Welcome to the Energy Capital Podcast. I'm your host, Doug Leuen. Today's episode is a special recording of my live interview on September 6th with Jigar Shah, director of DOE's Loan Programs Office. I introduced him for the live interview, so I won't repeat that here. I loved this conversation with one of the leading thinkers and doers in energy today and for the last several decades. We talked about the work of the Loan Programs Office, the surge in manufacturing in the United States, the Inflation Reduction Act, load growth, virtual power plants, batteries, EVs, geothermal, nuclear, hydrogen, and even more. Believe it or not, it was a packed hour. This podcast was recorded live at the 2024 Texas Tribune Festival, Texas Breakout Politics and Policy event held in downtown Austin. For recaps from this year's recently concluded event and to stay updated on next year's program, visit tribfest.org. As always, please like, rate, and review wherever you get your podcast. And if you aren't already, please subscribe to the Energy Capital Podcast and the Texas Energy Power newsletter at dougleuen.com. That's dougleuen.com. The newsletter includes weekly articles on the latest issues and news digest, community chats, live blogs, and special presentations. We would love to have all our Energy Capital listeners join us at the newsletter. So, please do sign up. Again, you can find all of that by going to dougleuen.com and clicking the subscribe button. Thanks so much for being a listener and I hope you enjoy the episode.
Good to see you all. My name is Doug Leuen. I'm the host of the Energy Capital Podcast. We are recording this for the Energy Capital Podcast. The first time on the Energy Capital Pod we've done a live recording. So very excited for this and particularly thrilled that for the first time for a live recording my guest is Jigar Shah. I think probably everybody who's here knows who he is. But let me just give just a quick introduction as to who Jigar is in case you don't know. He's the director of the Loan Programs Office at the Department of Energy. He was the founder of Sun Edison, president of Generate Capital. He also wrote a book called Climate Wealth: Unlocking the Impact Economy. And we'll talk a little bit about that theme. For years and years, hosted the Energy Gang, and I think those episodes actually hold up super well. I learned a lot. Like just listening to that podcast was kind of like an education for me and I think many, many thousands of other people. So, really is just a huge part of the clean energy economy. In this role now at the Loan Programs Office, Jigar has a tremendous opportunity and has been using that opportunity over the last couple years to really accelerate the clean energy economy. So, if you want to add anything to that by way of introduction and then maybe let the folks both in the room and for the podcast know just, you know, briefly a little history of LPO and I think most importantly like why it matters.
Well, first of all, thank you for having me on and thanks to the Texas Tribune for putting on this fantastic event. I always meet just fascinating people here. So, thank you for that. Look, I think that we in the United States have always been amazing at innovation, right? I mean, DOE is roughly 45 years old. We've got 10,000 engineers, scientists, and experts that work at the national laboratories around the country. And so whether it's solar panels or modern wind turbines or advanced nuclear designs, enhanced geothermal, hydraulic fracturing, all of that stuff really came out of the research mission of the US Department of Energy. And then it sort of, you know, happened that the capital markets of the United States just wasn't interested in commercializing much of that, right? And so a lot of those technologies went overseas to get commercialized and now we're importing a lot of those technologies back into the country having someone else make it. Right? So the Loan Programs Office was conceived of in 2005 in the 2005 Energy Act and the goal of it initially was to help build nuclear plants in the United States. In 2007 we had an additional mandate around helping with fossil technologies and renewable energy technologies. And you know, from 2009 to 2011, it was super busy and did about $35 billion worth of loans at that moment. I'd say it went dormant after that. And I think when the secretary came in to the Department of Energy, she and President Biden really wanted to bring back the Loan Programs Office, they asked me to join. And it was the right place at the right time. And today we've got almost $300 billion worth of loan applications into the Loan Programs Office. You know, and it's roughly at 50% debt equity. So it's probably $600 billion worth of projects. And so, you know, people in America have never been so energized to do big things again in our country. And it's great to see.
