“End Nuclear Insanity Before Nuclear Insanity Ends Humanity” ~llaw
Feb 25, 2025
Stock image of a solar energy farm in a desert environment. (Not related to the following post) ~llaw
LLAW’s NUCLEAR WORLD NEWS TODAY with the RISKS and CONSEQUENCES of TOMORROW
This Post is from an interview about 9 months ago, but, needing a breath of fresh air, coming up from the stench of nuclear issues and Trump’s outright attack on Democracy and the free world, I saw that this was on my “TODAY’s NUCLEAR WORLD’s NEWS” articles list, so I decided to give us all a break, offering a fresh agenda for today, with a look at why solar energy production is possibly the best of all other sources for so many reasons.
The interview is long, so I have left the “Podcast” link intact for those of you who are interested in the subject but don’t have time nor the disposition to read the entire text. It is also good reference material for issues and comparisons to other energy sources for more advanced interests in solar energy production . . . ~llaw
An Interview with Terraform Industries CEO Casey Handmer About the Solar Energy Revolution
Thursday, May 30, 2024
Listen to this post:
Good morning,
This Stratechery Interview is another installment of the Stratechery Founder Series; as a reminder, one of the challenges in covering startups is the lack of available data. My solution is to go in the opposite direction and interview founders directly, letting them give their subjective overview of their companies, while pressing them on their business model, background, and long-term potential.
Today’s interview is with Terraform Industries founder and CEO Casey Handmer. I am primarily familiar with Handmer via his blog, which covers the future: space, technology, energy, etc. Handmer writes very persuasively about solar energy, and has backed up his conviction with his career choices: Terraform Industries is working to build the Terraformer, which produces natural gas from sunlight and air, and can be installed anywhere in the world.
In this interview we do discuss Terraform Industries, but I wanted to spend the most time on understanding solar energy and why Handmer has such conviction about it being the future. This is a topic that is increasingly pertinent to Stratechery specifically and tech broadly as AI becomes a reality: right now the number one way we know how to make AI better is by scaling up, but that requires an ever-increasing amount of energy, and it’s not clear where it will come from. Like many of you, I have been a long-time advocate of nuclear energy; Handmer makes the case, though, that solar is simply better in every way.
To that end, topics covered in this interview include the ongoing revolution in solar, driven by ever-decreasing costs, the importance of batteries, objections to solar, the implications of localized energy, and Terraform Industries. Do note that this interview was conducted before the Biden administration levied tariffs on Chinese solar panels and batteries; Handmer told me that he doesn’t think it changes much in the long run.
We do cover a lot of ground in this interview, and I am by no means an expert; to that end Handmer helpfully wrote a blog post with links to a number of pertinent Articles he and others have written that undergird the arguments in this interview. It is a very compelling case, and I hope he is right.
As a reminder, all Stratechery content, including interviews, is available as a podcast; click the link at the top of this email to add Stratechery to your podcast player.
On to the Interview:
An Interview with Casey Handmer About the Solar Energy Revolution
This interview is lightly edited for clarity.
Topics:
Background | The Solar Revolution | Batteries | Solar Objections | Localized Energy | Terraform Industries
Background
Casey Handmer, welcome to Stratechery.
Casey Handmer: Thank you. It’s great to be here.
So when it comes to Stratechery guests, I think there is definitely a bimodal distribution in terms of knowing who you are. I know for a fact that you have some ardent readers and followers who have been campaigning me to have you on for a long time, but I also think probably the vast majority of my subscribers don’t know who you are at all. So give me the Casey Handmer networking event introduction, who are you and what do you do? And I know there’s a lot there, so you can have a little more time than your typical roundtable, tell me who you are.
CH: Thank you so much. I’m a recovering physicist. I’m an Australian by birth, I moved to the United States about 15 years ago. I did stints in academia, startups, NASA, and now I’m running a deep tech, climate-tech startup.
Wow, that was fast, you really got through it quickly. You have an incredibly wide array of interests. A lot of this is based on writing of your blog, which I followed for a while, from the Vesuvius Scrolls, which I definitely want to ask you about, and Stratechery subscribers do know about because we’ve talked about with Nat and Daniel, to space, to energy, which I think we’ll spend most of the interview on. But what is your background? You mentioned you grew up on Australia, you were a physicist. I could only imagine what a handful you were for your teachers as a kid.
CH: Well, I’m still in touch with a few of them today, and I don’t think there’s any hard feelings. But now I’m a manager and a teacher myself in some ways, and I have young children, I can certainly see how I must’ve presented the odd challenge, but hopefully not too onerous of one.
So were you interested — was it physics from the get-go, or what were your interests growing up?
CH: Well, I was always quite strong at math, or maths as we say in Australia, and so physics and the hard sciences reward that skill and interest in a way that maybe the others don’t as much. But I was actually pretty much even across the board and to this day, retain a deep interest in chemistry, biology, geology, and a bunch of other areas. But physics is certainly where I spent most of my time, probably starting in my late teens.
And so you started out in academia then, after university?
CH: Yeah, I took the academic route to immigrate to the United States. In retrospect, that’s certainly the story. At the time, I was intending to become a professor of theoretical physics, focused in on gravitational theory, as a step towards building a warp drive. But once I landed in LA, I realized that there was SpaceX and JPL, NASA’s Jet Propulsion Laboratory was there, and I actually didn’t have to wait for warp drive, I could go and work on spacecraft right away. Of course, I had to get a green card straightened out, which took about eight years, but once that was done, nothing could stop me.
So then you went to NASA after getting your green card then?
CH: Yeah. Well, some of your listeners will know about ITAR [International Traffic in Arms Regulations] and so on. It’s extremely difficult for foreigners to work on technologies that are considered advanced weapons technologies by the United States.
But you managed it. Were you working there, you’re like, “This is slow, bureaucratic, I need to do a startup”? What’s the transition there?
CH: Yeah, so I went into JPL after two and a half years at Hyperloop, where I did mostly mathematical modeling in magnetic machines, a bunch of other stuff. I was really incredible experience, but I certainly had some startup PTSD. So I went into to NASA and then suddenly the many, many layers of bureaucracy made a lot of sense to me, at the time, and they still do now. They exist for a reason.
What’s the reason?
CH: Well, if you’re trying to run a very large organization, basically these large Mars rovers that JPL is famous for flying to other planets and then driving around, rely on maybe 250 or 300 distinct teams, each of which have their own subject matter experts to successfully build and integrate one of these things. It’s a miracle they can do it in only six or seven years and only a billion dollars at a time. But many of these team members have never met each other, they don’t live in the same country even, some of them are not even alive at the same time and so obviously you need quite a lumbering bureaucracy in a way to make that all fit together.
So it’s understandably a very large bureaucracy to run the entire situation. But the downside of course is that early career, people like myself, people with a lot of ambition, tend to get steamrolled and after four years, I think I’d basically seen it, and done it, and had a pretty good idea what the next 10, or 20, or 30 years of my career there was likely to be like, and decided to strike out into the wilderness and start a company.
The Solar Revolution
So is that when you started Terraform Industries?
CH: Yeah, exactly. So these ideas developed during COVID and then I did probably almost a year of experimentation in my garage before I finally reached conviction to quit my very comfortable government job essentially, and start a crazy hard tech startup.
What’s the combination of factors that made that hard? Because I feel like you have three challenges. Number one, coming from Australia, one of my very good friends, longtime podcast partner, was Australian and he talked a lot about the tall poppy syndrome thing, coming from there.
CH: Yeah.
You have the going to academia, which is you work on theoretical problems and have a relatively nice life, but it doesn’t necessarily reward massive ambition. Then you have NASA, you’re in this huge bureaucracy. Was there a bit where you really needed someone to — you have got a triple layer to overcome, to strike out and do your own thing?
CH: So it’s certainly true that it probably took me a few years to deprogram from an Australian mentality around entrepreneurship and actually my good friend, Ash Fontana, who was a VC in the Bay Area for many years, was the first to, I think, to tell me that in Australia, if you have an idea, probably someone will buy you a beer to tell you, “No mate, it can’t be done” — but the United States, someone will probably buy you dinner to try and write you a $1 million seed check. That’s obviously another simplification, but it really underscores the ambitious, positive mentality that you find, particularly here in the west coast of California, or the west coast United States in California, which is, yeah, there’s no place like it. It’s absolutely incredible. I knew once I arrived here that this is a place that could serve as a vehicle for the changes that I wanted to see in the world.
So those changes you want to see in the world. I think you mentioned it’s a climate tech startup, but it is, Terraform — I guess we’ll get into the specifics more, but it’s definitely about solar and I think that that solar energy is a big thing that you’ve written a lot about.
