Good morning everyone. I'm Salem Samaha, partner at GIP, part of BlackRock. I'm honored to be moderating today's panel. We have an all-star crew here. The panel is about powering America's AI future and we're really here to discuss the physical backbone of what it takes to enable AI and to scale AI in America. We're here to talk about the hidden bottlenecks behind that and also how do you do that in a way that ensures that energy continues to be very affordable to consumers. Joining me today is the Honorable Chris Wright, Secretary of Energy, John Ketchum, President, CEO, Chairman of NextEra, and Ruth Porat, who's President and CIO of Google and Alphabet. So without further ado, let's kick this off. The AI, maybe I'll start with Secretary Wright. So AI obviously has a lot of enablement in the physical world which many people don't appreciate. We're talking about chips, we're talking about the grid, we're talking about massive natural resources that have to be rewired to get them to where they need to be. What do you think people fail to appreciate about what it really takes to scale this?
Yeah, the scale to build things again in our country. One of my missions coming to Washington is to make it easier to build big things again in our country. Obviously, look at this building. Look where we are. America got where we are by boldly risk-taking and building big things. But we've done precious little of that in the last 20 or 30 years. We've made it just way too hard to build things. You know, NEPA for example, we've just made it very easy to stop something today about the state of things, right?
It's all your fault. There you go.
Electricity and the focus is not going to be a political agenda. The focus needs to be deliver secure, reliable, affordable electricity. So we cannot outsource this next energy-intensive industry that's arriving, artificial intelligence. We want it here in this country. It'll be hugely beneficial for America and Americans. And we can do it. We can do it and drive down our electricity prices. It is a massive win, but we need to get in a very different gear than we have been for electricity for 20, 30 years.
And John, you're doing that across renewables, gas, nuclear, grid, just having that front row seat. What's your take on the challenge and how we overcome it?
Well, first of all, I agree completely with the Secretary's comments. We have got to unleash energy in this country. We got to do it quickly. We have to restore American energy dominance. We're fully behind the Secretary's agenda and the administration's agenda in that regard. And for us, it's incumbent upon companies in our sector to move quickly to get every electron on the grid as fast as possible and to build at scale. And we can't just take the approach of building 100, 200, 300 megawatt solutions. That's not going to get it done. So one of the things that we're doing at NextEra is we've completely shifted our strategy around what I call data center hubs, for example, where we can build 3 to 5 gigawatt facilities and we're out sending our land team out tying this up and then bringing a combination of resources that it's going to take and capabilities and experience that few companies in the sector can do. You look at NextEra, we have the largest gas fleet in the United States. We're the largest consumer of natural gas in North America. We know how to build gas and get it done. We're one of the largest nuclear operators in the world. We can build transmission. We built the last long-haul gas pipeline in this country, Mountain Valley Pipeline. It's going to take a combination of all those resources to get it done and then the public and the private sector working together on permitting reform. It takes far too long to get a gas pipeline built in this country. It takes far too long to get a transmission line built in this country. And it's not necessarily the federal permitting that is slowing us down. It's the courts because we have a lot of courts in this country that love to legislate from the bench. And we need to clean that up through permitting reform so we can get these projects online quickly and at scale. And that's something that we're working not only with this administration on, but with Congress on as well.
I can certainly relate to that building big infrastructure as well with the court issue. Ruth, you're obviously a big customer for all this energy infrastructure but at the same time you've taken your own initiatives to build the generation capabilities. Maybe share your perspective on what could be done differently to unlock this opportunity.