It really is great to see, particularly because, and this is something I think you know is sometimes lost on people, the Inflation Reduction Act and the increase for the Loan Programs Office, but also for a lot of other programs. You were on Dave Roberts' great podcast Volts talking about nuclear. Anybody interested in nuclear, I know a lot of people are interested in nuclear these days, should be listening to you, should listen to that podcast. What Dave Roberts said, I don't think he said on that podcast, but he said it somewhere else and I really like it, is that the Inflation Reduction Act is really sort of industrial policy masquerading as climate policy. The point of the Inflation Reduction Act, yes, there's a lot in there about clean energy and about decarbonization, but it's also about reshoring manufacturing and actually bringing that back. And that has been one of the huge wins we've seen over the last couple years, right, is the increase in manufacturing. Can you talk about that piece? The competitiveness, actually building a stronger supply chain here, right? We saw after COVID the weakness of the supply chain and all the problems that caused and having a lot of sort of critical materials. Manufacturing everything from chips, and obviously the CHIPS Act is really important too, to solar panels being manufactured somewhere else makes us vulnerable. The inverse is true. Having it manufactured here makes us stronger. Can you talk about that piece a little bit?
Yeah, I mean, I think you've, I think you covered a lot of the elements of it. I think, you know, in 2009 there was an attempt to pass climate legislation called Waxman-Markey. That climate legislation was really putting a price on carbon. I think that, you know, because of everyone's experience during COVID, but also I think there was a broader narrative that was started around America wanting to build things in our country. My sense is that it's actually industrial strategy, that everyone knew they were voting for industrial strategy and the climate thing is sort of like a branding exercise. I mean, I think when you think about, you know, all the senators that voted for that piece of legislation, there's a lot of them in there that are not necessarily climate focused but are industrial strategy focused. I think as you suggested on COVID and supply chains, I mean, when you think about what we're trying to do in the United States where over 75% of everything we've added to the grid every year since roughly 2016 has been clean, right? Has been solar, wind, hydro, geothermal, nuclear. You know, if all of those component parts were imported from China, you could imagine there being less interest from the American public to continue to invest in the energy transition, right? I mean, you know, I think that to me, I don't know that you have to guess too far, right, to see what the intention of many of the legislators of the House and Senate members were when they passed this. I think that when you're thinking about something as essential as energy and the energy transition, we want a lot of our batteries to be made here, our critical minerals to come from a diverse set of sources. And I don't think it means that we're, you know, not going to do business with China. I think China is still a very large trading partner of the United States. But I think that we're saying in the same way that we managed OPEC, right? And we didn't want a certain set of countries to have a stranglehold on, you know, oil production and oil prices. I think the same thing's true for solar panels and critical minerals and all the other pieces, is we want to make sure that whether it's friend-shoring or whether it's onshoring here in our country, we want to make sure we have a diversified supply chain, especially if we're going to continue to increase investment from roughly a hundred billion a year to closer to 500, 600, 700 billion a year.
Yeah, exactly. And I like the way you put that, like we'll continue to do business with China, but then it's from a position of strength, like it's not from a position of dependence. It's like, no, we can do these things here. I want to talk about another really hot topic. I mean, you can't have a conversation for more than nine minutes about energy without bringing up load growth. Obviously a lot of headlines in the energy world about just really, you know, rapid load growth. And even just today at ERCOT, there's a meeting going on where they publish updates every month of load growth. I tweeted this out earlier today. Just in the last month, there are another four and a half gigawatts worth of interconnection requests for large loads just in ERCOT. So just here, and to put that in perspective, we're recording this obviously in Austin, Austin Energy, the entire Austin Energy service territory is about 3,000 megawatts. So an Austin and a half just in the last month entering the queue. Now, not everything's going to be built. That puts it at like 57,000 in the queue on a peak demand system of about 85, 86,000. So massive load growth coming. We're seeing data centers. What we were just talking about with manufacturing, obviously that means a lot of load growth to support that manufacturing. You have this really fascinating and unique position where you see what's going on all around the country. You get to work with utilities, with manufacturers. What are you seeing related to load growth? Do you think that some of this is maybe a little overhyped and not all of it's actually coming? And can you just talk about sort of how that's playing out within your queue at the Loan Programs Office?
