend for keeping
their workers safe, Safety Group members can get something even better,
a second dividend that's up to two dividends every year.
Plus you'll get serve US focused coverage from Texas Mutual
workers comp partner you know and trust. The Texas Oil
(27:06):
and Gas Association Safety Group is tailor made for your business.
Talk to your agents or learn more at Texas Mutual
dot com slash t x o g A. Dividends are
based on performance and not guaranteed.
Speaker 2 (27:22):
And we're back. You're listening to the Energy Mix radio show.
My guest today is Jeff Miller and Brian Murphy of
Ey Jeff, we've been talking a lot about managing costs
along with you know, cuts demand. It's all on the table.
No one really seems to have a plan, certainly not
(27:45):
the industry as a whole seem to be united on
what is the path forward. We just know that we're
having a real crisis when we look at demand will
be up in the future and we're going to have
to address it some way, somehow. So I want to
ask you to help me, you know, understand a little
bit more about managing excuse me, managing rising equipment cost
(28:06):
What strategies are utility companies using to employ the rising
cost of critical equipment to ensure the reliability and energy supply?
Brian mentioned earlier h I.
Speaker 4 (28:19):
I r P, which is the.
Speaker 2 (28:23):
An infrastructure resource plan? What is it?
Speaker 4 (28:29):
The integrated resource plan? That's that's the the plan submitted
by utility to the regulator, to your intended capital.
Speaker 2 (28:39):
Hang on a second, he's going to answer that, so, Brian,
Brian mentioned earlier I RP.
Speaker 4 (28:47):
Is that a solution?
Speaker 2 (28:48):
Can you tell our listeners specifically what that is and
how it drills down into answering potentially, is this the
solution of how they're going to address the rising equipment
cost and while managing to grow as well.
Speaker 3 (29:03):
So the I RP only lays out, basically lays out
the strategy of what assets you need to that the
utility will deploy over the next let let let's say
the next ten year period. It doesn't get into the
strategy to actually how how do we manage costs given
those assets that are being deployed. And I think that's
(29:24):
where you're getting to with your question, is how do
we actually manage managed through those rising equipment costs? And
really i'd look at a couple strap utilities are UH,
you know, have already engaged around and could engage around
going forward. And what we've seen already is utilities that
have locked in equipment supply and I would say stockpiles
(29:47):
some level of inventory, and that's relationships with UH, the
turban manufacturers around those assets, relationships with UH with the
solar manufact with the solar equipment manufact UH around around
panels and verbs. So that that's one way you could
look at. The second is how do we actually migrate
(30:10):
those supply chains over time? A way you know, potentially
either to the US or to near shore locations where
there's UH where there's lower tariffs that are in place.
So but but the ilenge both of those cases is
they just take time. And you know, you know that
that's something that we could look at from a long
(30:32):
term perspective, and I'm sure you know we've started to
see we started to see some of that movement already,
but it just takes time to manage that.
Speaker 2 (30:41):
Is there any magic bullet either one of you see
that might actually be a solution and you might even say, yes,
let's deal with the tariffs and get that over then done.
I don't really know, but I do know that we
have to look to the feature and we know that
we're going to need more, not less. So is there
anything that you ey ces that would really kind of
(31:04):
really push this into you know, first gear to get
it going, to make sure that we're able to manage
and have an abundance to be able to handle what's
coming down the pike with all this growth.
Speaker 3 (31:16):
I don't think there's one strategy that's going to help
us get you know this is this is the one
thing that we need to do, I would say continued
investments in all of the technologies that we'll talk about
to see where the traction is, because you know, if
we had an answer now, everybody would be driving towards it,
and we and we don't at this point. So let's
(31:38):
continue to push on natural on gas turbines, let's continue
to push on nuclear. Let's see what we can do
in the immediate turn, what's solar and storage and and
basically I think it's its best efforts to try to
figure out how do we manage the growth in the
lowest possible cost matter.
Speaker 2 (31:59):
Let's Jeff talk about decarbonization goals amidst plenty of challenges,
despite challenges posed by the tariffs, energy policy uncertainties, how
are utilities staying committed to their long term decarbonization goals.
I think there's a lot of people that are loose
for on looking decarbonization. I don't think so. But how
(32:25):
do we do this is definitely something I don't really
think that the average consumer has an idea of how
do we do this? How are they going to keep
everything all these uncertainties in mind along with staying committed
to decarbonization.
Speaker 3 (32:44):
So I think what we've seen is a number of
utilities and companies that have actually pulled away from near
term targets. So if you look at at twenty thirty
targets that have been that have been pushed out, but
it's interesting that there's been very little move and if any,
around around twenty fifty targets up to this point. And
(33:04):
I think a lot of that has to do with
the fact that, uh, you know, when we actually go
so far out, utilities have not figured out how to
the and many companies have not figured out how to
actually address that, you know, last twenty percent of decarbonization
goals that they had in place anyway, And at this point,
(33:24):
there's not a downside to actually holding off on communicating
anything about how do we meet those targets while let's
continue to invest in the different technologies that could potentially
get us there. So, uh, you know, I I see that,
you know, just given consumer sentiment and company priorities, you know,
(33:45):
particularly coming from the larger tech companies, you know, those
decarbonization goals are still going to be out are going
to remain out there, and you know, let let's see
what happens, you know, when we're five or ten years
down the road and you get closer and the development
of some of the some technologies around you know, long
(34:07):
duration energy storage, nuclear, potentially even hydrogen. You know, do
we get to a point where there's, uh, there's a
ramp up in those technologies and the economics are proven
to be viable.
Speaker 2 (34:20):
Well, guys, let's take a quick break. But when we return, Brian,
I'd like to bring you into the conversation to talk
about policy and regulatory landscape. But we've got to take
a quick break. You're listening to the Energy Mix radio
show and we'll be right back.
Speaker 6 (34:35):
Farmers and ranchers are the hardest working people on Earth
and deserve a side by side vehicle that works just
as hard. That's why Yamaha makes the Viking and all
New Viking six, the world's first true three and six
person UTVs assembled in America, ranked number one and drive
train durability, Viking outworks and outclasses the competition and features
(34:55):
comfort and off road capability. For more, visit Yamaha Viking Dot.
Most of pitable claim based on a twenty thirteen Yamaha
Source side by side owner study.
Speaker 7 (35:04):
Are you a business owner feeling overwhelmed where to begin
your businesses? Online presence? Maybe you've spent thousands of dollars
in the past just to be highly disappointed with the results.
