Powering the AI Boom: Grid Challenges & Energy Innovation

08:33 – Fuel Choices: Gas, Renewables & SMRs

11:44 – Cloud Growth Beyond AI

12:24 – Turbine Shortages & Project Planning

13:40 – Grid Strain Is Broader Than Data Centers

15:26 – Oilfield Innovation Meets Data Infrastructure

17:50 – Nuclear’s Regulatory Wall

19:32 – Transmission Bottlenecks & Urban Realities

21:03 – Cleaner Power & Carbon Capture

21:29 – Bill’s Return Invite

22:25 – Contacting Bill Mazzetti

23:14 – Wrap-Up & Thanks

 

Full Transcript:

Conversation in Energy with Bill Mazzetti – Final Cut .mp3

Stuart Turley [00:00:07] Hello everybody, welcome to the Energy Newsbeat Podcast. My name is Stu Turley, president and CEO of the Sandstone Group. I’ll tell you what, AI and data centers is all in the news right now, and I happen to have an expert who is with Rosedin Data Center, and he is Bill Mazzetti. Bill, how are you today?

Bill Mazzetti [00:00:27] Stu, I’m doing great, thanks for having me on.

Stuart Turley [00:00:29] I’ll tell you what, I’m excited to visit with you about this data center. You’ve got over 20 years in the data center business and you have been doing this for a lot longer than this news cycle.

Bill Mazzetti [00:00:40] Yes, sir. So been in the data center business, actually, personally, it goes back to, you know, my college thesis was actually the swab data center designed back in the mid 80s. So I’ve been in the data center business for for a long, long time, and it kind of lived through all of these every 10 years, generational changes, whether it’s, you know, main, you know, kind of a lab environment to mainframes to cloud now into AI and have kind of live through it and kind of kind of work through all those problem sets as we get through it.

Stuart Turley [00:01:08] Um, so where are you at right now?

Bill Mazzetti [00:01:11] I’m actually in my home office in San Francisco. I’m born or raised here. I work all over the country in many cases. And in the not so recent past, kind of worked all over the world on behalf of our clients.

Stuart Turley [00:01:21] Fantastic. So where are you seeing most of the data centers rolling out right now in the U.S.?

Bill Mazzetti [00:01:27] Well, I think, Stu, it’s kind of related to where power in a development environment is permissive. And that’s it. Permissive doesn’t mean it’s a kind of a pushover. And you certainly see in the media today where, you know, a lot of the negative press in data centers is the NIMBY. And so it’s like, oh, my God, they’re putting a transmission line near town. I go, but gosh, you didn’t talk about the 30 million dollars you’re doing on the wastewater treatment plant to make to make the town better. So it’s really where power is, because, you, know, computers run on power. They don’t run on a lot of water, believe it or not, people forget that today. And so really that’s Texas, the Midwest. Some of this is really related. Memphis is a hot market, ironically, and some of this the adaptive reuse. When we deindustrialize the United States, specifically steel. Textiles, textiles take a lot of power, didn’t know that till I got into it a little bit. So there’s a lot aluminum processing, really, that’s kind of the Columbia River Valley up in the northwest. So all that kind of stranded power is being adaptively reused to use the real estate term and been turned back into data centers. Then there’s also just, you know, states that have an ability to put generation or transmission online, whether that’s renewable or fossil fuel, Texas is a big part of that. And so Texas in really the central part of countries where we’re seeing the greater part of the development today and then also from if you kind of go from like Texas to Minneapolis and then or Detroit but then you get to Oklahoma City and go dead east kind of through Memphis a Montgomery and into Atlanta that’s what we’re saying I would say the greater deal of the large-scale data center development today

Stuart Turley [00:02:55] Well, this is really extremely cool. And especially when we sit back and take a look, we take a look at the demand that I’m seeing behind the meter. So do you guys go ahead and take like, let’s take Stargate here in Abilene, Texas. They are looking at what enough to power 90,000 homes, but they’re going to be not attached to the grid. So they’re putting in a basically. Gas turbines to get them up to speed because there’s a real huge shortage on gas turbines right now. So are you looking at a lot of your projects being behind the meter or how are these looking for that?