Yeah, I mean, I started in this industry in the late 90s and, you know, I think from that period of time all the way to today we've generally had no load growth, right? And that energy efficiency every single year basically offset load growth that came onto the grid. So you could imagine that all of the CEOs and CFOs in the electric utility industry, their entire careers really were in a zero load growth environment. And so as a result, there was a lot of hostility, right? You know, when people wanted to put solar panels on their roof and wanted to do net metering, people were like, you're stealing, like, you know, money from my pocket that we could be using for other things. And you talked about cost shifting, talked about lots of things. Even energy efficiency in some ways was frowned upon because people were like, well, we don't want, you know, negative stuff. You had public service commissions who had entire dockets around how do we get more load growth? We need the denominator to be larger so that we can keep electricity costs in check, right? And so you can imagine that now that we're in a place where we're still doing a ton of energy efficiency, right? The Biden administration has really accelerated all of the updates of energy efficiency standards, etc. So, I think you're going to see continued energy efficiency. But I think when you see data center load growth, but also electric vehicles, heat pumps, and as you suggested, the onshoring and reshoring piece, it does look like we're going to have load growth that exceeds what energy efficiency can support. I don't think we're going to be at 7, 8% load growth. I think it's probably more like two and a half to 3% across the country just because I feel like, you know, there's a lot of noise in the data. I'll give you one example of what that means. So, if you build a new house and that house has 400 amp service with 240 volts, the utility interconnection application for that is 96 kilowatt, right? But in general, you know, like your house is going to use 2 kilowatt. So it's not really like the numbers sometimes get skewed and people get confused. And so I don't know that I love the interconnection queue and looking at that as the way in which you solve it. But I do think the dynamics of the marketplace has changed such that the electric utilities that I talk to today are no longer trying to figure out how to meet shareholder concerns and figure out how to rate base things that are the most expensive way to do things, etc. I think they're realizing that raising rates by 10% a year every single year is like not sustainable, right? That like governors are mad at them. The public service commission is mad at them. Obviously, residents who have to pay higher electricity bills are mad at them. And so they're starting to say, how do we use next generation technology, a lot of which we've been piloting for 20 plus years at DOE, to be able to manage this moment? And so you're starting to see a lot of folks look at grid enhancing technologies, right? Reconductoring where you replace old wire with wire that can handle two times the amount of electricity. You do dynamic line ratings and so you change the capacity of what can be sent on that transmission line based on the weather outside, etc. And then I think you're seeing a huge amount of interest now in virtual power plants where, you know, there's a lot of folks who say, well, if 10 people on the block buy electric vehicles, we have to be able to make sure that we supply power if all 10 people want to plug in at the same time and their heat pumps are going and everything else is on. Like, well, that causes you to overspend on the distribution grid. And so people are realizing, well, maybe we should figure out a way for people to stagger their charging because most people charge their electric vehicles. They plug in at 5:30 or 6:00 when they get back. They unplug at 7 in the morning. And so it only charges for three and a half hours during that period of time. So most homeowners don't care which three and a half hours it's charging. Maybe we should stagger them, right? And so I think you're starting to see all these new concepts being embraced. And part of this is there's some complexity in it, but it's not too bad, right? When you're building a data center that's 1,000 megawatts, which is what these like new data centers might be, it's going to be disruptive to the grid. Like let's just be clear, like we're going to do a lot of planning to figure out how to accommodate these thousand megawatt data centers. If you're building a manufacturing facility that has 5 megawatts of load, we can figure out how to put it somewhere, right? If you're figuring out how to deal with electric vehicles and heat pumps, you can very straightforwardly accommodate that within the grid that we've already built. So each of these things has a different level of complexity. And I think for a lot of people, what they were saying was let's just use this old toolbox for all of these issues. And that old toolbox is coming in at 10% rate increases. And then when you look at the new toolbox which the secretary has been quite visionary about, and so we did these liftoff reports. So we've published a lot of DOE's data and a lot of these solutions back in 2022, 2023 because we saw a lot of this coming. So we're ready for the moment. And it turns out the rate increases can be right in line with inflation and still meet this moment, right? And so I think the tools are there. The load growth is real. I don't think it's 7%. It's probably more like two and a half to three and a half percent. But that's a lot more than it was in the '90s. That's a lot more. We've had average load growth of 0.4% a year. And so it's like almost 8x, right, what we're used to. So it's a lot, but if we do it right, it leads to lower bills for everybody over time, right? Because we're using the system we've already paid for more efficiently. And if we do it the wrong way, well then it'll increase rates by a lot.