We understand because we were once you. Since then, we
decided to hire the very best experts to help us
and you. Let us send you our business profile that
will quickly show you your Google business rankings in these
(35:27):
five areas, reputation ratings, online website advertising and social media,
and search engine optimization. All of these areas really affect
how Google ranks your entire listing.
Speaker 8 (35:39):
So if ranking on page one is your goal, pick
up the phone and call us now two ten two
four zero seventy one eighty eight, or simply go to
Shale mag dot com slash business profile. We'll be in
contact with you within twenty four hours. Once again, pick
up the phone and call us now two ten two
four zero seventy one eighty eight, or simply go to
Shale that's s h a l e mag dot com
(36:04):
slash business profile.
Speaker 7 (36:06):
Start dealing with a company you can trust and always.
Speaker 2 (36:09):
Find, and we're back. You're listening to the Energy Mix
radio show. My guest today is Jeff Miller and Brian
Murphy with Ey Brian I want to bring you. Brian,
I want you to help our listeners and me understand
a little bit about policy and the regulatory landscape. It
seems to be changing a lot in the first one
(36:29):
hundred days that President Trump has been in office from
the previous administration. So I guess my question would be,
you know, how does current energy policies and regulatory uncertainties
influences the buility for utilities to invest in renewable energy,
renewable energy infrastructure and maintain affordability, Especially in today's climate,
(36:50):
when we're looking at a new administration and they're kind
of changing their energy policy a little bit from the
previous where do we go How do utility companies handle
new landscape.
Speaker 4 (37:01):
I'll start with the affordability aspect, and as Jeff just
kind of walked through, it's a challenge, and it's a
challenge where we don't have clear answers right now. Assuming
renewable energy is the tip of the power generation sphere
over the next five years, we've already seen the impact
that regulation and policy can have on certain technologies. Those
(37:26):
executive orders, one in particular was unleashing American Energy. Can
you mention this earlier? It paused funding for clean energy
different grants and loans. There was another executive order at
the same time. That was the one that halted the
permitting for offshore wind when or even onshore wind where
they were on federal lands. That really kind of slowed
(37:46):
down that permitting process. But as Jeff alluded to, our
utilities are doing everything they can in the short run
to minimize those affordability issues. But the balance between that
need for the power, the reliability that you talked to about,
the safety and security that you talked about, all of
that is critical path and so affordability I expect is
(38:09):
going to be kind of under some pressure and exacerbated
by certain policies, whether that's the executive orders, tariffs, and
we can talk a little bit about looking forward. We
know the Inflation Reduction Act is a cornerstone for a
lot of our renewable energy today, a lot of credits
and incentives in that space. Over the coming months, we
expect Congress is going to turn and focus on tax policy,
(38:32):
the Tax Cuts and Jobs Act, but part of their
focus is going to be taking a hard look at
the IRA.
Speaker 2 (38:39):
Interesting. That's interesting, I had not heard that. So then yeah,
let's switch gears, Brian and talk about the future of
the renewable energy investments. And you know, of course, giving
the situation at hand right now between riot Zee and
you said, Congress might be looking at this. Is this
going to shift the pace or the scale of investment
in renewable energy projects like solar way And do you
(39:00):
think this is probably why Congress is going to take
a look at it to make sure that it continues
to grow as well, considering that it has seen some
fun trave administration.
Speaker 5 (39:11):
Yeah.
Speaker 4 (39:11):
Can I do think that uncertainty is often a key
impediment to speed, to speed to market, to how quickly
the utility sector can react and respond to the demand
and power. Some of that uncertainty is being manifested in
the tariffs in the executive orders, but right now, looking forward,
(39:34):
there's uncertainty and where the Inflation Reduction Act that houses
so many of these renewable energy and CentOS, where that
might land after we see TOX policy move forward. I
would say win power projects in particular, you know, in
the short run they have that near term advantage when
you think about just the tariffs, the supply chain being
(39:56):
less dependent on Southeast Asia. But the US has been
investing in solar and winged exponentially. That's really been the
focus in the last couple of years, dramatic investment in
the solar and battery space, to the extent we see
big changes or reductions in the IRA if they pull
back or repeal certain incentives and provisions in those tax credits,
(40:17):
particularly for these technologies. I think in the near term
you'll see somewhat of a slow down of deployment of
those technologies. You'll see, as Jeff talked about, a focus
on the better projects, the projects that are more viable,
that have better economics without the incentives. So it will
shift the focus to those projects and maybe move away
(40:37):
from the projects where that we're not quite as robust
or quite as strong economically without the incentive. But I
think in the long term all these technologies win, solar battery,
the combined cyclo natural gas. I think we're in a
bit of a nuclear renaissance in a response to the
need for all power on deck. Looking at a lot
of the kind of older power plants in the US,
(40:58):
the nuclear plants that maybe we're near the end of
their license life being revisited to say, is this something
that we need. Baseloads certainly for the next five to
ten years. So I think when we look at the
overall US power generation mix, we're going to see that
all of the above strategy regardless of what happens to
(41:18):
the Inflation Reduction Act, but it will impact the speed
of deployment and kind of the order of what technology
we see rolled out.
Speaker 2 (41:27):
Let's close the show on a positive note, collaboration and innovation.
You know, one thing that comes to mind was I
did a show the other day and it discussed we
were discussing how Spain and Portugal lost power for a
couple of days. And I'm not trying to get into
that discussion on this show. That was another show, but
it does show the importance of having a diverse energy mix.
(41:50):
In my mind, this is you know, Kim's opinion, and
so renewables are at the table as well, or they
should be. We're going to need more, not less. And
why bring that up is because we wouldn't want to
run out of power period and end up like Spain
and Portugal because we just don't have enough power to
power everything. So all the above strategy works for me too.
When we look and see doesn't happen, well, it just did.
In Spain and Portugal. So let that be our lesson
(42:12):
how for the future of renewable energy investments? How how
do we collaborate with governments, utilities and private sectors to
address these challenges? Any ideas how we do this and
are there innovative solutions that you guys can think of?