Bill Mazzetti [00:03:33] Interactive. So thanks for mentioning Stargate. That’s actually a major client of ours. We actually are building in Abilene. So it’s not 90,000 homes. It’s probably closer to 300,000. So, and so the way development’s going today. That I think I’ve written on it in LinkedIn. And if you read through my profile, you’ll see some of this thing really in the old days, the traditional part and the challenge for utilities in the country. And I’m gonna start with power because without power, we can’t get anywhere. We can’t build hospitals or manufacturing or data centers. And so it starts with the fact is that just the time to interconnect to the grid. This is complicated engineering, takes two to three years. And it’s shorter time to build what we call an on-premises power solution. It’s not behind the meter. So in many cases, it starts with, we call island mode, you’re running on the power plant. And there’s a joke in it. Actually, it’s not a joke. It’s a true story. 32. Lawyers and financiers are on the phone with Bill Mazzetti and it’s like and they’re talking about this power plant deal when it’s Like and I explained go guys. This is the utility power plant It’s just a lot closer to you and we throw wires literally over the fence to you And then ultimately what happens to is that that power solution is definitely for the site But then ultimately the site will be connected to the grid. So there’s really an interaction between that power plant, the load, and the grid. But what’s changed in the last five years, we as data centers, or any load, whether we’re making planes or steel or a hospital, we’ve been a consumer of energy within the United States. And I think what’s changing today, the utilities and their customers are having to become more load interactive on the large scale. A large scale load in the country right now varies between 20 and 50 megawatts and so it’s not a really big load for data centers but it’s a big load for a lot of other things so but that’s a good thing because that’s that’s needed to come around.

Stuart Turley [00:05:20] Load interactive. I love that word that that is really a catcher right there.

Bill Mazzetti [00:05:27] Yes, where that comes from, it’s actually we didn’t invent the term that load. The interaction is really kind of how the utility operates. And so in many cases, the loads are becoming part of the solution. For example, Senate Bill six in Texas requires that large loads have batteries on site so that when when the utility needs it, they can dispatch power for either grid stability, which is voltage or frequency, or it you I need more capacity or. Come off the grid, go to your battery so you get a load reduction and the grid has more capacity for somewhere else. This is an interactive process between the ISOs and the loads themselves. And this is honestly every project set up to do this thing. It’s just cooperation is what it And it’s good for the country, and it’s good for customers, and good for utilities too.

Stuart Turley [00:06:14] So you’re doing your customers, the data centers, the, the big tech companies, a huge service by being able to identify power sources and also a pitfalls that they can see, because there was also a couple other bill caveats in that Texas bill that they could shut down a data center if there was a problem with ERCOT.

Bill Mazzetti [00:06:37] There is, there is, and that’s basically, that’s kind of low demand in California. Kind of the derivative of that is when we have really hot days or there’s a danger of wildfire that will turn the power off, which by the way is very sensible. But, you know, if you’re on the other end of the line, it doesn’t feel very sensible at that moment, which, by the way, let me speak about the cooperation for a second. And it’s a good story about California, you know, back in 2022, we almost lost the Bay Area because we had really, really hot and they asked the data centers, hey, can you guys just go to your and they took a gigawatt of load, 660 megawatts, off the grid in Santa Clara and about another $400-500 around the Bay Area. And it saved the Bay area. That’s being good neighbors. Wow. A year later, instead of doing that, they just said, hey, you know, California, hey, you got on the text on your phone. Hey, it’s kind of hot today. Can you guys like turn the air conditioning up a little bit? And can you maybe not charge your cars right now? And that’d be really good. The grid lost, the grid got, seriously, it was like this kind of surfer Bob gets on the text line and we took off eight to 12% of the grid demand inside of 14 minutes. So people want to do the right thing. Data centers have generators and batteries on board. They can do this. And so that’s that, that’s a cooperation. And when you cooperate, everybody gets where they want to go. I mean, the load gets power and the utility gets stable. And so, but that’s a very different set of rules, because that’s not how the utilities operated for, you know, a hundred years. But it’s a good thing.