So Jigar just mentioned the liftoff reports. I do want to put a plug in, put a finer point on that. Those liftoff reports are fantastic. I'm a person that reads a lot of reports. They're really well done. And so yeah, I want to get into, and I should say also we are going to leave time at the end for questions. So we're going to cover a lot of ground here, but if there's things that we don't cover and you want to ask about at the end, so be thinking of what your questions are. Your mantra's kind of been deploy, right? People wear t-shirts around with your face on it with the word deploy. I know it's weird. It's weird. We're in Austin, but still it's weird. Weird in the best sort of way. I love it. So I don't have one yet. I probably should get one. But speaking of deploy, this has really kind of been the emphasis of the Loan Programs Office. And so these reports you're putting out, they're foundational. They're important to increase people's understanding, but it really kind of comes down to the projects and what's getting done. So let's, can we kind of, I want to kind of run through some of that, like what you guys are prioritizing, and then if you could maybe give an example or two of where these things are happening so people can kind of get a sense of where they're happening. So let's start there with the virtual power plant. So when we think about that load growth coming, we have to remember, just as you put it, it's not going to be done the old way where you just take that maximum possible peak load, add 15% of generation, and if it happens that way, we're going to really hurt consumers. The system's going to kind of break, but there's no reason it has to happen that way, right? So with virtual power plants, we're talking about adding up lots of little tiny sources into a much bigger whole. We are actually seeing this in Texas through a really exciting project, the aggregated distributed energy resource pilot, ADER pilot. Just recorded a podcast with Arushi Sharma-Frank about what has gone on with that. Can you talk a little bit more about VPPs? And I think the most important thing is like how does this impact somebody's life, right? Are they going to be able to get a bill credit for this? Do they get a payment for this? Does it allow them to, you know, increase the control they have over their homes? So one, to kind of make it more real for people, you know, what does this actually mean? And then are there projects you guys are actually funding at DOE right now on VPPs?
Yeah, a lot there. I think, look, I'd start with saying that the underlying technology that we need to unlock these virtual power plants have been added to everything that you buy starting in 2016. Right? So today if you go out and buy something, whether it's a refrigerator or a water heater or an EV charger or whatever it is, a thermostat, there's an app for all of it. I mean, I just bought two humidifiers. There were an app for the humidifiers. I'm not sure what I would do with it, but whatever it is, there's an app for it, right? And so by definition, when you have an app, that means there's a way to communicate with the device without physically going and touching the device, right? And so that means that this layer by which you can control these devices exists already, right? So now the question becomes who is that useful for, right? And so it depends on the business model that you're operating in. So in Texas, a lot of, you know, you have a deregulated market. A lot of people have retail electricity providers and those providers have to go out into the wholesale market and buy power for you to supply you power and they have to hedge. They have to do all sorts of interesting things that results in a certain cost and then that cost is shared with you. There are some retail providers like Octopus Energy or others who've said, 'Hey, if you let us control four of those apps for you, we'll give you a big discount on your bill.' And some folks are saying, 'Great. I would like that discount.' And other people are saying, 'Keep your hands off my appliances.' Totally fine too, right? But then you don't get the discount, right? And so I think as people start to become aware that these things are available, then, you know, they're starting to take advantage of it. Some of them are done via price signal. So when you look at like Duke Energy or Florida Power and Light's territory, they're saying, hey, you know, we want to put in an EV charger, but there are certain hours of the day where those EV chargers are going to generate a lot more complexity for us than other hours. And so if you agree not to charge during those hours, we'll give you a heavily discounted rate for your EV charging. And if you need to charge because it's an emergency, push this little red button and you're going to pay 45 cents a kilowatt hour for those periods of time, right? Which is what it sort of costs you at an EVgo station or whatever. And so again, you know, they're empowering consumers to get much lower costs to power their electric vehicles by showing some flexibility. And if you don't want to show flexibility, you just pay that top rate and you get to do whatever you want, right? And so I think that all of these things are enabled by pilots that DOE funded for the last 20 years here at, you know, Pecan Street in Austin, etc., which we started funding, I think, back in 2009. And a lot of that data has been coming forward, right? And so we have this now. Now you go to the next stage, right? The next stage is utilities have to physically make changes to their distribution circuit. Right? So people are saying, hey, you know, the peak load that's theoretical might go up because everyone's putting in heat pumps or everyone's putting in a