Speaker 3 (42:27):
Well, I guess the question is where do we start
seeing any sort of public private partnerships around deployment, around
deployment of any of these assets. Where do we see, uh,
you know, capital investments coming from and is there a
greater ability or from either from from the banks or
from infrastructure providers private equity in terms of being able
(42:50):
to support some of those investments. I look at the
deployment of the share volume of data centers that are
going to come up, and that's you know, you know
that that infrastructure and those investments need need to come
from someplace and it's a MiG and it's likely going
to be a mix of private and public and utility
investment that's going to get us over the hump. So
(43:11):
so I I really think it is a question of
how do they how do they come together? Uh, you know,
we we at the beginning of the discussion today, we
started talking about relaxation of permitting and and some of
the regulation and and to me, that's a question of
how and when that happens. So even if we reduce
some of the tax incentives that are in place that
(43:33):
I would say would have a you know, a negative
impact on prices, you know, can we can the government
support and you know, and private companies follow through on
you know, on relaxed permitting and the ability to to
build the infrastructure you know, better and faster than what
we've seen before. So I think that's you know, to me,
(43:54):
that's the positive spin and things that we can look towards.
Speaker 2 (43:58):
Brian only give you the last word. We've got about
the thirty seconds.
Speaker 4 (44:01):
I agree. Staying on the positive note, this is a
really unique opportunity to transform the entire US power infrastructure
and grid and bring it to an entirely new, modern level.
And it's going to require really close collaboration with utilities, commissions, customers,
public private partnerships. All of that is on the table
to get to the goal.
Speaker 2 (44:23):
Very good, Well, I think as we make our path
to stay on the path of decarbonization and what you
both said, it's going to be a partnership and we
just have to rise to the occasion and look out
for what's in our best interest. It will be interesting
to see what happens here in the near future with
power utilities and renewables. Jeff Brian, thank you for coming
(44:44):
and talking to me today, getting us up to speed
on what EI thinks is happening in this energy sector,
and I look forward to having you back on the
show in the near future.
Speaker 3 (44:51):
Thanks a lot, I appreciate the opportunity.
Speaker 4 (44:53):
Thanks for having us.
Speaker 1 (44:55):
The Energy Mix Radio show is where we explore topics
that affect us all in the oil and gas industry.
Every week, our host will interview the movers and shakers
in this fast paced industry. You'll hear from industry experts,
elected officials, and many more on the Energy Mix Radio Show.
Welcome to the nationally syndicated Energy Mix Radio Show produced
by the Energy Network Media Group. The Energy Mix Radio
Show will give you an inside look at the energy
industry and how it affects you by talking with industry leaders, experts,
and government officials on the Energy Mix Radio Show.
Speaker 2 (00:16):
Welcome to the Energy Mix Radio Show, where we dive
into the latest trends, challenges, and innovation shaping the future
of energy today. I have two incredible guests joining me,
Jeff Miller and Brian Murphy from Eypower and Utilities. With
their deep expertise in the industry, will explore key topics
like gridmodernization, sustainable energy solutions, and the evolving landscape of utilities.
(00:43):
So stay tuned as we break down all of these
things and what is next for power and utilities and
how businesses and consumers can navigate the changing energy landscape.
So let's get started. Jeff and Brian, Welcome to the
Energy Mix Radio Show. Thanks for having us, Ken were
excited here, guys. I'm going to give you guys a
(01:04):
few minutes to talk a little bit about what you
guys specifically do with EY. Jeff, let's start with you,
what is your role and expertise.
Speaker 3 (01:15):
So as our EY parthenon leader for the America's Parthonize
basically our strategy consulting brands. So it's providing guidance mainly
to invest around utilities, around everything related to you. I'll
say business unit strategy, performance improvement, and activities around the
(01:38):
M and A market.
Speaker 2 (01:39):
Okay, and Brian, how about what do you do it Ey?
When we talk about power utilities and renewable tax.
Speaker 4 (01:47):
Here as the text leader, can I get to work
with our clients and that includes our regulated utilities throughout
the US, but also power generators, independent power producers with
a focus on electricity electric generation regardless of the source,
whether that's renewables or fossil fuels or nuclear, and get
(02:07):
the opportunity to work with these clients and figure out
the complexities of tax and how to navigate taxes across
that entire chain.
Speaker 2 (02:15):
Now, for the listeners who may not be familiar with EY,
can either one of you tell me a little bit
about Uy's background. I'm familiar with it. It's it's a
pretty big company handling multiple things. But I'd like for
you guys to break down EY for our listeners. Yeah.
Speaker 3 (02:32):
Sure, I'll start I mean, obviously, you guys, what are
the the big four accounting firms. We've our our service
lines include assurance, which is our auto practice, consulting, our
Parthenon team, and our tax team. Uh, you know, we're
we're a global We're a global firm and a global brand. Uh,
(02:54):
you know, serving, I would say pretty much, you know eight,
you know, probably not ninety plus versus the companies around
the world.
Speaker 2 (03:02):
And it's not just in renewables and more of the
powers utilities, but it also includes oil gas. You guys
kind of cover the whole thing. We talk about energy correct.
Speaker 4 (03:17):
As a firm, that's right, Kim, And as the tax
leader in powered utilities, I'm focused in that niche of
power and utilities in terms of electric generation, and Jeff
has a somewhat wider energy view in that consulting practice
of Parthenon.
Speaker 2 (03:35):
So, guys, today, I want to really drill down into
there's a lot going on when we talk about the
tariffs and how it's going to affect the energy sector
as a whole. You guys are specializing in a specific
area with Ey, so I want to drill down on tariffs,
the cost implications, how it potentially could affect consumers. How
(03:56):
is the industry going to balance growth with affordability, managing
rising costs, decarbonization goals and challenges, policies, regulations, the future
of renewable energy, investment, collaboration, innovation. So I hope we
can get all of these questions that I have for
you guys covered in today's show. But let's start with
the most pressing, which is the tariffs. What specific impacts
(04:21):
have terraffs been having on critical equipment like solar panels,
large power transformation and win components. And do you guys
also see particular regions where the market is being affected
more than others when we're talking about solar panels and
power transform transformations.
Speaker 4 (04:40):
Yeah, that's an awesome question, Kim and Jeff Fitzer. Right,
I'll start and then we'll come over the top with
any views. So I think it helps a bit if
I set the stage and then drill into that tariff question.
The outlook for US power demand is forecast to grow dramatically.