I have to admit, I usually come to these interviews with a massive list of questions because I often have very strong opinions about everything that we’re going to cover. Today is a little different. The importance of energy is becoming a really big deal in tech, thanks to AI. Right now, chips are the constraint, but it is very clear that chips need energy and that will be the constraint going forward, and it’s not clear how to solve it.
So I want to talk to you to get your perspective, articulate this point of view, but I want to ground the conversation with that admission of where I’m coming from and I think I stand in for the Stratechery audience generally about this. So this is definitely a learning expedition and not necessarily a cross-examination. So walk us through your journey about latching onto solar, believing this is a big deal. This will, I think, lead into the Terraform Industry’s story generally, but let’s go back to first principles. When did you first start paying attention to solar and why did you gain so much conviction about that as an energy source?
CH: Yeah, so I can’t take too much credit for this. I read Ramez Naam’s blogs in probably about 2011, and he was one of the first people I think to really raise the flag and say, “Something funny is going on here. Yeah, solar technology is improving at a predictably enormous rate, and at this rate in 10 years time, it should be extremely interesting.” And here we are, I guess 13 years later now, and it’s been extremely interesting for a few years.
But, yeah, fundamentally, it just comes down to the question of energy. Our civilization in the United States, we consume about 99% of our energy in the form of electricity or oil and gas, and about 1% in the form of food, which is one of the reasons why we have such amazing lives. The productivity of our entire economy is no longer limited by our collective digestive capacity and our ability to convert — often pretty poor — food that we could grow in a pre-industrial agricultural setting into mechanical labor with our hands or maybe with some animals. And it’s a huge unlock, right? It means that essentially all of us can enjoy the mechanical output of a hundred people, embodied in a single person, and without the chattel slavery that drove every economy prior to the invention of steam engines.
So it’s a really transformative thing, and then of course, really cheap, new forms of energy don’t come along very often and I think solar is probably the cheapest by far, the most transformative by far, it’ll probably be the last major one that humans really get to depend on. Yeah, and it’s happening, right as predicted. I’d said in about 2012 that this will take about 30 years, and here we are.
Walk me through that prediction. What was the prediction that hooked you in 2011?
CH: Okay, so you look at a graph in 2011 or 2012, and you say, “Well, you can calculate induced demand as cost falls, and you can calculate cost falling as deployment increases and manufacturing production increases and you can make some assumptions about what will happen in the future”. Then you basically just extrapolate the line for however long it takes until it clears the line where all 8 billion humans have a decent quality of life, and that’s about 30 years. It could be 25 or 35, but it is in that ballpark, it’s smaller than a human lifetime. That’s amazing, right?
I think we’ve made enormous strides just in the last few decades, in terms of pushing down extreme poverty to the point where you could probably say with some certainty that the number of human years, person years, to be left throughout the history of the universe, where humans will endure extreme poverty is finite. It’s probably around about a billion human years. Which is still an extremely large number if you consider the quality of life these people must endure, but it’s a lot better than the default guess 30 or 50 years ago, which would’ve been 90 to 95% of the world, of the entire human population, forever.
So what do you think drove that initial decrease in this energy-based view of the world?
CH: In terms of poverty reduction or in terms of solar cost improvement?
No, the poverty reduction. So from your view, is there stage one, where we drastically reduce poverty generally?
CH: Yeah.
That’s talked about in terms of things like globalization, industrialization, what’s the energy frame on that?
CH: Well, I think poverty reduction is mostly a side effect. As Nat Friedman likes to say, “A lot of technology improvements are driven by demand at the very top, and then that demand trickles down”, and so all of us get to benefit from cell phones, for example, which the early adopters of that technology, were definitely military, government type stuff, it took a few decades and here we are. That’s certainly, I think, the case more generally with extreme poverty, although of course valuable work is being done by NGOs every day, but when we think about what would it take to transform the lives of 8 billion people on earth to be as good as yours and mine, no manner of wealth redistribution or social programs can achieve that, only a radical increase in productivity, and the productivity of our economies and supply of basic goods, and energy in particular, which really underlies that whole thing.
Actually one of the major weaknesses, cutting against this in probably the last 50 years, is a slowdown in global growth caused by energy supply uncertainty, since peak oil and the oil crises in the early 1970s, and it’s really exciting that we’ve got to the point right now where solar deployment worldwide last year was about 460 gigawatts, which is roughly equivalent to the global entire nuclear fleet. Within, probably by 2030, we’ll be deploying more solar than everything else combined which means that once again, we’ll be breaking free of the fundamental limitations of geological sources of energy to essentially solar panels, which are for the purposes of our civilization, completely unlimited and it’ll drive another factor of 10x increase in per capita productivity, and per capita energy consumption, and GDP and so on, probably over the next generation or so.
So you have the oil age as it were. You mentioned the ’70s when you have the oil crisis, that was supposed to be the nuclear age. What happened? Is it the standard story, just people got scared and regulators made it too expensive? Or is there something more profound than that?
CH: Yeah, well, I think at the end of the day, obviously many more people know much more about nuclear than I do, I’m actually a physicist by training. I used to teach nuclear physics, so I’m not bigoted against nuclear power. I think it’s an incredible technology, but at the end of the day, a nuclear reactor does the same thing that any other kind of power plant does. It’s a steam engine, right? It makes water hot, boils water, uses that water to drive a piston or a turbine and there’s a fundamentally irreducible cost of doing that because turbines are metallurgically complex and for people who like hard numbers, it’s about $35 per megawatt hour.
That’s mostly in capital costs or that’s also marginal costs?
CH: Well, for a coal plant, obviously, you’re consuming coal and for a gas plant you’re consuming gas. But also, there’s a lot of CapEx involved there. But actually for the $35, that’s just the CapEx of the turbine and the steam handling system. So even a fission reactor that was free, one way or another, you just cracked open a rock in the ground and there’s a fission reactor ready to go, the cost of actually delivering that power to the end consumer is well over $35 per megawatt hour.
Whereas the marginal cost of solar, like rooftop solar in Australia, for example, which has really somehow managed to get the cost down really quite low, it’s an unusual success for an Australian energy policy, is well under $20 per megawatt hour, which is just, it’s incredible. That’s a factor of two better and it’s going in one direction.
For nuclear to compete on cost with solar in 2024, it has to stop getting more expensive and then it has to start getting cheaper, faster than solar is getting cheaper. But solar’s getting cheaper about 15% per year, and that’s a trend that’s been in place for, well, the trend has been in place for about 40 years, but it really took off about 15 years ago and it’s going to be very, very hard to keep up with that, I think for any other energy source.
I think your arguments about why solar will beat nuclear today in ’24, is very interesting. I just want to make sure I understand this. In the 1970s, is there an alternate history where we actually do keep building, we do move down the cost curve, we have tremendous more energy today? Or is there, because I think the common refrain among nuclear advocates is blaming government, blaming regulators, all this sort of thing.
CH: Yeah, it’s someone else’s fault.
Or is it just a fundamental constraint because people are concerned for a reason. You have to have super high-end metallurgy to your note. To build a reactor is not easy. Is it just fundamentally limited?
CH: Well, as I said, other people know more about this than I do. In particular, I think Austin Vernon, who you should have on your show, was on Dwarkesh’s show about two years ago and had a couple of good comments there. His relatives actually work at the NRC, and so they have their own perspective on it, and I think it’s certainly true that regulation in the United States tends to make some things more expensive, but also the United States is significantly richer than other parts of the world.
So you can point at nuclear reactors built by almost any other country, like South Korea is a typical success story, but those reactors aren’t super cheap. They might be a factor of two, or three, or five times cheaper than US reactors, and that’s nothing to sneeze at, but there’d have to be another factor of 10 times cheaper on top of that to even be able to compete with solar today, under the most generous financing assumptions. That’s really tricky.
Now, as for your hypothetical, I do love historical counterfactuals, and I think that if it was the case that Earth, for example, did not have significant resources of oil, and gas, and coal, in its crust and it was also a lot further from the sun — so say Earth was out near Neptune or something like that, so you couldn’t really rely on solar power, then yes, we’d certainly develop nuclear power as a source of energy and heat for our civilization then.
But at the end of the day, the amount of uranium and thorium that’s available in the crust to produce nuclear power is so staggeringly limited, compared to the amount of solar power that rains down on us for free every day without any complex metallurgy, or mining, or anything like that, that if you wanted to build a Kardashev level one civilization, you can’t do it with uranium you can find in the crust. Maybe if you had a fusion reactor and you converted the entire surface of some outer planet moon into fusion reactors, converting the hydrogen there into energy or something, you get close. But just the sheer amount of effort required is insane.