Stuart Turley [00:08:02] That is a really cool story. I love that. Hey surfer, dude, you know, you might want to turn it up. I mean, just like, oops.

Bill Mazzetti [00:08:08] Yeah, I’m a Cali boy. So I can kind of get away with that. And I also surf and body surf. So, but it’s more like, Hey, listen, and then right now it’s like, Hey, they’re on the TV. Hey, we’re having a hot day tomorrow. So, you know, turn your conditioning up between four and nine. I mean, it’s kind of, that’s the interaction between a supplier and a consumer and that, and honestly, that how we’re going to get more development done is that we’re all just good citizens. We’re good. You know, utilities are good suppliers and we’re good customers.

Stuart Turley [00:08:33] So as you sit down with a group of folks and you take a look, you know, the Marcellus up in the Pennsylvania area has got lots of natural gas. Do you look at natural gas or do you look at coal is nuclear starting to come in? Because we’ve got all these modular nuclear reactors that are being tested up in, the next five years. I could see you guys changing your mode to dropping a nuclear, a modular nuclear sitting right there.

Bill Mazzetti [00:09:01] Right. Let’s talk about gas first and kind of feedstock. So the feedstock fuel is almost, from a fossil fuel standpoint, is almost exclusively net gas. So whether that’s running a turbine or reciprocating engine, these are big engines. These are 25, 30, 50 megawatt turbines or receipts. On the other side, too, people forget that Texas is like the biggest renewable energy state in the country. And they forget about that. They think, oh, we’re just drilling holes in the ground and sucking oil out of it or gas out of. That’s not the case. So we look at it this way. Again, megawatts are megawattes. We have. Campuses that are both directly connected to renewable sources. We put a little battery on the site and then we connect it to the grid and the grid enhances when we need it. We have other sites that have turbines. We have others sites like an Abilene. We have everything. We have turbines and we have solar right next door. So energy, energy is a solution. It’s kind of funny. I took about three years off from our data center business and worked on our energy business, mostly because I was doing robotics and some other stuff, and it was actually a fortuitous for Rosadin because I learned all the interconnection business, I learned the energy business and then I brought back to the data center site. So you’re right. So what’s interesting about kind of site selection today for data center sites is, hey, where are gas pipelines? That was something we actually avoided in the old days. Because they kind of explode. And if you remember San Bruno and California, where that thing went off. But now it’s like, God, I want to be close to that thing because I want a suck gas out of that line. So that’s actually so that the business needs change. Kind of the sensibility is how we select sites on the SMRs, the small modular reactors. You know, I have a kind of a bit of a warped sense of humor. And so people say, are they safe? They go, well, they stick them on a submarine and put them underwater for 25 years. We haven’t had a problem. So it’s probably pretty good stuff. Now, I think there’s certainly people still think of Three Mile Island or Chernobyl. And those are much older technologies, but nuclear is very viable. And I think depending how NERC gets through whether it’s a stage one reactor, stage two reactor, stage two is the big cooling pond stage one’s contained. These are all kind of fail safe technologies. We’ve looked at them as an EPC from the energy solution side to build those and they make sense. I think it’s just, I think, it’s matter of. When versus if, Stu. In other words, they’re going to come along, but there’s certainly going to be strong NIMBYism to that. I mean, we’ve talked to Oklo and a couple of the providers and said, listen, there’s 14 states that we won’t put them into because there’s no way the state’s going to approve it. One of them is California. Some of them are states that really need the power, but they’re never going to get over the regulatory or the entitlement challenges to do that. But that’s very much a very, very viable technology. But between now and the next eight to 10 years, we’ve got to do something. And so in data by way data outside of this AI stuff People forget the data center business grows, the cloud business like your Instagram, your TikTok, your Outlook, that grows 20 percent per year. That’s just.