I think we all seeing these forecasts over the next
(05:02):
five ten years very steep curve, and particularly from now
till twenty thirty. That demand is driven in large part
by electrification you know, electric vehicles, advanced manufacturing, AI, data
centers are US utilities are going to need to meet
that rising demand for power, and they're going to have
(05:24):
to embrace all technologies to get it done. It's combined
cycle natural gas, it's the renewables. We'll talk about solar
and wind, it's nuclear, it's nascent technologies. It's going to
take all of it to meet this curve. And so
with that said, if I look at last year as
a data point, around eighty percent of all new generation
(05:46):
in the US was solar and storage. And we also
know that if a utility decides today to build, say
a combined cycle natural gas plant, it's going to take
a while. It's going to take five to six years,
I think is kind of a consensus. But renewables like solar,
they can be deployed much quicker, much more rapidly, So
they're an important part of this story. I think getting
(06:09):
to the tariffs and focusing on solar, the vast majority
of the supply chain for solar comes out of Southeast Asia,
whether that's wafers or solar cells. Over ninety percent is
really coming out of Southeast Asia. Somewhere around seventy five
percent China alone. So other technology like wind, combined cycle
(06:33):
and natural gas, they're dependent on imports as well. But
part of that supply chain is you know, near shore,
I think is the right term, coming from countries like
Mexico well where the rates the tariff rates are not
quite as high as we're seeing in Southeast Asia. So
my view, Kim, is that the longer these tariffs are
(06:53):
in place, the more likely it is that power prices
are going to increase, wholesale price are going to have
to increase, and ultimately retail prices to the customer are
going to have to go up. Jeff, I know we've
had conversations and we've been hearing things from major US
utilities about how they're handling the tariff and how they
(07:15):
expect the tariffs to kind of manifest into their cost
in the near term. Anything you've earned the last few
earnings releases, it's worth sharing.
Speaker 3 (07:24):
Yeah, I think it's been interesting that if you look
at some of the larger investor on utilities, you know,
they've been really locking in deals with suppliers and have
some ability to withstand and manage through the tariffs without
passing costs onto customers. So I think the question is
how much of an impact. And you know, we've seen
(07:44):
you know, folks talk about anywhere from half of half
a percent to less than five percent in terms of
the implications. But those are utilities that have significant buying
power and are either able to you know, either have
you know, stockpiled some level of inventory related to turbines
(08:05):
or panels, or or they've got relationships and they're able
to pass those costs onto suppliers. When you start getting
into the smaller mid size utilities, I think you'll see
a lottle You'll see that a lot that that'll be
a lot more challenging, and you'll probably see newer term impacts.
You know, generally though we're still talking about twelve to
(08:26):
eighteen months for solar and storage to be deployed, and
a lot of the equipment for uh you know, uh
for plants that are that are in process has already
been has already been locked in. So you know, will
there being in will there be a long term impact,
you know, without a doubt whether or not, you know,
(08:48):
how do we weather that storm over the next you know,
twelve to thirty six to forty eight months is going
to be interesting to see.
Speaker 2 (08:55):
I'm curious. I want to get to the regions that
are being most effective.
Speaker 4 (08:59):
Also, I want to.
Speaker 2 (09:00):
Ask you both Trump administration changed a lot of things
around into what is they look as renewed as far
as power sources and what they're looking at to invest in.
And I know that solar and wind have been a
component that has been affected in probably more of a
negative way. But how does this impact that industry, Like
(09:23):
will we continue to see it growing the way it
had been growing or has the Trump administrations change from
one administration to another? Are they being affected these industries
as well due to the changes that are happening in
the Trump administration.
Speaker 3 (09:39):
Yeah, I mean I think the UH UH you know,
I view the UH you know, the opening up of
UH and the general tone of the executive orders towards
the oil and gas industry as being you know, something
that will you know. I think the intent is how
do we manage to keep boiling and gas prices low
(09:59):
and pass those onto customers? So I think the intent
of the administration and in that respect, UH is is
I view as a big positive. And I also view
as a positive the ability to UH to grow the
natural gas industry just given the fact that we're going
to need baseload supply to support the data centers and
AI investments UH that Brian had talked about previously.
Speaker 2 (10:22):
UH.
Speaker 3 (10:23):
From a when you look at the overall landscape, though,
I think the all of the above strategy will have
to be the case in terms of what we see
for the deployment of different power generation technologies UH, solar
and storage UH and and when to a great extent,
can be brought on much more quickly than than gas,
(10:44):
uh than natural gas fire plants. So we're going to
continue to see a push around those despite uh, you know,
any tariffs from the administration, and you know, to a
great extent, you know, the the utilities look at the
need to provide you know, reliable power and they're going
to defall to uh the sources supply that actually get
(11:07):
them there and UH. And then the challenge comes in
what will the cost be over the long term? UH?
And then you look at the tariffs and the executive
orders and say, is this say, you know, what's going
to happen as we go from one? You know, when
when there's a two to four year plus impact on
uh UH you know outprice impact and you look at
(11:28):
the timing of you know, what happens post this administration.
Speaker 5 (11:31):
Uh.
Speaker 3 (11:32):
You know, I think long term, you know, the trend
towards decarbonization will continue. It's driven by you know, companies
and UH and consumers as as much as UH governments.
So you know, there's no way around you know that continue. Uh,
the decarbonization I I have you know, my UH, the
(11:54):
the statement that I use quite a lot is the
decarbonization trains has left the station. We're down a path
as an economy, and we're going to have to figure
out how how how we adopt in that uh and
the resulting changes in the energy mix.
Speaker 6 (12:08):
UH.
Speaker 3 (12:08):
But we're still looking at you know, so solar wind
storage from a renewable standpoint, UH predominance and natural gas
and eventually development of nuclear of the nuclear industry.
Speaker 2 (12:22):
Right well, I was going to say that I think
that you know, all the above. As Sarah a Week
which just concluded a couple of months ago, there was
you know, great awareness that due to these data centers,
which we'll get into that a little bit later on
in the show, and just the need for more power
and more energy everything has to be looked at because
(12:44):
we just simply do not have enough. When we returned
from break, I want to talk a little bit about
particular regions and markets that might be effective more than
others due to the tariffs and cost implications, but we
got to take a quick break. You're listening to the
Energy Mixed Radio show, and we'll be right back. And
we're back. You're listening to the Energy Mix radio show.
(13:04):
My guest today is Jeff Miller and Brian Murphy with
ey guys. Before the break, we were talking a little
bit about tariffs and how they are impacting solar panel
power transformers and win components, which I think everybody is wondering.