Compare this to a solar panel, which is essentially an inert piece of glass. In fact, solar panels are about as expensive as glass right now, and you don’t need any advanced technology, or labor, or understanding, or certifications or anything to deploy, you literally put it in the sun. It’s easier than planting a veggie patch with your kids and it creates power, and actually not only does it create power, it creates significantly more power, roughly a thousand times more power than the veggie patch does. Modern industrial agriculture, for all its advances, and fertilizers, and crop dusters, and all the rest, plants are wonderful, but plants are not nearly as efficient as solar arrays at converting sunlight into usable energy for us and for our civilization.
And that’s actually the other really cool thing about solar, which is that, I mentioned earlier, we consume about a hundred times more energy outside of our guts than inside our guts, and so you might wonder how much solar do we need to match the amount of land that we already devote to agriculture just to feed us? But because solar is so much more productive per unit area, you actually don’t need very much solar on that scale at all, yeah, which is super useful. Otherwise, we run out of Earths to pave with solar.
I’ll link to a post you wrote, talking about the nuclear cost point, and I found it very persuasive. I was always a, “Yeah, we should’ve done nuclear, we can do nuclear now”, sort of guy. But the cost argument I think was very compelling, and to your point, it’s not just a regulatory thing, there’s inherent cost involved.
CH: Yeah.
But let’s dig into this solar thing. What is driving the cost curve decrease that was forecasted in 2011 that attracted you? And that has absolutely manifested over the last 10 years, famously exceeding every official projections for future costs. It always ends up being cheaper, faster than people realize. What is the driver of that?
CH: Well, so actually even Ramez Naam’s predictions were too conservative. No one, back then, predicted that solar would get as cheap as it has now. If you look at the DOE’s predictions in 2012 for how long it would take for us to get to current solar costs, their best guesses were 2150, and I don’t know if I’ll live that long.
So of course their entire roadmap for decarbonization didn’t include this, but now we have it. Can we use it? Yes, we sure as hell can and we sure as hell should, because it’s a massive gift that enables us to — we don’t have to de-growth in order to stop emitting pollution into the atmosphere. We can build our way out of the climate crisis by just increasing energy consumption and making energy cheaper for everyone.
In terms of how it gets cheaper, well, essentially, as I say, once the technology is inside the tent of capitalism, it’s generating value for people. It tends to attract wealth, it tends to attract capital, and that capital can be used to do things like hire manufacturing process engineers, and they’re very, very clever and they work very hard, particularly probably hundreds of thousands of engineers working at various solar factories in China right now. And sooner or later, they will find every possible configuration of matter necessary to force the price down. So same as with Moore’s law, essentially, we’ve just seen steady improvements.
Yeah, I was going to ask, is this an analogy to Moore’s law or is it actually the same sort of thing? Moore’s law is not a physical law, it is a choice by companies and individuals to keep pushing down that curve. Number one, what I get from you is that’s the same sort of concept here, but number two, are the actual discoveries actually similar to what’s going on?
CH: Yeah, actually to a large extent because it’s a silicon-based technology.
Right, exactly.
CH: There’s a lot of commonality there, but I think Moore’s law is not a law of nature, it’s what we call a phenomenological law, an emergent law. But basically all it says is there’s a positive feedback loop between cost reductions, increases in demand, increase in production, and cost reductions. So provided that the increase in demand, the induced demand as a result of the cost reduction, exceeds the cost reduction for the next generation of technology, you have a positive feedback loop. Otherwise, it’ll converge at some point, right? You’ll achieve maybe a 10x cost reduction and then it’ll stop, and we start to hit diminishing returns on all these technologies. But if you look at Moore’s law, it’s actually a series of maybe 20 or 30 different overlapping technology curves that kind of form this boundary of technology throughout time, and you see the same thing in solar technology if you really look under the hood and see what’s going on.
But yeah, the fundamental thing is there’s just enormous demand for solar at lower and lower prices and so manufacturers are justified in investing the capital they need in order to hit those prices and then the feedback mechanism keeps going. Solar manufacturing itself is a brutally competitive business which is both good and bad, it means like if you decide that you want to compete in solar, you don’t have to be at it for 50 years in order to compete. If you can capitalize, you can build a solar factory and if you’re smart enough and you work hard enough, in five years you can be in the top 20 manufacturers globally which is huge. Talking about billions of dollars of revenue every year just because everyone’s existing capital stock gets depreciated really quickly.
Right. But to your point, it’s also commodity then, right? So how do you actually build a sustainable business?
CH: Well, picks and shovels essentially. So actually one of the things that we like to say at Terraform, and I’m jumping the gun slightly here, but Terraform’s product essentially is a machine that converts solar power into oil and gas, so it bridges these two technology spans. It allows you to arbitrage essentially economically unproductive land that would otherwise just be getting hot in the sun. You throw some solar panels on there, that’s your computing hardware, but that’s not very useful, right? I could hand you an H100 but doesn’t do anything for you until you’ve got software to run on it and the software allows the raw computing power of that H100 to become useful for an end consumer.
In a very concrete form, it’s converting sunlight to intelligence — that’s what we’re going for here.
CH: Yeah. Well, I mean the Terraformer doesn’t necessarily make intelligence-
The H100, I should say, but yes.
CH: Yeah, the H100, but it’s the same basic idea. So like software is a relatively cheap, well you say that, but have you ever tried to develop software?
(laughing) I have. I’m in the middle of it.
CH: The sort of money required to develop proof of concept for software is certainly much, much cheaper than the all new chip fab or something like that, but it drastically increases the utility of the underlying hardware, and the Terraformer is a little bit like that because it takes the solar array, which by itself is a commodity product, but struggles maybe to transport that energy from where it’s produced in the middle of nowhere, to an end market that has someone with a credit card who can pay for it.
What the Terraformer does is it allows a solar developer to convert that power out the middle of nowhere into oil and gas, which is an extremely fungible high demand commodity. It’s also a commodity product, but it’s a different kind of commodity, the amount of money rolling around in that industry is absolutely enormous.
All right. You covered like 47 things, all of which I want to get to so let me touch on a couple of them sort of real quick.
Batteries
Actually let’s run through some of the objections to solar power and then I think that will inherently get to some of these things. So we talked about the nuclear bit, what happens when the sun doesn’t shine?
CH: Yeah, so we’re actually seeing this in California right now. It creates a time arbitrage, right? If you have the ability to store power during the day and then release it during the night, you can make an incredible amount of money and that’s why we’ve seen battery deployments in California, for example, increased by I think a factor of 10x in the last four years, and the effect of that is it’s basically allowing people to transport power, or transport energy, through time in much the same way that power lines, transmission lines, allow people to transport electricity through space.
So what is happening with the battery cost curve? Because if that’s sort of an essential component to make this happen-
CH: Same thing, same story.
For the same reasons?
CH: Exactly the same reasons, same story. Battery manufacturing is probably a little bit more complex and not quite as well-developed as silicon solar panel manufacturing, but we’re seeing year-on-year growth of battery manufacturing. It’s like well over 100%, so it’s actually growing faster than solar, and then the cost improvement’s not quite as steep, but it’s easily like 5% or 10% per year depending on which technology you’re looking at.
In 2021, for example, it was extremely confidently predicted that lithium ion batteries would never get under $100 per kilowatt hour at the cell level and the pack level, and of course Tesla was widely mocked for claiming that they would be able to get ultimately below $100 bucks per kilowatt hour at the pack level. But then again, I think January this year or December last year, a Chinese manufacturer came out with a sodium ion battery cell, which is at $56 per kilowatt hour, so it’s like a 2x reduction in cost on top of what is already considered cutting edge, and we just go down from there.
Now, sodium ion batteries might not be perfectly suited for all kinds of applications, but they’re probably cheaper to produce than the lithium ion batteries. We know they’re cheaper to produce in lithium batteries and they’re more than capable of doing the sort of load shifting required to essentially store power during the day and then use it in the evening.
Are we in a situation already, or do we still have a bit to go, where the sort of combined weighted cost of solar, which is much cheaper than nuclear as you talked about, plus batteries, which sounds like it’s still more expensive now, but when you combine the two is it already lower?
CH: Yeah, so again just look at the data, right — the market reveals its preference. CleanTechnica ran an article almost five years ago now showing that in Texas they were developing battery plants 10:1 compared to gas peaker plants. Texas runs its own its own grid under slightly different rules where you can basically just build and connect and then the grid can force you to curtail if they’ve got overproduction, but that typically means it’s a more liquid market. And even in Texas, which is certainly not ideologically committed to solar, and actually incidentally this year deployed more solar than California did.