heat pump water heater or people are deciding to get off of natural gas or whatever it is that they're doing and that load is going up. And so what the utility is now saying is like, look, if we have to make this investment, that's $150 million and we're going to have to charge you that $150 million. Instead, if there's a reliable way for us to give you compensation for you to have enough load flexibility that we feel confident that enough people have opted in that we can actually manage the existing grid the way it is and just use it more productively, then we can avoid the $150 million, right? And we can put some of that money that we would have spent on the $150 million into your pocket, right? And that's really what this virtual power plant thing is. And it comes in all shapes and sizes. So clearly what most people think of when they think about it is, you know, Tesla Powerwalls and Tesla Electric is a retail provider. And there's all these people who get on Twitter and show people their negative $500 bill because they sold power back into the grid when grid prices were $5 a kilowatt hour and whatever else, right? Fine. Kind of cool looking. I don't think that people should rely on that long term, but you know, so you've got batteries, right? Some people put solar with those batteries. Now you've got electric vehicles, right? Like F-150 Lightning has been, you know, advertising heavy in Texas and saying, 'Hey, if you hire this provider, we can connect it to your house and we can take your entire house off-grid, you know, running off of your F-150 Lightning.' And a lot of folks are like, 'This is amazing. I'd love to do that.' Right? So that's another thing that's happening. You've separately got folks who, you know, have thermostats and they're saying, 'Hey, let's aggregate all these thermostats.' Now, the thermostat's problem is that it works most of the time, but doesn't work some of the time, right? Because some of the time it's 110 degrees for an entire week and no one wants their thermostat turned off, right? And so you're going to override that every single time. So yes, it's less useful and therefore less valuable in certain programs, right? And so each one of the technologies has its own benefits, rewards, you know, and so each one of them has a different compensation profile, right? But, you know, when you think about what happened in Houston with CenterPoint, there's a huge backlog of middle class families now that are signing up for backup generators from Generac, right? That's real money. Someone's got to spend 8,000 bucks to put that thing in their backyard and then they got to pay somebody every year to come out and test it to make sure it's still working because otherwise two years from now when you need it, it doesn't work, right? So that is never going to give you a return on investment, right? Like that is something that you just spend out of your budget. It makes you feel safer for your family. Now if you put in a battery, right? Well, now it could cost you the same $8,000, but now you could actually bid into this virtual power plant market, make a return on it. You might not get a positive return. You might get, you know, like most of your money back over 10 years, but that's better than the Generac system where you would have no chance of getting any of your money back over 10 years, right? But the question becomes like when this event happens in Houston, like what are people going to do? Right now, the default position is to call Generac and get a diesel generator. The goal, I think, out of all of our education work and all the work we're doing with the utilities and the public service commissions is to say, 'Hey, how come the default position is not a battery?' And from the perspective of the utility companies, starting from the beginning of what I was saying, they're not hostile to it anymore. And in fact, they want it because they realize that a battery is part of their system and can be viewed as a grid resource. Whereas a diesel generator generally has a shut-off switch. You take your home off-grid, you're running it off the diesel. So it's not really a functional part of the system that they're operating every day. And so they actually do want you to install a battery, but I was like, well, where does that say something on your website? Do you ever like tell people that you'd rather them do a battery? 'Oh, no. We forgot to do that.' Well, you know, like people are not going to read your mind. Like, why don't you say it out loud? And so I think that's where we are right now is folks are getting comfortable with each other. They're a little less hostile towards each other and they're realizing that all these investments that people are making in appliances, vehicles, backup power can be part of the grid and can help your neighbor and everyone else get better resiliency.
No, it's really, really well put. And actually, it's not, I don't think, a coincidence or mistake that CenterPoint's VP Jason Ryan is the chair of that ADER task force I was talking about earlier. I recorded a podcast with him and he talked about how in Houston 60%, sometimes 70% of the power that they need, they've got to import. They don't have enough power in their service territory. So to your point, like getting that solar and storage on rooftops, the storage in people's garage, like that can really make a difference. And on the electric vehicles, and you've been great at talking about this, just the aggregated amount of capacity going around in cars right now is phenomenal. That F-150 you mentioned has standard a 98 kWh battery that'll power a home for even a big home in Texas with a large air conditioning load. That's three or four days. I mean, it's a massive amount of power.