We've seen a defunding of particularly these energy sources, but
(13:27):
yet we realize that we have to look at all
forms of energy to just basically supply our needs, especially
what's coming down the pike and in the future. With
a lot of defunding to these specific areas solar and
wind components, how do you with the Trump administration and
how do you guys see them being able to continue
(13:49):
if they were not really being financially supported and propped
up by the government. Does that really moderate anymore? You
mentioned earlier that the train has left the station. So
are they Have they grown enough to be able to
stand on their own two legs and be able to
continue to build as we've been seeing. What are your
thoughts for the future for energy and UH and win.
(14:12):
I'm sorry for solar panels and wind, Brian, I'll jump
I'll jump in and start with this. So I think
our view is that, you know, a lot of the
solar and wind investments, given the price of those technologies
have con come down, will stand alone without without the
(14:34):
support of the tax incentives. At the same time, there
are a lot of projects that were on the edges
that probably will not make as much sense. So, you know,
the the growth and solar and when will continue. The
pace of what it would have been with IRA will
probably not be the same as as what was previously forecasted,
(14:54):
But you're still looking at critically part of the UH
of the nations evolving energy mix will be solar, wind
in combination with gas and eventually in nuclear right Jeff
or Brian specifically, are there any regions or markets that
(15:15):
are being more affected by the tariffs when we talk
about these type of energy sources than others. Who's getting
the hardest hit by tariffs and specifically looking at solar panel,
wind and power transformers.
Speaker 4 (15:28):
Maybe I'll answer that Kim indirectly to a degree. So
I in terms of regions of the country that are
going to be impacted, I agree with Jeff that you know,
we meet in all of the above strategy and in
the long run renewables sustainability agenda that's left the station.
But in the short run, some of these executive orders
(15:50):
and tariffs, they do have immediate implications and consequences. So
I'll pick a technology, will pick offshore wind. And so
one of the executive orders really targeted the permitting process
for offshore wind and for all intents and purposes, has
kind of halted that sector. And so you think about
the regions affected by that, and that takes you up
(16:11):
to the Northeast. It takes you up to you know,
that northeast quadrant of the North Atlantic and New York
and Massachusetts who had somewhat robust plans for offshore wind
development in that region. And then you think about you know,
wind onshore. Some implications, but as we talked about in
the SU supply chain, probably not as much as the
(16:32):
indirect impacts to solar on the short run for the
Southeast Asia markets really being the core of that supply chain.
So then you said, well where was the solar being deployed?
And I think you're going to get up a proportionate
responsive impact. Whether that's California as the leading state for solar,
(16:53):
but Texas is a second in solar, and Texas, which
probably hasn't talked about enough, number one in wind. It's
number one in combined cycle natural gas and oil and gas,
but it's number one and wind, and it's a close
number two in solar. So I think those are markets
that are are going to be looked to for significant
(17:13):
build out of generation and these shifts in the short
term of the cost structure and the supply chain going
to probably hit those markets first.
Speaker 2 (17:21):
Very interesting. Let's talk about the consumer. When do you
all anticipate an increased cost of like equipment and it'll
start reflecting you know, you mentioned that it's going to
continue the prop the you know, the the growth might
be at a slower pace, But do we as consumers
starts seeing increases in our utility bills and things like that,
(17:44):
and so you know when and are there any measures
that are being taken to you know, try to figure
out how do we, you know, avoid the cost to
the consumer.
Speaker 3 (17:57):
Yeah, I mean customer affordability is front and set in
every dialogue that we're having with our clients at this
point in time, and it's and it's an ongoing challenge.
And it's a challenge because the growth in data center
demand and how we actually bring uh, you know, bring
new assets online and that's that's generation as well as
(18:19):
all the T and D infrastructure that needs to be built.
So I I think there's a couple ways to look
at it. One, UH, if you look at some of
the larger investor owned utilities, they've they've locked in supply
and locked in some of their supply chain costs. Uh
for they've got a better capability. Two uh to not
(18:39):
pass along costs in the near term to customers. Uh.
You know, once we get to two to four years out.
I think, let let's see, uh, let's see where we
are with respect to tariffs, Let's see where we are
with respect to UH to to supporting some of the
infrastructure developments. So that's uh, you know, that's one way
(18:59):
to look at it. That this second piece is just
how do we actually develop the you know, can we
actually add to our system in ways where in areas
where they're slack and you've got the ability to do
that potentially with some of the larger spread out utilities.
The Northeast is it's particularly problematic just because you're not
(19:22):
citing as many data centers in the Northeast, or you
don't have as much growth and you've got, you know,
the push around effort electrification in those markets. So I
think it's going to be there's a broader capability in
the i'll say the southern part of the country in
order or to hopefully to support it sustained potentially in
(19:44):
the Midwest as well. Brian, anything else that you've got
to add, I think you.
Speaker 4 (19:50):
Hit it, Jeff. It's really the larger utilities. They have
that unique advantage, whether it's you know, they have established
supply chains, access to inventory, they can negotiate probably a
lot stronger with their vendors for the equipment and for
kind of sharing that risk and sharing cost. I think
all that said, though, if the longer the tariffs continue,
(20:11):
the longer this period is that they're in place, whether
you know, whether that's a year or two years, whatever
that duration is, I think we'll see some slow generation
development and higher prices.
Speaker 2 (20:22):
Overall very interesting. We're going to take another quick break.
When we return, I want to get back on the
demand for electrification, the data centers and manufacturing, and how
do we balance all of this growth and then of
course maintaining affordability to consumers. How are we going to
(20:43):
provide all of this? Let's look a quick break. You're
listening to the Energy Mix Radio Show and we'll be
right back.
Speaker 5 (20:49):
Attention, small and medium sized business owners. Are you feeling
overwhelmed with back office tasks like payroll, workers, compensation, federal regulations,
safety laws, employment standards and benefits. Don't worry. Unique HR
has your fact. For over thirty years, our team of
qualified professionals has been providing people centered solutions to help
businesses like yours navigate the heavy burden of running a
business and managing their workforce. We're the PEO with a
(21:12):
pulse and we are just a phone call away. Call
us today at three six one eight five two six
three ninety two. Unique Hr the partner you can trust.
Speaker 2 (21:22):
And we're back. You're listening to the Energy Mix Radio Show.
My guest today is Jeff Miller and Brian Murphy with
ey Brian, let me go to you and ask you.