Yeah, I was going to say.
CH: Also Texas has the cheapest natural gas in the history of the universe, but they’re deploying more battery packs than they are gas peaker plants 10:1.
Is that because of the arbitrage opportunities?
CH: Yeah, batteries are actually significantly more versatile than a gas peaker plant. So even a gas peaker plant will take five to ten minutes to turn on, whereas a battery plant can switch between taking power off the grid and putting it back on the grid 100 times a second if it really wants to. Obviously in typical operation it doesn’t do that, but also because of that, the versatility, essentially batteries are first in line to make money when there’s a fluctuation in the grid.
Battery operators, this is one of Tesla’s major side businesses in Megapack, battery operators have been making an absolute killing offering what’s called frequency control auxiliary services to the grid. This is incredibly a crusty, finer detail, but essentially the broad brushstrokes are you put solar on the grid, it increases the supply of power, it’s able to push more expensive legacy producers off the grid, which creates instability that creates demand for batteries, put batteries on the grid. Those two things balance each other out and together they kind of form this kind of tag team that collectively, and I kind of wrote a blog about this in 2019, push all the traditional spinning generation out of the market entirely. A little bit like Uber’s do with taxi drivers — it’s a very compelling kind of economic model that becomes the new stable attractor for how grids have to operate.
The issue though is why do we have grids, right? The reason we have grids going previously is we have these huge baseline power generation, that’s the model people have for this, and the entire grid has to be balanced. You have the input of power, you have the consumption of power, it’s massive amounts of complexity. The idea of solar and batteries would seem like the actual optimal application of them and this gets to Terraform Industries, what you were talking about, is they’re completely isolated. They don’t need a grid, it’s sort of a self-contained package.
CH: Yup.
Is this a sustainable long run where you have batteries and solar taking advantage of the grid’s weaknesses to arbitrage and make money? Or is there a path dependency here where because we started with grids, we’re going to always have grids and we’re going to figure out how to make it work?
CH: It will probably depend from place to place and certainly one of the things about solar is that it works better in sunnier places. So you can look at sunnier places and see what the future will be in less sunny places, which I think is kind of neat. But in terms of arbitrage, I don’t want to give the impression that batteries are just sucking value out of the grid, arbitrage creates liquidity that allows prices to work.
Yeah, don’t worry. I think this is largely a pro-arbitrage audience.
CH: But I just want to say there’s a conception that, oh, solar and batteries only are on the grid because they’re massively subsidized and they’re actually screwing everything up. That’s actually, that’s not true. Solar and batteries is what’s keeping the grid working right now, it’s the only thing that’s providing expanded capacity.
The major challenge with additional solar development, particularly here in the States, is we now have this ten-year backlog or kind of development queue before you can connect your solar array to the grid, and the reason for that is the grid is old and it’s kind of overwhelmed, and it’s not able to transport all that power effectively to market.
Of course, one solution to this is just to build more grid. Another solution is to put some batteries on the grid. And, you know, the third solution is basically just build batteries and solar wherever you can, it’s actually working really well.
Then obviously what Terraform is doing is taking this otherwise un-utilized capacity for solar development and then pouring it into another aspect of our civilization’s absolutely unquenchable thirst for energy. Just to give you some hard numbers here, roughly a third of U.S. energy is consumed in the form of electricity and about two-thirds in the form of oil and gas. So even if we successfully electrified huge amounts of ground transportation and also moved all of the electricity grid to say wind, solar and a bit of nuclear and some batteries and maybe some geothermal or something like that, so completely decarbonize the grid, that would only deal with about a third of the economy. Two-thirds of the economy still runs on oil and gas and so that’s what Terraform is here to try and deal with.
One more question on the batteries.
CH: Yeah.
There’s always been, or the common refrain has been, we need a battery breakthrough, we need something completely new. Is the take, and you mentioned the sort of sodium ion, but even with terms of lithium ion, is the actual expectation or is the actual realization in your expectation going forward that actually the technology we have — sure, it’d be great to get a breakthrough, but there’s actually way more improvements and in what we have that will carry us a long way?
CH: Lithium ion batteries are already amazing. I mean, they’ve been around for about 35 years now, I think they were first commercialized for Panasonic camcorders or something and even then they were extremely compelling. They pushed NiCAD [nickel-cadmium] out of the market almost instantaneously, which is the previous battery chemistry and numerous applications. They’re more than good enough.
You say, “Well, I’d like a battery breakthrough”. Why? “Because I want to run my supersonic electric jet off batteries.” Well, good luck with that. But for all ground transportation purposes, for static backups, for all these kinds of applications, not only is the technology already great, it’s got a 30 year history of manufacturing at scale. We know how to make it safe, we know how to make it cheap, it’s extremely compelling and the numbers speak for themselves.
Battery manufacturing capacity expansion is not just happening for no reason, there’s enormous untapped demand for batteries. The way I like to think of it is what’s your per capita lithium ion allocation? Maybe in 1995, you might have a Nokia 3210 with — actually that would be after 1995 — but with a small lithium ion battery in it. So you’ve got 10 grams per person of lithium ion battery and nowadays my family has two electric cars, and that’s probably most of our batteries.
Yeah, now we have laptops, we have computers.
CH: But in terms of the bulk mass, like 400 kilograms per person or something for people to have electric cars and then if you have a static backup battery in your house and then maybe a share of your per capita part of the grid scale batteries and so on. I think it could easily scale to a couple of tons per lithium ion battery per person, particularly in like the more energy intensive parts of the United States.
Is that a large number? No, not really. I easily have a couple of tons per person in terms of steel just in my cars. I easily have probably 50 tons of concrete per person in terms of my built environment. I don’t actually think this is a particularly large number, I just think it’s unusual to see in such a short span of time some product go from the size of your thumb to the size of a large swimming pool, a large hot tub or something like that, in terms of your per capita allocation.
Where are we at as far as availability of say lithium or of all the various rare minerals or rare earths, whether that go into both solar and batteries?
CH: Yeah, I mean, again, I’m not a super expert on batteries, but the cure for high prices is high prices. Lithium is the third most common element in the universe, there’s no shortage of it. You could argue there’s a shortage of lithium refining capacity in the United States, particularly if you’re concerned about strategic vulnerability.
It’s like the rare earth thing, right? Rare earths are not actually rare. It’s just the actual ability to refine them.
CH: They’re super common, and actually solar solves that. It turns out that you can electrically catalytically separate rare earth elements using cheap solar power, more significantly lower environmental impact and much lower cost than traditional refining, and I have some friends working on that.
It is certainly true that batteries, people are concerned about cobalt. Actually, I have some cobalt here, here’s a cube of cobalt on my desk. Cobalt is a fabulous metal, but there’s not a huge amount of it necessarily. It’s not scarce like gold, but the mining situation is not quite sorted out. But at the same time, like almost all the major battery manufacturers use almost no cobalt right now because they’re able to adapt their processes to basically optimize their costs towards the cheaper materials.
Capitalism solves this, we don’t have to worry too much about it, there’s literally hundreds of thousands of chemists out there right now who are solving this problem right now, you don’t have to lose sleep over it, it is a completely commoditized production system.
Solar Objections
What is the China risk for this vision of the future given that a lot of this, particularly solar panels, is made in China? Is there a geopolitical obstacle to achieving this or is the relative simplicity, you mentioned anyone can set up a solar panel plant. Does that make you less concerned about that?
CH: Well, in the United States, particularly since the passage of the bipartisan infrastructure law and the CHIPS Act and the Inflation Reduction Act, we’ve seen absolutely incredible investments. Well over $1 trillion dollars in U.S onshoring and also friend-shoring like Canada and Mexico, production of batteries and solar panels and a million other things, which I think kind of underscores the United States is currently industrializing, or re-industrializing, at a faster pace than any point in its history, including the buildup to World War II.
Obviously, China retains for the moment at least a strong lead in terms of solar panel manufacturing, but they also have really significant domestic load growth and demand, so that’s fine. Now, if China decided tomorrow to ban exports of solar panels to foreign countries, for example, it would probably slow down the deployment of solar in the West by a couple of years. But at the end of the day, the technology was developed in the West. The tooling is built in Germany, in the United States, the factories themselves are built in China for reasons that are really not current anymore. China no longer has particularly cheap labor compared to Mexico, and so I think it’s only maybe 5 or 10 years before we see major changes in the geological or geographical locations of solar plant and solar manufacturing.
But, you know, at the end of the day energy is a race that all humans want to win, want to run and want to win and I think that there’s no need for zero sum partisanship or politics when it comes to solar deployment. Every gigawatt of solar panels deployed saves something like 250 lives per year in terms of averted coal pollution.