Yeah, I mean, I think that people have a really hard time processing what's happening. Like when you think about a million electric vehicles with an average of let's say 100 kilowatt hour battery, right? Then you're talking about 100 million kilowatt hours, right? So that's 100 gigawatt hours worth of batteries that, you know, people are buying every year and that number is going up from a million to 2 million to 3 million cars a year, right? And so the president's goal of 50% electric vehicles or plug-in hybrids by 2030, right? And so when you think about where we're headed with all of this, you know, the entire United States uses roughly 14,000 gigawatt hours a day, right? We're going to have 14,000 gigawatt hours worth of batteries in people's garages or, you know, their homes or, you know, backup batteries, etc., probably by like 2035. So it's like right around the corner that you're going to have that much capacity sitting around. Not all of it's plugged in, not all of it's accessible that day. But when you think about the sheer scale of how many batteries we're deploying, it's far larger than people are contemplating.
Yeah. All right. I could talk about that topic all day, but I do want to cover a lot of other things. So some of the other fantastic liftoff reports you guys have done at Loan Programs Office. Let's talk about nuclear a little bit. The podcast you were on with Dave Roberts, you went deep into it. We won't go that deep today. Talk a little about the prospects for nuclear. I know you were actually, you know, very excited about Vogtle, the plants that were completed in Georgia. Texas actually has two sites with nuclear: South Texas Project and Comanche Peak. They both have two units. They were both designed for four. Maybe there's an opportunity there. And then maybe just a little bit also on small modular reactors, which I think you have said are neither small nor modular, which isn't that kind of the issue? We need to get to where we're modular on nuclear, that we can really just recreate these things much quicker than we're doing now, which isn't very quick at all.
Yeah, I think we start with what's the point, right? I mean, I think that there's a lot of folks who say, well, solar is so cheap. Look how much solar we're adding to the Texas grid every single day. And, you know, I obviously love solar and so I think it's great. I think the batteries that are getting added to the Texas grid are also super important, amazing. But we also have a lot of coal, natural gas, other, you know, technologies on the grid today. A lot of those assets are getting old, right? So a lot of the coal plants are retiring not because of regulation, but just because they're hitting the end of their life, and you'd have to spend a billion dollars to just like repair it and do all the work to get it back up to speed. And so a lot of folks are choosing to not build new ones. So when you run a grid that's on solar, wind, and battery storage, you can do it, right? Our friends in...
Australia have shown it. You can do it. There's other people who have shown you can do it, but it's expensive, right? Because you got to build a lot more transmission capacity to move the electrons around than you would if you had a lot of clean firm power generation sources. So when you think about geothermal, nuclear, hydro, if we don't figure out a way to make those technologies cost-effective and have those technologies provide 40% or so of the grid, then we're choosing a higher cost approach if once we go beyond that.
And just to put this in perspective, because I think everyone gets fairly hysterical about these things, you know, the solar and wind industry are sort of in that 20% of the grid range and heading that way now, right? So if nuclear and geothermal and hydro and those things are 40% of the grid, then solar and wind can still go from where they are now to 60% of the grid. They got a lot of growth. Do as much solar, wind to battery storage as you possibly can. No one's telling you to stop, right? But if we're going to be retiring a lot of these coal plants and then some of these natural gas plants over time, then we need clean firm power generation resources. So that's why we're bothering.
Right now the question is if you're going to build new nuclear, where would you start? Right? Nuclear power plants require a lot of security, safety, other things. And we have 54 campuses around the country, a few more where their plants have been retired. In those places, you have 90% plus approval ratings of the nuclear power plants, right? The people who live around nuclear power plants love nuclear power plants, right? People have worked there for 50 years, like their high schools always seem to have a brand new gymnasium, like you know, like people love nuclear around there. As you suggested for the Texas nuclear power plants and others, almost all of them were designed to build four reactors at the site, and many of our nuclear campuses only have one reactor, some have two reactors, one or two have three reactors, and Vogtle is the only place you have four reactors, right? And so just going back into our existing nuclear campuses and building lots of new nuclear plants, you could build, you know, somewhere in the neighborhood of 35 gigawatts of new nuclear power plants, right? So you can build a lot of nuclear power plants just at those sites where they're already designed to.