I want to talk about balanced growth and affordability. I
mentioned earlier Sarah a Week there was a lot of
discussion there about how important AI is for the energy
(21:43):
industry as a whole, didn't matter if it was oil,
liquefied natural gas, electrification, utilities, AI data centers, and the
importance of us staying ahead of China and making sure
we grow quickly, make sure that we also protect ourselves
against cyber threats. But we've got to grow, grow, grow, grow,
(22:03):
grow Now we have tariffs, and so with the rising
demand for power being driven by electrification, these massive data
centers and manufacturing, how do you see utilities balancing the
need for growth and maintaining affordable rates to the consumer.
How are they going to do all this? Because that
was the one thing that Sarah Week really couldn't answer,
(22:24):
was we need to do it, but we don't know
how to do it except just be real careful that
you don't fall into a cyber attext. So everybody was
kind of scratching their head at Sarah Week of like, well,
we think we've got a plan, or either maybe it
was that nobody was really discussing what their plan was
due to strategies, but it was very obvious that we
(22:45):
have a huge demand coming. How are we going to
handle this? Tell me what ey thinks? What do you think?
Speaker 4 (22:53):
Kim? It's telling that the Serah Week conversation seemed to
come back without an aim answer. That's very insightful to
how steep this challenge really is, how difficult it's going
to be to solve that mix, that balance of generation
and affordability. What I see is that utilities are going
(23:15):
they already have been on this journey, but they're going
to become even more vigilant around all of their operating
costs and trying to really dial into how do you
really take out unnecessary cost and make sure every dollar's
spent smart. And they're going to have to become a
more dynamic with what they call their Integrated Resource Plan
that IOP, that's their forward look of what does our
(23:38):
capital spend look like over the next five years, where
are we going to invest in our system, whether that's
TND or generation. That's going to become a lot more robust,
many more iterations to make sure their connectivity with their
regulators is tight, and that they're in lock step making
sure that every capital project, every dollar they undertake, that
(24:01):
it's the right one at the right time. Because to
your point, that balance between security, safety, reliability, those are
critical and have to be in balance with affordability. You
can't just put one forward at the expense of the other.
Speaker 2 (24:18):
Correct, Jeff, Do you have anything to add on to that,
because it seems like we're in a mad dash rush
to stay in front of other countries and to own
this space. But as Brian said earlier, how we have
to manage it carefully as well and make sure that
everything makes sense, especially when we talk about profitability.
Speaker 3 (24:36):
Yeah, and I think the utilities are looking at both,
you know, how do we reduce a O and M,
How do we manage our capital budgets in a way
that you know that improves the efficiency of that spend.
And then on top of it, it's looking at how
how do we support the growth in We're embarking on
(24:56):
a period of you know, we've gone through a period
of twenty to twenty US years of pretty much flat demand. Uh,
and now we're talking two to five percent growth, you know,
coming from data center with data centers being a big
part of that historically within the industry, growth was a
great way to actually manage costs for the customer. So
(25:16):
we look at spreading more killowt hour you know, uh,
you know, uh, you know, when you when you increase
the denometor in the equation of dollars per kilo what hours,
you could hopefully reduce costs to the customer. And I
think utilities are trying to figure out how to actually
manage the dollars in such a way to enable that
(25:37):
to happen. And I think to the point that Brian
made the non answer that you heard from SERA week
is pretty much where utilities are trying to figure out
and model that as we speak. And I don't think
anybody's gotten to a point where they've got a really
good answer, but but I think we're we've got an
idea of what the challenge is. That's lane that the
sitting out in front of us right.
Speaker 2 (25:59):
Well, we're going to take another break, but turner drill
down into the rising equipment cost and the strategies as
you mentioned earlier, about how are they doing it very carefully?
And I want to drill down a little bit more.
We got to take a quick break you're listening to
the Energy Mixed radio show, and we'll be right back.
Speaker 5 (26:20):
The Texas Oil and Gas Association Safety Group is your
pipeline to discounts, dividends and industry expertise. It's a value
added benefit from Texas Mutual Insurance Company, the state's leading
workers comprovider. At Texas Mutual, they know the oil and
gas industry, which means you'll have access to expert resources
and information that make your business better. As a Safety
(26:42):
Group member, you'll also save about twelve percent on your
workers Comp premium, and that's just the beginning. While Texas
Mutual policy holders can earn an annual dividend for keeping
their workers safe, Safety Group members can get something even better,
a second dividend that's up to two dividends every year.
Plus you'll get serve US focused coverage from Texas Mutual
workers comp partner you know and trust. The Texas Oil
(27:06):
and Gas Association Safety Group is tailor made for your business.
Talk to your agents or learn more at Texas Mutual
dot com slash t x o g A. Dividends are
based on performance and not guaranteed.
Speaker 2 (27:22):
And we're back. You're listening to the Energy Mix radio show.
My guest today is Jeff Miller and Brian Murphy of
Ey Jeff, we've been talking a lot about managing costs
along with you know, cuts demand. It's all on the table.
No one really seems to have a plan, certainly not
(27:45):
the industry as a whole seem to be united on
what is the path forward. We just know that we're
having a real crisis when we look at demand will
be up in the future and we're going to have
to address it some way, somehow. So I want to
ask you to help me, you know, understand a little
bit more about managing excuse me, managing rising equipment cost
(28:06):
What strategies are utility companies using to employ the rising
cost of critical equipment to ensure the reliability and energy supply?
Brian mentioned earlier h I.
Speaker 4 (28:19):
I r P, which is the.
Speaker 2 (28:23):
An infrastructure resource plan? What is it?
Speaker 4 (28:29):
The integrated resource plan? That's that's the the plan submitted
by utility to the regulator, to your intended capital.
Speaker 2 (28:39):
Hang on a second, he's going to answer that, so, Brian,
Brian mentioned earlier I RP.
Speaker 4 (28:47):
Is that a solution?
Speaker 2 (28:48):
Can you tell our listeners specifically what that is and
how it drills down into answering potentially, is this the
solution of how they're going to address the rising equipment
cost and while managing to grow as well.