Yeah, so one more objection, and then I want to get into some of the more specifics of what you’re building on yourself.
CH: You’re really grilling me here. I like it.
Well, no, I mean, honestly, I find your blog really compelling. I want the, “Why Casey might be wrong”, blog on the other side just because yeah, I buy it.
CH: Sure, I like it.
I’m with you so this is my chance. What happens with old solar panels and old batteries? Obviously this is an objection to nuclear which is nuclear waste, and the good thing with nuclear waste is it’s really not that much. We’re talking about this deployment of massive amounts of solar panels, all these batteries. Where are we at in 10, 20 years if this build out happens? Is that a potential issue?
CH: I’m not too worried about it. And again, you need to look at your waste stream on a per capita basis. If we deployed as many solar panels as I want to, how many solar panels will you end up disposing of? I think if you ground them up it’d be one garbage bag per year. For a suburban family, we probably have 1,000 garbage bags of trash every year that gets landfilled.
But to talk about specifics, batteries I think are prime targets for recycling because the materials in them are essentially, as Elon Musk once said, super concentrated for the raw materials you need to make batteries. There’s multiple companies out there, including Redwood Materials, that are doing exclusively battery recycling, or battery component recycling, which is super obvious. That said, as battery production increases, even if you recycle all the old batteries, it will only be 1% of the input stream or something, but I just don’t see a future where we have giant piles of batteries lying around.
Then as far as solar panels go, they’re like a layer of silicon dioxide, which is glass, a layer of silicon, which used to be glass, and then a layer of silicon dioxide and maybe some aluminum around the edges. Well, you can strip off the aluminum and recycle that trivially, we’ve been recycling aluminum for 100 years, and the glass is glass. You can grind it up and landfill it, it’s basically sand.
People will say, “Oh, what about cadmium or something?” — well first, solar uses a cadmium telluride process to make their solar panels. But again, the amounts involved are trivial, they’re inert, they’re solid, they can’t run or leach or anything like that, I’m not too worried about it. As far as the sort of trash that humans routinely landfill, solar panels would actually significantly increase the purity of our dumps because they’re so inert compared to everything else.
The same goes for old wind turbines, it’s like, “Oh no, it’s a bunch of fiberglass”. It’s basically inert, you can put it in a hole in the ground and it’s not going to destroy the water table or anything. That is quite different to nuclear waste, which is quite a small volume of it but it does need careful handling.
(laughing) Yeah, you can’t throw that in the landfill.
CH: No, you really shouldn’t.
What I think is interesting is you’ve made a couple different allusions — you mentioned the 400 people that would die from pollution or smog or related sort of issues.
CH: Yeah. It’s about 5,000 people in the United States are dying every year directly from the effects of air pollution caused by legacy power plant.
The freak out over nuclear power in the late 70s made no sense because even if you had multiple Chernobyls, it would still actually on net save lives. But that obviously is an argument that failed, right?
CH: It’s not a particularly compelling argument in the court of public opinion, no.
That’s right, it’s arguably a similar thing here. People in societies tend to not properly value the ongoing cost that they’re already incurring. You see this with self-driving cars. It’s like, well, one self-driving car accident, everyone freaks out. They don’t think about the 50,000, 70,000, whatever people that die in auto accidents every year.
CH: Or pedestrians crushed by people texting every day. Shocking.
Right, exactly. It’s just like it’s accepted.
CH: Yeah, it’s like hundreds of people per day in the United States.
But what I find so compelling about your arguments, is do you need to win that argument?
CH: No.
Or basically is it just it doesn’t matter because the economics are so compelling, the right thing’s going to happen regardless?
CH: There are cases, for example, where extremely compelling business models have been crushed by regulation, possibly for the greater good. But in this case, the cat’s out of the bag, it’s going to happen whether we like it or not. To an extent the Inflation Reduction Act could speed it up a bit and something else could slow it down a bit. Actually, the major break right now is the Environmental Protection Agency regulations. Ironically, the single thing that is slowing down deployment of clean energy in the United States, by far the most. It’s absolutely insane.
And this is because of all the permitting process to build out these fields?
CH: Nixon wrote this into law — Nixon, of all people — wrote this into law about 50 years ago. At the time, I think it made a lot of sense that we wanted to safeguard what remained of our environment and make sure that it was a healthy environment for people and so on. But over time interpretations and regulations surrounding it have grown in many ways beyond the intention of the original statutes and the consequence of this right now is that if you want to deploy solar arrays essentially in the middle of nowhere, anyone can sue your project for any reason and will almost certainly slow it down by years and years and years.
As I said before, every gigawatt scale solar plant, that it’s typically delayed by about four years due to litigation in the United States. Any of these projects that’s delayed by about four years, will cost about a thousand lives per gigawatt. To put that into context, last year globally we deployed about 460 gigawatts of solar power, so those 460 gigawatts are saving 460,000 lives from the effects of mostly coal-powered coal plants, pollution that they’re displacing all over the world. But if we could double that deployment rate, we would save another half a million lives next year. These are big numbers, right? This is comparable to the number of Americans that died from the effects of COVID. In many cases, people with already compromised respiratory systems as a result of lifelong exposure to industrial pollution and air pollution and smoke from coal plants were the people who were taken off by COVID.
So it drives me nuts, the situation you’re in. Basically, their hands are bound by statute, but the Environmental Protection Agency and NEPA, the environmental protection laws, should absolutely be saying like, “Oh, you want to deploy a solar plant? Yes, of course. Off you go, we’ll give you some money, please, as fast as you can”. Instead of, “You have to go through exactly the same impact process or environmental impact statement process that every other plant or project has to go through, it takes 15,000 pages and four years”. It’s absolutely insane!
Basically on an economic perspective, you don’t need to make the case. The economics are super compelling. But we are back at the regulatory issue.
CH: Yeah. Well, the regulation just slows it down. It cannot stop it, it will not stop it, it only slows it down.
There is a traditional environmentalist view, or maybe not traditional is the right word — like old school, like you go back to John Muir — it’s sort of this preserving the natural environment, not necessarily about climate change or global warming. I guess I had one more objection for you to answer to solar. Isn’t that a fair question given the fact that the function is area and there’s that one picture from China that everyone always posts of a bunch of solar panels on top of a bunch of mountains.
CH: Yes, pretty sick.
Whereas take nuclear as an example, is very compact? What’s your response to that one?
CH: Yeah. I have a lot of respect for John Muir and the conservation movement in general, I named my first born Yosemite for that reason, so I think I have strong credentials on that front.
It’s important to remember that in the United States there are currently a huge number of states, maybe 5 or 10 states, mostly devoted to corn and soy production or other forms of agriculture, extremely intensive monocultures with basically no vestiges of the pre-industrial landscape there whatsoever.
Yeah, I’m from the Midwest so I am well aware.
CH: Exactly. Like there’s enormous plains bison used to roam on and the amount of area in the Midwest that hasn’t been converted at one point or another for industrial agriculture is vanishingly small. The number of prairies that have never been plowed is vanishingly small. So in the United States right now about 50 million acres — that’s a very, very large amount of area — is devoted to production of corn for biofuels, corn and soy for biofuels now.
Which is just a terrible technology.
CH: I’m not a huge fan myself, but it’s important to note that if we deployed 50 million acres of solar arrays in say a less economically and less ecologically productive part of the United States, like out here in the West where it’s dry and there’s a few plants but not much else going on, we could produce enough oil and gas to meet more than half of current U.S. demand.
Then, 50 million acres of biofuel corn could be rewilded and allowed to go fallow and we could reuse plants there and then at the same time increase production by a factor of between 20 and 100 with a solar synthetic approach to making the same chemicals. Only our chemicals are like 97, 98% pure right out of our machine whereas biofuels necessarily have these side product waste products and so on.
At the end of the day, I love corn, I ate corn chips just before this interview because that’s my nootropic of choice. But at the end of the day, corn can try hard, but it can’t compete with solar panels.
So this is very compelling, I love that analogy. You take the exact same amount of land devoted to biofuels, you devote it to solar, you put it in a place where no one goes anyway, like the deserts in the West, and there’s lots of sun there and I think this gets to Terraform Industries, if that happened, let’s fast-forward and the forest and the woods come back to the Midwest, the Great Plains, well the Great Plains we could probably put solar there too. There’s not much going on, I can promise you that.
CH: Well, a little bit. You put solar here and there so you can have a mix of traditional agriculture and then some solar which has a hundred times higher economic productivity. So suddenly money is flowing into these communities for the first time in a century, and then you can also rewild vast stretches and have continuous areas where migratory animals can move through and so on. I think this is a much more aesthetic model for how we can fix some of the excesses of the past by going to future.