Well, I very much agree with both comments. The core issue is the US is underinvested in energy capacity and the infrastructure that's needed. We are adding, we're net investors in adding capacity when we build a data center. We think that's a core part of what we should be doing so that we are net contributors to the communities which we build. We in fact just closed on an acquisition of Intersect Power yesterday. Very excited because what that's enabling us to do is build energy capacity as we're building data centers. And so again, continuing to add. I think the other really important point is what incrementally we and others do to protect affordability. And there's a very important piece of work Lawrence Berkeley National Labs released last year where they looked at data centers and their impact on energy affordability and found actually states without data centers have seen electricity prices increase faster than states with data centers on average. And the assessment is that's because data center workloads enable better amortization of the fixed costs. That's one important point. But our view is that we need to do more than that when we're entering any state when we're building data centers. So we're committed to buying, not only investing not only in 100% of the energy that we use but very importantly to their points the infrastructure required to support that growth whether or not we use that infrastructure. And I'm going to quote Secretary Wright because we're doing this around the country. But importantly, last year when we announced in Georgia that we're approaching it this way, invest in the energy that's needed, really immunize ratepayers, the CEO of Georgia Power said as a result of the way Google comported itself, the choices around execution, they can hold ratepayers, you know, the rate base flat for the next three years. And Secretary Wright, your comment on the back of that was really important. You said done right, the addition of data centers can actually add resilience to the grid and protect affordability. And I think that done right part is what's really guiding us on everything around adding capacity and protecting affordability.
So, Secretary Wright, as someone who lives and breathes energy, I see how these data centers can help reduce costs for consumers. But if I'm not an energy expert and I'm one of those consumers, what can we do as an industry and as government to make sure that these benefits are more obvious to the ordinary person?
Yes. And I got to congratulate Ruth for what they did in Georgia. A similar deal was done in Alabama, also a three-year rate freeze. The state of Indiana a few weeks ago filed to the public utility commission for a rate decrease and that's in nominal dollars. When you keep nominal dollars flat, that's a slow decline in real prices for electricity. We can do this and I honestly believe we will do this. The key to driving down electricity prices is to grow demand. Everyone thinks that that's backwards. These data centers are going to drive up prices. It's actually the opposite. If you look at the states that have both the most expensive electricity, they're also the states with the fastest growing electricity prices. And I'll shout out a few of them. You know, California, New York, Massachusetts, Delaware. These are all states that produce less electricity today than they did five years ago and in most cases than they did 10 years ago. If you look at the European nations, Germany, they have the record. They've tripled their electricity prices whilst spending a half a trillion dollars on their electricity sector. They tripled their electricity prices and they produce more than 20% less electricity than they did when they started it. So if you're spending money in the electricity sector thinking you're decarbonizing the world, number one, you're very naive, you're not moving the needle in any measurable sense. But if you're spending it for an objective besides affordable, reliable, secure energy, guess what? You're going to get more expensive, less secure energy, and you're going to push users out of your state. Your demand is going to go down, and your prices are going to have to rise faster. The states that have done the best on electricity prices, all of them have fast demand growth. The faster your demand growth is, the more you can push your electricity prices down. And another reason for this, it's just more efficient use of assets. Our electricity grid today, as we sit here, it only operates at about 50% capacity. So right today, we got hundreds of gigawatts of spare power right now. Bring all the data centers you can build the next five years and we can power them this hour. What matters is can we continue to power them at peak demand time. That's all that matters. The way you can increase the capacity of the grid is to increase the deliverability at peak demand time. But if you put a data center on, it uses electricity 24 hours a day. It has some variability in the load, but it's a much steadier load than the average load. So now the average utilization of all those assets goes up, the per unit cost goes down. And in addition, the hyperscalers like Google, they're very cooperative. They want to build giant assets. They'll put money up front to build infrastructure. They'll sign long-term contracts, which allows long-term new assets to be built. Data centers are the road to lower electricity prices in our country. They're the road to increase jobs, pushing up wages, increase tax revenues. Done right is correct. A few deals have been done poorly. They've just soaked up excess power and pushed up prices. It has happened. So there is some reality to the oh these guys came in and hurt my electricity grid. That has happened. I do not believe you will see that happen at any scale going forward. You will see the opposite. The states that attract that investment are going to win. And not only will the locals win, but it's so critical that the United States lead in artificial intelligence. I think it is hard to overstate the enormous positive benefits that will come to our society, our economy, our national defense, the progress of science, the rate at which we're going to make cancers treatable conditions and not death sentences. So much upside is waiting for us if we can get moving as fast as possible on artificial intelligence.