Stuart Turley [00:11:44] Even without AI.

Bill Mazzetti [00:11:46] Even without AI, AI is goose that because it’s kind of the rat through the snake. But the data business grows 20% of your just on normal business.

Stuart Turley [00:11:55] You know, Bill, when we sit back and take a look, we got caught flat footed by the growth in the deindustrial, you mentioned the de-industrialization as we off short everything and now we are now needing new turbines and you have GE, you have all these other turbines, there’s now like a five year wait for a decent size turbine. So you got to have some skills and in designing a staged in or phased in data center, I’m assuming.

Bill Mazzetti [00:12:25] I’d agree. Well, I mean, first of all, the lead times are getting a little better because frankly, this is not a problem that’s going away. So for example, this morning, one of our regular suppliers says, hey, I’ve got 14 turbines that amounts to about half a gigawatt worth of spin that, hey I’ve got them available, do you want them? I go, well, maybe. But anyway, let’s get back to it a little bit where these lead times are obnoxious, yes. But that’s not because anybody is planning against it or trying to jack up prices. It’s a longer time issue. I think that the challenge to all of this, and by the way, Data centers aren’t the only thing, right? So, you know, EVs are kind of down right now with the Trump administration, but the two, we’re big fans of Wood Mackenzie, which is a great research organization. We use them on our energy business side. But if you look at the projections that you’re gonna see both vehicle and fleet electrification, as well as the electrification of buildings where we’re getting rid of natural gas and buildings for heating and cooking, are gonna be multiples like two or three or four times the size of the data center growth and expansion. So, there’s an electrification of the country, exactly. And so, the challenge with that is that we spent 50 years of declining per capita energy consumption like, you know, how much power Stu and Bill use at their house, but you know, hey, the light bulbs are better, right? We have LEDs now that are pretty good. We’ve got more energy efficient appliances. We’ve gone energy efficient. You know, everything we do is just running better for the same amount of work. Well, the problem was all of a sudden, so demand took, you know, we had this confluence of factors, which is really vehicle electrification and the data centers growth hit at the same time within a 18 month period and then. Now we have a push on the electrical codes that say we’re going to go full electric. We actually have some of our first full electric hospitals coming on board online here in 2028. So that just means there’s more power demand for it. It’s not all data centers. It’s vehicles, it’s buildings as well. So the grid has to respond to it. The poor utilities guy did get caught flat-footed. I would ask you to go, well, how do you do utility planning? Half of them say, I do it based on the applications I receive. There hasn’t, you talk about that partnership between the utility and the customer. No one would actually go talk to the poor utility going, hey, I’m thinking about dropping a gigawatt in your backyard the next 10 years. And they’re like, great, because it’s great revenue. By the way, but that’s one of those surprises. It’s a good surprise because I got revenue. It’s bad surprise because my infrastructure is not ready for it. So that’s what we coach to most people is that you can’t just assume you’re going to hook wire to the place and get electrons out of it. You’ve got to be partners with the utility these days. But vehicle electrification is here to stay, and it’s going to continue to move forward. And we certainly see that with delivery, like with Amazon and stuff like that. And we’re going to see the buildings electrify as well, which is going to drive up utility demand. Ironically, what will happen is you’ll probably use the natural gas that we’re not using to make power. So it’s like, oh, the nat gas to the house, I’ll run a nat gas generator or a fuel cell outside back of my house, and I got power for that.