At the end of the day, it’s not my choice, I think it’s right obviously, I can advocate for it, but I think in terms of our impact on the environment, the best thing we can do is switch to synthetic fuels as quickly as possibly can. By the time we’re done, we’ll be synthesizing animal feed and stuff as well so we can reduce the other 150 million acres that are used just to grow feed for animals.
Localized Energy
But to that point and you putting it in different places, in this future, this gets back to my grid question where, what is the challenge of say building a solar plant in the middle of the desert? You have to move that energy to a different place. There’s lots of challenges there. There’s huge regulatory challenges, there’s just efficiency challenges, the amount of energy that gets lost in transmission, all these, you end up with these major sort of dependencies on what, 30 major transformers in the US, and they’re all unique and if they got taken out by an EMP pulse or something, we’re all screwed. There’s a sort of fragility and brittleness to that versus, and you can tell us more, I think about Terraform in this answer, this idea of you have self-contained power and production that becomes something else. So this is the gigawatt data center in the desert that’s doing AI training, or it’s making oil and gas or desalinization, which I think is another interesting aspect. Where do you see the balance of that in the long run?
CH: So you can wave your hands and prognosticate a little bit about where we think the economy is going to go, and I’m in particular extremely bullish about future economic growth driven by cheap energy, so I think we’ll see a lot of increase of energy production, but mostly ideally local to its consumption. So people’s rooftop solar and people putting solar around new chemical plants, new data centers, solar desalinization, whatever the case may be, you’re only the fifth person today to ask me about AI training data centers, solar-powered in the desert. So it’s clearly something in the water.
Well, you wrote a blog post about it, so you bring it on yourself.
CH: Yeah, I bring it on myself, that’s how I think about it.
Sort of your life story.
CH: It’s my life story, exactly.
Then obviously over time there’s a compelling economic reason to continue to electrify heating and cooking in houses, there’s a bunch of startups we all know about that are working on this. Obviously electric cars are extremely compelling, electric trucks not far behind, maybe ultimately electric ships for moving stuff around. Electric trains is a no-brainer, aviation obviously will almost certainly continue to be fuel-based.
The energy density of kerosene is unmatched.
CH: Yeah, exactly, and then the high temperature chemical and materials processes, industrial process in certain factories like production of plastics and other chemicals, which really depends on molecules — it’s based on oil and gas.
One of the things I like to say is that oil and gas is so common in our civilization, it’s invisible because every single thing that you see with your eyes is a surface that’s reflecting light, it’s usually pigmented or made of plastic, and that pigment or plastic is made of oil or it’s made of natural gas. So unless you go outside and look at a tree, which is ultimately made of a kind of plastic also derived from sunlight and air, it’s extremely difficult to lay your eyes on anything that’s not made of hydrocarbons and obviously, so we’re extremely bullish about growth.
Now it could be the case that there’s zero growth. It could be the case that the oil and gas industry just motors along at about $8 trillion of revenue per year, which is about $1 billion per hour. So just in the time we’ve been talking, it’s $1 billion, which is just insane. But I actually think that once we unlock these cheaper forms of hydrocarbons that it will promote substantial growth, particularly in the energy-intensive industries.
So just to underscore the vision here, I get really, really fired up about this, because when I think of aviation and how amazing it is, and how we’ve only had it as a species for about a hundred years, and it’s only really been something that we can enjoy in jet transport for maybe 50 years. But actually the people who routinely fly on aircraft, and I know that you’re one of them because you’re an expert obviously, and myself, it’s probably only 50 million people on earth who’ve ever had that experience of flying in a jet, I don’t know more than 10 times in their life. Wouldn’t it be incredible if that number was 500 million or 5 billion, but to get there from here in terms of fossil fuel consumption, emits a lot of CO₂, but it also requires a huge amount of fuel. Aviation currently consumes about 2% of the world’s oil and gas just to fly less than 1% of the world’s population around, and so obviously we need to bring on a new source of fuel.
So when you think, well, what is a nice climate-positive version of aviation? Is it like the European model where we force airlines to make customers pay for carbon sequestration or carbon credits or something like that, which is either extremely expensive or extremely fraudulent or both, but in any case makes aviation more expensive and less accessible to people, just makes it more exclusive? Or do we say, “Why don’t we solve both these problems at once, and just bring online enormous new supply of high quality, cheap gas and natural gas for the future liquefied natural gas powered supersonic aircraft?”
At the same time it just happens to be carbon-neutral, so you don’t have to worry about CO₂ emissions, it’s not polluting the atmosphere with new CO₂ from the crust, and at the same time, instead of Boeing producing 500 aircraft a year, Boeing and maybe a few more startups can be producing 10,000 aircraft per year to service this kind of massive explosion in demand driven by economic expansion. That is a sick vision, that is so cool, we should absolutely do this as quickly as we can.
I think whether or not Terraform plays a huge role in this process or not, and I’m certainly intending for it to be — currently we’re leading this process — the economics is inevitable that we’re going to switch over to synthetic fuel sooner or later, and when we do, it’s going to get really, really cheap because we’re running it off solar power and when it gets really, really cheap, we’re going to do amazing aviation and other energy applications, and increase manufacturing and maybe some little bit of geo-engineering on the side to keep things in check, increase water supply in dry areas and so on. Why wait until 2060? We could have this done in 2040 if we just apply ourselves the right way and find the right business model.
What’s the balance here? One thing you mentioned with Terraform Industries is that gas and oil is fungible and it’s fungible in multiple ways. It’s like you can buy any oil, gas, it’s all the same, but also it’s transportable, it’s movable in both time and space, those sorts of things.
To what extent is your opportunity a function of, “We have this huge opportunity in solar, we need to make something and there isn’t sufficient grid capacity to actually take over all the grid right now” versus regulatory challenges? I’m just trying to understand the drivers in the ecosystem broadly, because this idea, again, maybe I’m anchoring on the AI data center sort of thing, it’s a lot easier to build a fiber optic line that moves data than it is to build a power line that moves it for lots of reasons. So this idea that you have a self-contained powered data center, obviously it has to be way overbuilt on batteries, because you need to be utilizing your H100s or H900s or whatever we get to, all the time.
I’m not sure what I’m driving at here, but it seems there’s this balance between the grid path dependency we have today versus this completely federated, isolated pockets of energy production. I’m very intrigued by this because it seems like this could completely reorganize so much of society. You go back to the formation of cities, they’re all around rivers because that was lower cost, transportation of goods.
CH: And local agricultural land. Yeah, because you have to carry stuff around all by cart, you didn’t have refrigeration, you didn’t have trucking.
Yeah, exactly. If all of energy becomes localized and self-contained, how does this play out?
CH: I think it’s a huge positive, and I think one of the challenges we face conceptually is that when people think of oil and gas, they think it’s all in Saudi Arabia and maybe parts of Texas or something, but it’s certainly not evenly distributed around the world, whereas solar power is pretty much evenly distributed everywhere that people live. There are some of the world that are exceptionally sunny in some parts that are exceptionally cloudy, but very, very few people live there.
But I think there’s this opportunity for a different energy future where we shorten the energy supply chain very drastically, and that has all kinds of unbounded upsides for people all over the world who are at the wrong end of a very long supply chain, or they have local security problems that they’re unable to fix for themselves. Not every country has the US Navy to ensure that the supply chain stays open — the US Navy keeps everyone who imports oil by sea keeps their supply chains open. So like China imports about 12 million barrels of oil a day from the Middle East on shipping lanes that are policed by the US Navy, which is insane, but I think certain countries are extremely geopolitically vulnerable to oil supply chain interruption by adversaries, and I think that in the efficiently, distant future, that will no longer be the case.
I also think that maybe making H100s will be quite difficult even in a hundred years, but certainly if you wanted to build the solar array and the batteries and so on to power local industry doing any number of things, whether it’s metals or desalination or whatever, that’s certainly something that could be localized in probably dozens of countries, I think, would be able to stand up that sort of supply chain.
I think it’s a huge positive and also the amount of capital that we would have fork over to build and maintain this extremely long-distance energy transmission infrastructure that we have would diminish, and so I think over time we’ll probably see the grid, and this is actually probably my most controversial take, kind of prune and decrease in size much in the same way that the US rail network has halved in size over the last a hundred years just as the unprofitable lines or unprofitable routes are not used anymore. I think it’s super cool.