Speaker 3 (29:03):
So the I RP only lays out, basically lays out
the strategy of what assets you need to that the
utility will deploy over the next let let let's say
the next ten year period. It doesn't get into the
strategy to actually how how do we manage costs given
those assets that are being deployed. And I think that's
(29:24):
where you're getting to with your question, is how do
we actually manage managed through those rising equipment costs? And
really i'd look at a couple strap utilities are UH,
you know, have already engaged around and could engage around
going forward. And what we've seen already is utilities that
have locked in equipment supply and I would say stockpiles
(29:47):
some level of inventory, and that's relationships with UH, the
turban manufacturers around those assets, relationships with UH with the
solar manufact with the solar equipment manufact UH around around
panels and verbs. So that that's one way you could
look at. The second is how do we actually migrate
(30:10):
those supply chains over time? A way you know, potentially
either to the US or to near shore locations where
there's UH where there's lower tariffs that are in place.
So but but the ilenge both of those cases is
they just take time. And you know, you know that
that's something that we could look at from a long
(30:32):
term perspective, and I'm sure you know we've started to
see we started to see some of that movement already,
but it just takes time to manage that.
Speaker 2 (30:41):
Is there any magic bullet either one of you see
that might actually be a solution and you might even say, yes,
let's deal with the tariffs and get that over then done.
I don't really know, but I do know that we
have to look to the feature and we know that
we're going to need more, not less. So is there
anything that you ey ces that would really kind of
(31:04):
really push this into you know, first gear to get
it going, to make sure that we're able to manage
and have an abundance to be able to handle what's
coming down the pike with all this growth.
Speaker 3 (31:16):
I don't think there's one strategy that's going to help
us get you know this is this is the one
thing that we need to do, I would say continued
investments in all of the technologies that we'll talk about
to see where the traction is, because you know, if
we had an answer now, everybody would be driving towards it,
and we and we don't at this point. So let's
(31:38):
continue to push on natural on gas turbines, let's continue
to push on nuclear. Let's see what we can do
in the immediate turn, what's solar and storage and and
basically I think it's its best efforts to try to
figure out how do we manage the growth in the
lowest possible cost matter.
Speaker 2 (31:59):
Let's Jeff talk about decarbonization goals amidst plenty of challenges,
despite challenges posed by the tariffs, energy policy uncertainties, how
are utilities staying committed to their long term decarbonization goals.
I think there's a lot of people that are loose
for on looking decarbonization. I don't think so. But how
(32:25):
do we do this is definitely something I don't really
think that the average consumer has an idea of how
do we do this? How are they going to keep
everything all these uncertainties in mind along with staying committed
to decarbonization.
Speaker 3 (32:44):
So I think what we've seen is a number of
utilities and companies that have actually pulled away from near
term targets. So if you look at at twenty thirty
targets that have been that have been pushed out, but
it's interesting that there's been very little move and if any,
around around twenty fifty targets up to this point. And
(33:04):
I think a lot of that has to do with
the fact that, uh, you know, when we actually go
so far out, utilities have not figured out how to
the and many companies have not figured out how to
actually address that, you know, last twenty percent of decarbonization
goals that they had in place anyway, And at this point,
(33:24):
there's not a downside to actually holding off on communicating
anything about how do we meet those targets while let's
continue to invest in the different technologies that could potentially
get us there. So, uh, you know, I I see that,
you know, just given consumer sentiment and company priorities, you know,
(33:45):
particularly coming from the larger tech companies, you know, those
decarbonization goals are still going to be out are going
to remain out there, and you know, let let's see
what happens, you know, when we're five or ten years
down the road and you get closer and the development
of some of the some technologies around you know, long
(34:07):
duration energy storage, nuclear, potentially even hydrogen. You know, do
we get to a point where there's, uh, there's a
ramp up in those technologies and the economics are proven
to be viable.
Speaker 2 (34:20):
Well, guys, let's take a quick break. But when we return, Brian,
I'd like to bring you into the conversation to talk
about policy and regulatory landscape. But we've got to take
a quick break. You're listening to the Energy Mix radio
show and we'll be right back.
Speaker 6 (34:35):
Farmers and ranchers are the hardest working people on Earth
and deserve a side by side vehicle that works just
as hard. That's why Yamaha makes the Viking and all
New Viking six, the world's first true three and six
person UTVs assembled in America, ranked number one and drive
train durability, Viking outworks and outclasses the competition and features
(34:55):
comfort and off road capability. For more, visit Yamaha Viking Dot.
Most of pitable claim based on a twenty thirteen Yamaha
Source side by side owner study.
Speaker 7 (35:04):
Are you a business owner feeling overwhelmed where to begin
your businesses? Online presence? Maybe you've spent thousands of dollars
in the past just to be highly disappointed with the results.
We understand because we were once you. Since then, we
decided to hire the very best experts to help us
and you. Let us send you our business profile that
will quickly show you your Google business rankings in these
(35:27):
five areas, reputation ratings, online website advertising and social media,
and search engine optimization. All of these areas really affect
how Google ranks your entire listing.
Speaker 8 (35:39):
So if ranking on page one is your goal, pick
up the phone and call us now two ten two
four zero seventy one eighty eight, or simply go to
Shale mag dot com slash business profile. We'll be in
contact with you within twenty four hours. Once again, pick
up the phone and call us now two ten two
four zero seventy one eighty eight, or simply go to
Shale that's s h a l e mag dot com
(36:04):
slash business profile.
Speaker 7 (36:06):
Start dealing with a company you can trust and always.
Speaker 2 (36:09):
Find, and we're back. You're listening to the Energy Mix
radio show. My guest today is Jeff Miller and Brian
Murphy with Ey Brian I want to bring you. Brian,
I want you to help our listeners and me understand
a little bit about policy and the regulatory landscape. It
seems to be changing a lot in the first one
(36:29):
hundred days that President Trump has been in office from
the previous administration. So I guess my question would be,
you know, how does current energy policies and regulatory uncertainties
influences the buility for utilities to invest in renewable energy,
renewable energy infrastructure and maintain affordability, Especially in today's climate,
(36:50):
when we're looking at a new administration and they're kind
of changing their energy policy a little bit from the
previous where do we go How do utility companies handle
new landscape.