Stuart Turley [00:15:26] Right. It’s amazing. I just interviewed Ron Gusick, who is the CEO of energy Liberty yesterday. And, and so it was a lot of fun visiting with him. And he had just talked with the CEO from Oklo, the nuclear group. And so that’s pretty darn exciting. And when you sit back and take a look Liberty energy had electrified their frac fleet. So you are dead on by trying to sit back. My years ago, when they did this, I was kind of scratching my head. Back when Chris Wright was the CEO, I was kind of going, dude, why are you doing that? But now it makes sense because it’s all tying together.

Bill Mazzetti [00:16:04] Right, it’s funny because you talk about oil and gas not being particularly innovative on this. And so, you know, what do you think the what do you think that darn the darn oil fields run on there? They have to have their own energy plant. What’s interesting, right? So if you talk about you talk about the Abilene project, the Crusoe guys, we know Jamie and Chris forever. They were all 365 main data center guys, got bought out by digital, got out of the game for a little while. Then they got back into the game doing energy plants. For the oil and gas business, running gas turbines and gas engines off of the flare gas from the field. So this is, again, hey, I’m using more of the product to do better for myself, and then you don’t have to stress the infrastructure. Then they went back into the data center game, but they’ve always got a foot in the energy business. I have another client that’s a big liquefied natural gas guy, and they understand big projects. They’re used to building $20, $30, $40 billion jobs, big power, and now they’re in the data center business, but they started as energy guys. So I’m very heartened that business is kind of smart enough and nimble enough to figure this out. It does, by the way, it looks like a gosh darn mosh pit right now because it looks, like, oh my God, it’s all crazy. I’ll also admit that, I mean, I get Tourette’s syndrome watching CNBC or Bloomberg in the morning. It’s usually on the background. I’ve got it off during the interview here. But it’s like the guys on TV go that guy has no idea what the hell they’re talking about because you know It’s like they get a little snippet of idea and they pull on the three you’re laughing But it is true because three months later they look like the biggest idiot on the planet But of course what it does it goes completely viral They get a million and a half views in in 48 hours And they’re the toast of the town and we all just sit back and shake our head the great news to this though Stu, is I think that when you look at the consumer as really kind of large industrial clients, and I include Amazon with that as fleet electrification, I look at data centers, the energy business, they’re all kind of figuring it out kind of separately, but they’re all looking over the fence go, wait a second, I can work with that guy, like we’ll go do an energy deal to put something together. Utilities are part of this thing. And I think that’s heartening because in 10 years, it’s going to feel much more seamless than it is now, we are really positive on the small modular reactor. I think that we just have to get over kind of the local and state entitlement and rules that will be put upon them, which in some cases will be relatively onerous. I hope that people have a larger vision. I mean, you could put a 50 megawatt generator in the size of a small building. I mean, that’s great for development, but if you’re in Palo Alto or in San Jose, you don’t want that thing out there because people are afraid of a nuclear cloud on Three Mile Island on all that stuff. But again, it’s intrinsically safe for equipment. But you know, that’s something that the industry is going to the industry and societal sorted out as we get through it.

Stuart Turley [00:18:42] I’ll tell you what, but the three horsemen of the energy dominance apocalypse that’s happening in the United States, when you have Chris Wright, Lee Zeldin and Doug Burgum, you know, who are running energy dominance as a resource. I think we can make it. And I love your comment flat out. There’s two things I just cracked up when you said you had a Tourette syndrome after watching the CNN. I’m sorry. I really, I’m going to use that. I hope you don’t mind that was fabulous, but we, we have the three greatest administrators in the three most critical roles right now. And regulatory burden on nuclear has killed any it has wiped that out so i think we can get there.