That is your same point about oil and gas, it just makes all kinds of sense to use kerosene for jet fuel. The energy density is that’s the one area where that’s what matters more than anything, and you need oil and gas for plastics. Plastics are pretty important that need’s not going to go away, it feels like one of your arguments is that solar is sort of anti-fragile in a certain sense.
CH: Oh yes, for sure. Already the batteries we put on the grid have significantly reduced the fragility of the grid, made it much more robust, much more resilient. We see that every time a major storm rolls through Texas.
That’s the point, the more variability there is in the grid, which should usually take it down, and this the anti-fragile bit, it’s not just that it reduces fragility, it actually benefits from upheaval, and that’s that arbitrage story. When the grid is the most fragile, that’s when the batteries are the most profitable.
CH: Yeah, I mean in this transitionary period, the battery operators are making an absolute killing, but I think in 20 or 30 years, everyone has a 50 kilowatt-hour battery pack in their house. We no longer have to invest this sort of money that is bankrupting PG&E, ensuring that we have 99.9% uptime on every corner of the grid. It’s supplying power lines that run through hundreds of miles of densely forested mountains to get to remote communities, I think it’s absolutely insane that we spend so much energy and time doing that, and so I think that’s also to the good. That’s a significant improvement in the human condition, if we can take that capital and invest it in other things that are more productive.
Terraform Industries
I need you to do my job better than me. What is the limitation or what will stop this from happening? Or is it just so clearly inevitable to you that it’s hard to articulate a counter case?
CH: As a physicist or a mathematician, I like to think about existence proofs, and the existence proof is that all the underlying technology required to do this has been understood for a hundred years, and until maybe five years ago, solar was nowhere cheap enough to make this worthwhile. So you could do it just lose a lot of money, but as solar gets cheap enough, it doesn’t really matter which process you choose, there’s probably 300 different approaches that Terraform could have taken. We think we picked the right one, but there’s plenty of other companies out there trying different ones and it’ll become pretty clear.
And the approach being that you’re going to be making oil and gas or what is specific about your approach that you think is the right one?
CH: Just the specific chemistry of how we go about turning electricity into oil and gas. But there’s many, many, many ways of skinning that cat, which is great. We’re spoiled for choice.
How does it work? Give the non-physicist overview of how Terraform works.
CH: Yeah, sure. So from a customer’s perspective on the outside, essentially what a Terraformer does is it allows you to build your own oil and gas well in your backyard, regardless of the fact that you don’t own a drill rig, and in fact you don’t live anywhere near where oil and gas occurs naturally, which is again pretty cool. But how does it work under the hood? Well, it consumes electricity and most of that electricity gets used locally.
Actually I should state the Terraformer itself sits in the solar array, and that’s to reduce the cost of transmission of electricity, which would be absolutely prohibitive in this case, and the electricity gets used to capture CO₂ from the air and to split water into hydrogen and oxygen. We throw the oxygen away like trees do, we take the hydrogen and we react that in a classical old school chemical reactor with the CO₂ to produce methane and water. Then we can separate the water out because it condenses at a much higher temperature from the methane and we’re just left over with methane plus a little bit of leftover CO₂ and hydrogen and a tiny bit of water vapor. That’s natural gas, right?
Actually, when you get natural gas out of the ground, if you did have a drill rig and you did live in a place where natural gas occurs and you drill a hole in the ground, gas comes out. Well now you’ve got to build a well top and a bunch of other stuff that’s actually really complicated, and you might have a blowout and then what comes out of the ground is like between 10 and 80% natural gas and a bunch of other contaminants on top of that which have to be removed before you can sell it.
We don’t have that problem. What we produce is the pure product. It’s really compellingly elegant the way we do this. There’s no geology risk, plug-and-play once you plug it in it just generates a predictable amount of gas every day for however long the system lasts, which is most likely measured in decades.
In this case, you don’t have a battery capital cost, I presume it only runs when then suns out, right?
CH: Yeah, that’s absolutely correct. And I’ll say for anyone who’s considering doing a hardware tech startup, well, there is basically a recipe that we’ve stumbled upon for taking any existing industry and then applying it to solar power and getting the benefit of that extremely cheap power.
The first is you have to get the CapEx way, way down because your utilization is low, you’re only using your plant maybe 25% of the time, so you have to get the cost down by at least a factor of four. Then on top of that, you also have to make it compatible with the sun coming up and going down. So time variability, which is difficult, but not impossible. We have many processes that we can routinely throttle up and down in our everyday lives so you understand this intuitively, but if you can do that, and it sounds impossible, of course, “I just want a chemical reactor that’s 1/10 the size and 1/4 the cost and I can ramp it up and down”.
Well, the way you make this work is you just use more power. So you say, “Well, I don’t care about efficiency quite as much because my power is so cheap”, and that’s what makes it easy. But if you can do this, then you have —
You have to change that core assumption. Whereas almost every invention today is all about increasing the efficient use of power, and the whole point of solar is, “What if we assume power is basically infinite, but it’s bounded by time, then what would we do?”.
CH: It’s like cycles in your computer are basically free or on your cell phone or something.
I just want to double down on this because this was the key thing about Moore’s Law and the way it played out is, and this is I think the gating factor for AI in some respects today, which is the moment you cross over to assuming that compute is free, then everything changes. Right now with AI, it’s not there because everyone is very cognizant of the cost of inference, it’s whenever we cross over to the point that inference is free, that changes things in a substantial way. You’re making the same point just like with the core unit, which is energy.
CH: That’s exactly right. So the key is take an existing process, let’s say aluminum refining, adapt the Hall-Héroult process, which is what we use to produce it to be able to operate intermittently, find some way of making CapEx a bit cheaper but consume twice as much electricity as you otherwise would while still making more money. You can essentially turn that entire industry on its head.
In particular because of the relative cost reductions of solar, I saw a prediction a while ago that said that aluminum is quite a bit more expensive than steel, but it’s also quite a bit stronger per unit mass. But that ratio is going to swing drastically in the favor of aluminum in the next 5 or 10 years because of our ability to use cheap solar to produce it, which means we could even see aluminum rebar, which kind of screws my brain a bit, but there’s probably 15 or 20 different industries that are extremely power-intensive that make particular materials, whether it’s different kinds of metals or refining metals or different kind of processing or making fresh water from salt or cement. I’ve kind of got a laundry list of these industries that I would be working on if I wasn’t working on fuel.
Desalination seems like a potentially massive win here and very pertinent to the American West for example. But this idea that if you assume energy is infinite, we’re not short of water on earth, we’re sort of water without salt.
CH: That’s right, yeah. I mean there are some places where it’d be relatively difficult to transport even fresh water from the ocean, but in California that’s not the case. California is at the end of the Colorado River, which is declining, and California of course has senior water rights, we take about 5 million acre feet of water per year.
So unlike Terraform, which is definitely developing new proprietary technology in-house, it’s quite exciting, but with solar desalination, you don’t need any new technology. You just go and build a plant essentially with stuff you can buy off the shelf. How much would it cost to build a plant that is able to substitute 100% of California’s water extraction from the Colorado River, essentially doubling Southern California’s water supply, and at the same time allowing you to fix the Salton Sea and also set up a massive light metals industry and a bunch of other things? And you need about $50 billion over 10 years, which sounds like a large amount of money, but as you said—
No, it doesn’t. I work in tech, it doesn’t sound like a lot of money.
CH: Well, what’s the marginal value of basically making that area around the Salton Sea, which is south of Palm Springs, habitable, just like the real estate lift there, would be measured in tens of trillions of dollars. So this is something that should obviously be done and we couldn’t do it five years ago with solar, but now we can and in five years it’ll be extremely obvious that we should have done it five years ago and it’s just almost a human welfare story.
The Salton Sea is a mistake, right? It was a result of an irrigation disaster accident 120 years ago, and we can now fix that, we can now stabilize that huge lake, stabilize its level, stabilize its salinity, allow fish to live in it again. It’s too saline right now for fish to live in and allow the communities around it to prosper and at the same time develop this massive industry here in the United States. We should definitely do this and if I can help in any way, I’d like to, again, if I wasn’t working on Terraform, I’d probably go and set that up to the best of my ability.
So again, what is stopping this? Is it just a matter of it’s going to happen, it’s just when? It’s basically these environmental regulations that just prevents you from building as many as you want? You talked about, “Solar panels are going to pave the planet”, I think is the phrase that you used on a recent post, is there a bit where it’s good to go slow so we don’t pave where we shouldn’t? Or are the payoffs just so large that we’re just being absolute idiots by not moving faster?