Speaker 4 (37:01):
I'll start with the affordability aspect, and as Jeff just
kind of walked through, it's a challenge, and it's a
challenge where we don't have clear answers right now. Assuming
renewable energy is the tip of the power generation sphere
over the next five years, we've already seen the impact
that regulation and policy can have on certain technologies. Those
(37:26):
executive orders, one in particular was unleashing American Energy. Can
you mention this earlier? It paused funding for clean energy
different grants and loans. There was another executive order at
the same time. That was the one that halted the
permitting for offshore wind when or even onshore wind where
they were on federal lands. That really kind of slowed
(37:46):
down that permitting process. But as Jeff alluded to, our
utilities are doing everything they can in the short run
to minimize those affordability issues. But the balance between that
need for the power, the reliability that you talked to about,
the safety and security that you talked about, all of
that is critical path and so affordability I expect is
(38:09):
going to be kind of under some pressure and exacerbated
by certain policies, whether that's the executive orders, tariffs, and
we can talk a little bit about looking forward. We
know the Inflation Reduction Act is a cornerstone for a
lot of our renewable energy today, a lot of credits
and incentives in that space. Over the coming months, we
expect Congress is going to turn and focus on tax policy,
(38:32):
the Tax Cuts and Jobs Act, but part of their
focus is going to be taking a hard look at
the IRA.
Speaker 2 (38:39):
Interesting. That's interesting, I had not heard that. So then yeah,
let's switch gears, Brian and talk about the future of
the renewable energy investments. And you know, of course, giving
the situation at hand right now between riot Zee and
you said, Congress might be looking at this. Is this
going to shift the pace or the scale of investment
in renewable energy projects like solar way And do you
(39:00):
think this is probably why Congress is going to take
a look at it to make sure that it continues
to grow as well, considering that it has seen some
fun trave administration.
Speaker 5 (39:11):
Yeah.
Speaker 4 (39:11):
Can I do think that uncertainty is often a key
impediment to speed, to speed to market, to how quickly
the utility sector can react and respond to the demand
and power. Some of that uncertainty is being manifested in
the tariffs in the executive orders, but right now, looking forward,
(39:34):
there's uncertainty and where the Inflation Reduction Act that houses
so many of these renewable energy and CentOS, where that
might land after we see TOX policy move forward. I
would say win power projects in particular, you know, in
the short run they have that near term advantage when
you think about just the tariffs, the supply chain being
(39:56):
less dependent on Southeast Asia. But the US has been
investing in solar and winged exponentially. That's really been the
focus in the last couple of years, dramatic investment in
the solar and battery space, to the extent we see
big changes or reductions in the IRA if they pull
back or repeal certain incentives and provisions in those tax credits,
(40:17):
particularly for these technologies. I think in the near term
you'll see somewhat of a slow down of deployment of
those technologies. You'll see, as Jeff talked about, a focus
on the better projects, the projects that are more viable,
that have better economics without the incentives. So it will
shift the focus to those projects and maybe move away
(40:37):
from the projects where that we're not quite as robust
or quite as strong economically without the incentive. But I
think in the long term all these technologies win, solar battery,
the combined cyclo natural gas. I think we're in a
bit of a nuclear renaissance in a response to the
need for all power on deck. Looking at a lot
of the kind of older power plants in the US,
(40:58):
the nuclear plants that maybe we're near the end of
their license life being revisited to say, is this something
that we need. Baseloads certainly for the next five to
ten years. So I think when we look at the
overall US power generation mix, we're going to see that
all of the above strategy regardless of what happens to
(41:18):
the Inflation Reduction Act, but it will impact the speed
of deployment and kind of the order of what technology
we see rolled out.
Speaker 2 (41:27):
Let's close the show on a positive note, collaboration and innovation.
You know, one thing that comes to mind was I
did a show the other day and it discussed we
were discussing how Spain and Portugal lost power for a
couple of days. And I'm not trying to get into
that discussion on this show. That was another show, but
it does show the importance of having a diverse energy mix.
(41:50):
In my mind, this is you know, Kim's opinion, and
so renewables are at the table as well, or they
should be. We're going to need more, not less. And
why bring that up is because we wouldn't want to
run out of power period and end up like Spain
and Portugal because we just don't have enough power to
power everything. So all the above strategy works for me too.
When we look and see doesn't happen, well, it just did.
In Spain and Portugal. So let that be our lesson
(42:12):
how for the future of renewable energy investments? How how
do we collaborate with governments, utilities and private sectors to
address these challenges? Any ideas how we do this and
are there innovative solutions that you guys can think of?
Speaker 3 (42:27):
Well, I guess the question is where do we start
seeing any sort of public private partnerships around deployment, around
deployment of any of these assets. Where do we see, uh,
you know, capital investments coming from and is there a
greater ability or from either from from the banks or
from infrastructure providers private equity in terms of being able
(42:50):
to support some of those investments. I look at the
deployment of the share volume of data centers that are
going to come up, and that's you know, you know
that that infrastructure and those investments need need to come
from someplace and it's a MiG and it's likely going
to be a mix of private and public and utility
investment that's going to get us over the hump. So
(43:11):
so I I really think it is a question of
how do they how do they come together? Uh, you know,
we we at the beginning of the discussion today, we
started talking about relaxation of permitting and and some of
the regulation and and to me, that's a question of
how and when that happens. So even if we reduce
some of the tax incentives that are in place that
(43:33):
I would say would have a you know, a negative
impact on prices, you know, can we can the government
support and you know, and private companies follow through on
you know, on relaxed permitting and the ability to to
build the infrastructure you know, better and faster than what
we've seen before. So I think that's you know, to me,
(43:54):
that's the positive spin and things that we can look towards.
Speaker 2 (43:58):
Brian only give you the last word. We've got about
the thirty seconds.
Speaker 4 (44:01):
I agree. Staying on the positive note, this is a
really unique opportunity to transform the entire US power infrastructure
and grid and bring it to an entirely new, modern level.
And it's going to require really close collaboration with utilities, commissions, customers,
public private partnerships. All of that is on the table
to get to the goal.
Speaker 2 (44:23):
Very good, Well, I think as we make our path
to stay on the path of decarbonization and what you
both said, it's going to be a partnership and we
just have to rise to the occasion and look out
for what's in our best interest. It will be interesting
to see what happens here in the near future with
power utilities and renewables. Jeff Brian, thank you for coming
(44:44):
and talking to me today, getting us up to speed
on what EI thinks is happening in this energy sector,
and I look forward to having you back on the
show in the near future.
Speaker 3 (44:51):
Thanks a lot, I appreciate the opportunity.
Speaker 4 (44:53):
Thanks for having us.
Speaker 1 (44:55):
The Energy Mix Radio show is where we explore topics
that affect us all in the oil and gas industry.
Every week, our host will interview the movers and shakers
in this fast paced industry. You'll hear from industry experts,
elected officials, and many more on the Energy Mix Radio Show.
Popular Podcasts
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com