00:00Let's speak with Joe Kaiser, CEO of Switchyard Partners, a venture capital firm that invests in and supports innovators, scaling
00:07companies focused on energy transition and re-electrification.
00:10Joe, great to have you on. Congratulations on Switchyard, your new gig.
00:18What do you make of this giant power merger that centers on Dominion right at the heart of the data
00:27center ecosystem?
00:30Oh, Matt, you nailed it. Well, thanks again for having me on. Great to see you again. This is, make
00:36no mistake, this is a data center play.
00:39You are combining the massive portfolio power generation owned by Nextera with the transmission and distribution assets that Dominion owns.
00:49And to put a point on it, Dominion is building a huge transmission project right now that flows right into
00:57the substation at the heart of the concentration of data centers in the United States.
01:02So what I'm wondering about is, first and foremost, whether regulators will approve this, because it creates such a behemoth,
01:12right?
01:12Already the biggest power company, taking over the biggest data center provider.
01:18It seems like they have 10 regulators that need to approve it, from FERC to all the different states in
01:24Delmarva.
01:25How likely is it to get through? Matt, I think it is highly likely.
01:31I think the market to watch or the body, the regulatory body to watch is the state of Virginia's PUC,
01:38or utility governing body.
01:41That's the one to watch. That's probably where the most contention is. Virginia just announced a large, approved a large
01:49price increase for residential power consumers.
01:53But I think from FERC, federal government, I think the path is pretty open for this transaction to push through.
02:00So will they actually be able to bring enough power in terms of supply, right?
02:06Because I think demand is three or four times what is actually generated today.
02:11And will they be able to bring it at prices that don't drive inflation higher for all the residents of
02:19Virginia and the surrounding area?
02:22Yeah, Matt, I think that's a great point.
02:24I think the beauty of this project, or this merger, sorry, is its ability to be a one-stop shop
02:32for the hyperscalers.
02:34And as a consequence, you can aggregate that CapEx to keep it off of the bills of the residential homeowners.
02:44I think where you'll start to see some challenges from a power delivery standpoint is on these smaller projects.
02:52So I think it actually causes larger data centers to be built by the hyperscalers.
02:59It's those projects in the 10 to 100 megawatts that I think because of queues and to get interconnection where
03:06you're going to see some challenges.
03:07But from a homeowner perspective, I think this actually bodes well long term.
03:11Yeah, we're seeing right now headlines coming across from NextEra.
03:16They say they could have a combined large load pipeline of 130 gigawatts, so absolutely massive.
03:24I think Manhattan needs like 13, so a tenth of that.
03:29And I'm rounding up.
03:33What percentage of this is going to be—
03:35We still haven't gotten you on electric vehicles, Matt.
03:37When that day happens.
03:38As soon as—then we're going to need 130 gigawatts.
03:42What does the sort of renewable energy picture look like here?
03:48I mean, is it all natural gas, coal, oil, or are they bringing solar and wind power to this combination?
03:58Well, I think that is one of NextEra's core competencies is their distributed and diversified portfolio power generation.
04:07I think that is one of the things that NextEra might do better than any other utility on the planet,
04:12is bring all forms of power generation.
04:17So absolutely, you're going to see natural gas, some coal, but it definitely pulls renewables to the forefront.
04:26NextEra has a huge portfolio of solar and wind projects.
04:30And, in fact, their CEO has made that case about the importance of a distributed portfolio power.
04:38By the way, if this goes through, Joe, does it make NextEra the most important utility company in America, in
04:47American AI?
04:48Like, is there anybody else even close?
04:50They are already the largest, Matt.
04:53They will be double the second largest utility in the country.
05:00And I think this provides the roadmap for utilities of what has to happen going forward.
05:07And maybe most importantly in the short run, given Dominion was already 10% of the users of power on
05:14PJM,
05:15this only accelerates and emphasizes the importance of the NextEra of Dominion combined entity or PJM region.
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