CH: I think we could definitely move faster. When it comes to the solar desal project in Southern California at the full scope of the blog post that I outlined, that would require an act of Congress because it would require negotiation with Mexico over water rights and things like that, which ironically allows you to get around all these aspects of the environmental protection regulations because once it’s authorized by Congress, they can basically put in a stipulation there that that’s okay, which is cool, but that would be the major obstacle to deploying something of that scale. Whereas with solar deployment for power or solar deployment for natural gas or oil production, that’s just kind of an inevitability that capitalism is taken care of as we speak.
Now as far as paving the world with solar, if in 50 years we come out with fusion power, that’s much, much better than solar, great, wonderful. I want fusion. I could have been working on fusion right now, but I think fusion is obviously what we need to fly to Pluto and back in a lifetime, for example. But then what do you say? Well, we take the solar panels that are currently, say, covering half of Nevada, and we just take them off the racks and pile them up somewhere in case we need them again, and then those areas go back to being the same desert that they were before. Except there is one ironic environmental impact of solar panels in these desert areas, which is they increase shade on the ground, they decrease surface temperatures, they increase moisture retention.
It reverses desertification.
CH: Yeah, they increase plant growth, which is absolutely insane. So it turns out that one of the major obstacles to solar plants deployed conventionally in say Nevada or parts of California in 50 years or 20 years is that maybe trees are growing. Trees have not grown here for thousands of years, the whole area was very lush 10,000 years ago, but it’s dried up since then, where trees could be growing between these panels and I think that would just be so hilarious. It’d be so amazing to see that, but it’s easy to get ahead of ourselves in that regard.
But certainly I think that California’s very forward leaning development of water distribution infrastructure, which was really very, very cutting edge with Hoover Dam and so on about a hundred years ago, one of my heroes, Henry Kaiser, was involved in developing all that irrigation stuff was the best they could do at the time with recently invented concrete, and hydroelectric power plants and stuff like that had only just been invented. But we can do a lot better now and we can kind of lift our boot from the neck of some of these environments that are really damaged. In particular the Imperial Valley and the Owens Valley and parts of the Central Valley as a result of basically us doing the best we could with what we had a hundred years ago, but we can do a lot better now.
Well, we didn’t even get to space, I didn’t ask you about the Vesuvius Scrolls, where you cracked the code.
CH: Yeah, I’m sorry that we’re running out of time. I think the more people who can work on this the better. There’s a huge talent pool kind of scratching their heads, wondering what’s next in tech and maybe not everyone wants to work on AI, and you should definitely work on hardware if you can, and Scrolls in your spare time.
The nice thing about hardware is that it’s a challenge that can reward you for decades. I like to say the best time to start working on hardware was 10 years ago and the second-best time is today. But all these projects, it’s fallen to our generation to do these things and we better damn well do them as quickly and as cleverly as you possibly can. But there’s almost infinite demand for talented smart people to go and apply themselves and learn new skills in these areas.
Casey Handmer, that was super interesting. There’s plenty of scope I think, for follow up, so we should definitely talk again sometime. But yeah, I mean it’s exciting, it’s good news, the idea that this potential is out there and I appreciate taking the time to walk through it.
CH: Oh, it’s been an absolute pleasure and thanks so much for all the great questions. It’s like a month’s supply of really tough, interesting, hard, fun questions in a single conversation.
This Daily Update Interview is also available as a podcast. To receive it in your podcast player, visit Stratechery.
The Daily Update is intended for a single recipient, but occasional forwarding is totally fine! If you would like to order multiple subscriptions for your team with a group discount (minimum 5), please contact me directly.
Thanks for being a supporter, and have a great day!
Subscribed
ABOUT THE FOLLOWING ACCESS TO LLAW’s ALL THINGS NUCLEAR” RELATED MEDIA
There are 7 categories, with the latest addition, (#7) being a Friday weekly roundup of IAEA (International Atomic Energy Agency) global nuclear news stories. Also included is a bonus non-nuclear category for news about the Yellowstone caldera and other volcanic and caldera activity around the world that play an important role in humanity’s lives. The feature categories provide articles and information about ‘all things nuclear’ for you to pick from, usually with up to 3 links with headlines concerning the most important media stories in each category, but sometimes fewer and occasionally even none (especially so with the Yellowstone Caldera). The Categories are listed below in their usual order:
- All Things Nuclear
- Nuclear Power
- Nuclear Power Emergencies
- Nuclear War Threats
- Nuclear War
- Yellowstone Caldera & Other Volcanoes (Note: There are three Yellowstone Caldera bonus stories available in today’s Post.)
- IAEA Weekly News (Friday’s only)
Whenever there is an underlined link to a Category media news story, if you press or click on the link provided, you no longer have to cut and paste to your web browser, since this Post’s link will take you directly to the article in your browser.
A current Digest of major nuclear media headlines with automated links is listed below by nuclear Category (in the above listed order). If a Category heading does not appear in the daily news Digest, it means there was no news reported from this Category today. Generally, the three best articles in each Category from around the nuclear world(s) are Posted. Occasionally, if a Post is important enough, it may be listed in multiple Categories.
TODAY’s NUCLEAR WORLD’s NEWS, Tuesday, (02/25/2025)
All Things Nuclear
NEWS
Report: Iran nuclear facilities on high alert for surprise ‘Israel-US strike’
Israel Hayom
“They [Iranian authorities] are just waiting for the attack and are anticipating it every night and everything has been on high alert – even in …
An Interview with Terraform Industries CEO Casey Handmer About the Solar Energy Revolution
Stratechery
Like many of you, I have been a long-time advocate of nuclear energy; Handmer makes the case, though, that solar is simply better in every way. To …
Local providers wait for more information on Trump energy executive orders | KBIA
KBIA
All Things Considered. Next Up: 5:00 PM To the Best of Our Knowledge. 0 … The utility is planning for new nuclear energy generation by 204
Nuclear Power
NEWS
How the Energy Secretary Can Achieve His Goal of Next-Generation Nuclear Energy Deployment
Center on Global Energy Policy – Columbia University
This commentary describes the underpinnings of interest in nuclear reactor designs the Nuclear Regulatory Commission (NRC) collectively calls “ …
Time to Make Nuclear Energy Great Again | RealClearEnergy
RealClearEnergy
It provides nearly 20% of our electricity and over 50% of our carbon-free energy, yet we treat it like a problem rather than a solution. While wind …
Slight increase in nuclear power production in 2023 – News articles – Eurostat
European Commission – European Union
In 2023, 13 EU countries with nuclear electricity production generated 619 601 gigawatt hours (GWh) of electricity, an increase of 1.7% compared …
Nuclear War Threats
NEWS
Broken promises and nuclear shadows: Ukraine’s struggle for security – KXLH Helena
KXLH Helena
… War resurface as stark reminders of a fragile peace. … The desire for peace is tempered by the harsh reality of ongoing military threats, with …
Arghchi: Israeli nukes threaten global peace – Tehran Times
Tehran Times
… war. ‘US, UK are expanding nuclear threats across globe’. The Iranian Foreign Minister called out nuclear-armed states, particularly the United …
Incoming German chancellor’s call could lead to nuclear proliferation, says expert – Daily Maverick
Daily Maverick
… threats to use nuclear weapons throughout Russia’s war with Ukraine. Merz’s Christian Democratic Union/Christian Social Union (CDU/SCU) party won …
Nuclear War
NEWS
Ukraine war: game theory reveals the complexities (and fragility) of a nuclear deterrent
The Conversation
And any country with nuclear weapons can offer guarantees of peace to others. This is what happened in 1994 when Russia, the UK and the US signed the …
Top Scientist Warns Against the Existential Threat of Nuclear Weapons – IDN-InDepthNews
IDN-InDepthNews
… nuclear war. Such policies were very visible in the context of some now rightly discredited policy makers of the Biden administration and their …
Ukraine-Russia war: US sides with Putin at UN vote after Macron hails ‘turning point’
The Independent
“Yeah, he will accept it,” Mr Trump said. “I have asked him that question. Look, if we do this deal, he’s not looking for World War.”.
Yellowstone Caldera
NEWS
“It’s restless” — Not Yellowstone, but this supervolcano has America on edge
ECOticias.com
Scientists are monitoring California’s Long Valley Caldera supervolcano as it shows signs of unrest. Its history, seismic activity, …
The Secret World of Yellowstone’s Supervolcano: Could It Erupt in Our Lifetime? – MSN
MSN
Welcome to the enigmatic realm of the Yellowstone Supervolcano, a geological marvel that has both fascinated and bewildered scientists and …
EXPLAINER: How to see Hawai’i in YNP – Buckrail
Buckrail
YELLOWSTONE NATIONAL PARK — In this week’s Caldera Chronicles, the Yellowstone Volcano Observatory (YVO) compares the famous volcanic systems of …