Bill Mazzetti [00:19:32] Yeah, Stu, I agree. And I think that, you know, it’s funny you talk about the three horsemen of nuclear advocacy, but if you step back and look, there’s probably another hundred people around them on a policy and in company operating basis, both on nuclear and energy kind of, and I would say generation development, because really transmission resides, resides with the ISO. Um, and, and by the way, some of those are tough jobs. I mean, you look at what Silicon Valley power is going through to wheel power from P from Metcalfe into, into Santa Clara. It’s 12 miles. It is, it’s hand-to-hand. I mean, it is 12 miles through an urban area in San Jose. It is… People say, oh, it should have been done three years ago. I just look at people go, are you nuts? I mean, you couldn’t do that in Des Moines, let alone San Jose. So be fair about it and have great expectations. But I think what’s interesting now is that, and people say, well, what about gas turbines? What about pollution? I go, you know what? We can abate that, okay? We’ve done that in California. We can do, one of my buddies from college, Mark Thomas, big carbon capture guy. The White House fellow, I mean. That’s, you know, 10 years ago, small modular reactor, that’s crazy talk, right? We’re never gonna have that. Well, 10 later, there’s four or five producers of that. Well, you, gosh, you all this natural gas fired plant, well, it’s pretty clean in California, but we can make it cleaner. It’s just a matter of cost motivation technology and that’s coming along. I’m watching that every day just, you know, people are quietly moving that needle positively. And that just means we got more energy to build more stuff to make America and American society, American business better and stronger and faster.

Stuart Turley [00:21:03] I’ll tell you what you have just absolutely made my day with your energy and your talk of energy, but I would like to have you back as well, because I think this would be a first podcast that we need as you get new, you know, rise and gets new announcements or other things. I want to have your back to talk about more specific things as we get rolling further down this road. This is

Bill Mazzetti [00:21:29] Stu would love to do it. I think that right now, I think what’s coming up next is that so AI is going to change here in the next couple of years. Like I said, we’ve seen these big large language model campuses. So that’s kind of the foundry. It’s making steel, right? So think of the large language models, you’re making steel and then the inference buildings, which is AI as a service, that’s what the steel looks like. It turns into a building or a ship or something else, or an ore refinery for that matter, or a generator for what it’s worth. So I love to talk energy. I mean, you guys are really, you know, what you’re working on in your podcast and kind of where you’re, what the content you’re curating is right in our wheelhouse. Love to come back when you’re ready, like I said, and love talking energy, love talking data. It’s been kind of my life’s work. It’s kind of nice to know we’re pushing the needle here specifically. I am getting a little old for this stuff. You know, I’m over 60 and you know, after 40 years on the line, you get a little hog by it, but happy to talk shop any time you want.

Stuart Turley [00:22:25] Fantastic, and how do people reach you?

Bill Mazzetti [00:22:27] Well, I’d say LinkedIn is probably the best way and that’s how I kind of curate the gates and then, you know, if it makes sense, just DM me on LinkedIn and then what I’ll do is I come off and I check that daily. I do get a bit of traffic there, but it keeps my work accounts down to a minimum. You’d never get at my mobile number unless we’re doing business because otherwise I get all kinds of crazy I get on kinds of knuckleheads calling me but but on the other hand though I’ll tell one thing is I’ll I’ll total the the viewers one thing I do respond to stuff I do take cold approaches because sometimes those turn out to be pure gold and about once or twice a year somebody calls me some earnest person calls me I got a great idea and you know what and I we look around each other inside a rosary and go they’re right it is a great we’re going to talk to you. And those are some of the things we’re trying to do. Great clients and great suppliers for us or great partners for us, so.

Stuart Turley [00:23:14] Well, I hope that you get some of them from this podcast cause this podcast has a very significant reach. So I sure hope that, uh, you do get some great feedback, but again, thank you for stopping by the podcast today. I do appreciate your time and I hope you have an absolutely fantastic weekend.

Bill Mazzetti [00:23:30] Stu, best to you and yours. Thanks. Great luck on the channel. Congratulations so far. And when you need something else, you know where I am. Give me a holler.

Stuart Turley [00:23:37] That sounds great. Thanks.

Bill Mazzetti [00:23:38] Thanks, fellas. See ya.