And it's 30% cheaper to operate a nuclear power plant that has one nuclear power plant there if you added a second one because you don't have to double the number of employees, you don't have to double the amount of equipment. You can service two of them with the same staff and the same equipment, right? So it becomes more efficient from that perspective. The next piece is then, okay, so now what technology do you settle on? Right? We clearly built AP1000s in Georgia with Vogtle Unit 3 and 4. So to the extent that you wanted to do something that we've already figured out how to do, do more AP1000s, right? Fine. But the problem with AP1000s is that they're 1100 megawatts each. And so they're something on the order of around 11 billion per reactor. And a lot of people are like, that's a lot of money, right? And so when you go to states where there's only, you know, 500,000 meters, when you go to utility territories where there's only 1 million meters that they're servicing, it's a lot of nuclear, right? And so you know, you can imagine that there's a lot of folks who are looking for 300 megawatts, and that at 300 megawatts, you know, the price tag is 6 billion, now it's probably going to 3 billion once you're building 10 of them, and so you know, 3 billion feels like something where a lot of these utilities can afford 3 billion, right? And so that's why you do these smaller reactor designs.
It's going to be more expensive to operate a 300 megawatt power plant than a 1000 megawatt power plant, right? All things considered, same safety, same everything else. You have 300 megawatts instead of a thousand, so it's a little more costly. But from a capital markets perspective, like public service commissions feel better, everyone else feels better doing a 300 megawatt, right? And so I think that we're starting to recognize that. The last thing I would say is when you think about these 1,000 megawatt data centers, right? Where do you put them? It is very hard to go to a greenfield site, put a thousand megawatts in there and then have a grid like get, you know, modified to accommodate that. A lot of folks are looking at existing nuclear sites and building these 1,000 megawatt data centers nearby, not within the nuclear fence line, but let's call it 5 miles outside. You don't have to use a transmission grid. You can power it directly from the nuclear plant, but then you can tell the data center company, you got to build a new nuclear plant at that same site to get the additionality, right? And so you're starting to see a lot of the data center companies getting very interested in nuclear power, and that's how you're paying for a lot of that stuff.
Another one you all have put some focus on is geothermal. This is one that I think has huge potential here in Texas. We have a pretty good geothermal resource. Not as good obviously as the western United States, but good, and it leverages the expertise of oil and gas companies. We've got a couple of great companies in Houston, Fervo and Sage, just to name a few. Are you guys doing some loans in geothermal? Do you think that that's an area of growth potentially for the LPO?
Yeah, I mean because of the leadership of Texas and many other states, I mean we now have an entire supply chain around hydraulic fracturing and other modern technologies on subsurface. And so as a result, like we think we can actually get to really cost-effective geothermal with about $25 billion of investment into the first, you know, 3 to 5 gigawatt worth of geothermal, right? Once you get past the first 3 to 5 gigawatts, we think the cost curves are going to come down and geothermal might be some of the lowest cost way of, you know, producing power in the west. And so we're excited, and you start to see the contract that Google signed with Fervo and Eavor in Nevada, you saw the announcement between Meta and Sage, and so we're excited to see a lot of the leadership that's coming from the private sector to help commercialize those technologies. And then, you know, Devon Energy invested into Fervo, and so they're bringing some of their subsurface data and some of their risk management practices to the industry. Halliburton's been, you know, quite vocal about, you know, the fact that they think that drilling geothermal wells is way easier than drilling the other things that they do. And so I think you're starting to see a level of enthusiasm that frankly was probably more on paper before but now is being made real, and you're starting to see real dollars flow and people within these companies saying, hey, I'd like to work in the geothermal division, and so it's very exciting.
I mean so much of this really is about learning curves, right? And we come down those cost curves. We've seen solar and storage really go, you know, down the learning curve, and in Texas, obviously massive deployment of those, and now we kind of get to that question of like, can nuclear get there? Can geothermal get there? Like what are those clean firm technologies that are going to get there? I want you to talk a little bit about the Energy Infrastructure Reinvestment. Is that, did I get that right? EIR, which is I believe the biggest pot of, or you know, sort of category within the Loan Programs Office. So can you talk a little bit about, just tell us what EIR is? And I'm trying to think, like where does it... it's the Energy Capital podcast, you're at the Texas Tribune Tribfest. Like where's the overlap between LPO and Texas? Is EIR an area where there's big potential, and what other areas are there potential for Texas to leverage what's happening at LPO to create jobs, lower cost for consumers, all those good things?
Yeah, I think you know one of the things that I think Congress realized is that, you know, when you went from, you know, horses to cars, right, there are a lot of people who were put out of work in the horses business, right? And even though it's far better and, you know, you don't have all the downsides of horses, right, you still have a lot of folks who are dislocated, right, disrupted. And so now that we're in that situation with the energy transition, whether it's around coal and natural gas and oil, or whether it's around hydro facilities and, you know, other places around the country. For many of these communities, they got 50% of all of their property taxes paid for by these plants for the better part of 50 years. And so you can imagine them being fairly resistant to the change that's coming because of the huge hole that it puts in their budget. But also for many of these communities, these are the highest paying jobs in that community, right? And so when you think about, you know, who's sponsoring the baseball team and who's figuring out like pizza night and all these other things, it's all the folks who are working at these facilities.
And so I think what Congress said was like, look, you know, like there are benefits from an environmental justice standpoint and labor standpoint of reusing these old sites, right? And not just putting all these new facilities in greenfield sites, but actually saying, hey, for this old coal mine, what could we do with it? With this old coal plant site, what can we do with it? And it turns out that there's a lot we can do because the interconnection points are there, right? So if you want to build a big solar farm and a big battery storage farm, like actually the best place to put it is right there at the site of the coal plant, right? And so what Congress said was like, look, you know, the Loan Programs Office, you normally do innovation and greenhouse gas emissions, like you still have the greenhouse gas emissions mandate, but we're dropping the innovation mandate if people are willing to do creative cool things at existing sites, right? And so we have folks who have retiring coal plants that are putting solar plus battery storage there. We have folks who have old transmission lines that are 50 years old that they're now reconductoring with next-generation conductors that hold twice as much power. We have folks who are, you know, trying to figure out how to take old hydro dams and actually put fish-friendly turbines in there that, you know, actually let fish, you know, flow through them without any injury, and generates about 25% more power, right, at those sites, right? We have folks who are looking at old tank farms and terminals that are out of use today. We have old refineries that people are converting into sustainable aviation fuel facilities. We have folks who are taking old nuclear plants and completely refurbishing and turning them back on, right? And so I think when you think about just how much old infrastructure we have in our country, and, you know, a lot of folks viewed them as blights, right? Places where they've been shut down, they no longer generate any property taxes, and now they're a source of economic growth for those communities, and people actually are targeting those communities and saying, hey, how do we partner with you to figure out what you want to do with this old site because we get access to this low-cost loan. And so today we have about $120 billion of loan requests in for this Energy Infrastructure Reinvestment program, which has been super exciting, and we have about $250 billion worth of loan authority in that program, and so there's a lot more we can do, and so it's super exciting. And Texas has, I believe it's 11,000 megawatts of 30-plus-year-old gas plants that have that access to transmission, all that stuff there, so it's a great place to look for opportunities for clean firm, solar, storage, all that kind of stuff.
Great. One other area, transmission. You guys funding transmission? You mentioned reconductoring new lines. Does that come into that, like brand new transmission lines?
We definitely have brand new transmission lines too. So no bias here for reconductoring per se. It's more we need, you know, right now our transmission system is whatever size it's at. I'd say as a business-as-usual case we'll probably, you know, over the next 20 years get to like 1.6x our current transmission grid, just folks building new stuff and doing whatever they do. I think with the Grid Deployment Office and some of the other folks who've done really remarkable work, I think we're probably going to get to like 1.8x our grid instead, which is great. But I think we need to go farther. And so a lot of the reason why we're looking at reconductoring is, look, it's really hard, right? I mean, you know, when you want to build long lines, a lot of states don't want those lines going through their states. A lot of neighborhoods don't want those new lines going through their states. And so when you think about where Texas is at right now and the load growth that it's facing, taking the existing lines that you have and figuring out how to flow two times more power along those same rights-of-way can often be a lot easier and politically more practical than, you know, stringing new lines. Now you're going to be stringing a lot of new lines too, and Texas has led the world in, you know, speed at which you're building more capacity, which has been fantastic. But I think a lot of what DOE is saying is that these tools are pretty amazing, right? And so if we just unleash and deploy all of these tools that we've been researching for so long, you can get way more out of the grid that we've already paid for. Yeah. Right. And so why wouldn't you do that? Why wouldn't you do the thing that is the lowest cost way of meeting, you know, this moment? Why would you choose to do the highest cost thing every single time?
