How Solar Turned The Price Curve Upside Down - AES Clean Energy

Clean power is cheap, but sometimes it's cheap in the same way a thirty dollar flight is cheap. It sounds like a great price, but the timing is awful. It leaves at three in the morning, and it includes a nine hour stopover. Solar works a little bit like that. It floods the system with power in the middle of the day, and prices crash.

But then the sun sets, and demand rises as people get home from work, And prices spike as a result. Today's guest is Terry Embory, vice president and head of trading and market operations at AES Clean Energy. His job is all about the timing problem.

He helps turn renewable power into contracts that actually work, hour by hour.

For a while, clean energy deals looked easy.

Power was cheap. Prices were predictable.

But now, if power prices are lowest when the sun is shining, what incentivizes solar? If battery profits get hit as more projects show up, why bother building more? With data centers growing faster than grids, what happens next?

If the market doesn't reward your project, you look elsewhere.

Quietly, long term power purchase agreements, especially with big tech companies, are becoming the backbone of the new clean energy economy.

Ultimately, it's predictable revenues and not just cheap power that decides what gets financed.

But before we start, I have something to ask you. We want to give transmission a bit of a glow up, and we want you to tell us what's working and what isn't.

So we will put the link to a survey in the show notes. If you could take three minutes to fill it out, we would be very thankful.

Thank you. I'm Alejandro Adiego, and welcome back to transmission.

Thank you very much, Terry, for joining us today.

Could you start by introducing yourself, what your role is within the energy industry and AES, and what AES actually does?

Sure. So Terry Embry and I work for AES here in the Houston office. I am the vice president of trading and market operations.

I believe I've got fourteen traders, fifteen people in market ops, and then we've got a couple of other groups. AES, the company, is a big developer.

Our main customer base is is the the data centers, the big tech hyperscalers, Microsoft, Google, Amazon, Facebook, Neta.

But that's that's one part of the company, a very large part. Once the deals are done and the deal is real, we're gonna actually build something for a hyperscaler.

My group would then manage the project once it's we manage the risk in the deal from inception when we say it's real. So it's gonna take x amount of time for it to to start building and then go all the way up to now we're making power with it.

But there's also risk out there. It could be basis risk. It could be some length that the off taker, the the PPA buyer didn't take. It could be a multitude of other things that we manage, but we're managing all those things all the way from when you sign the deal all the way through when it's operating and to the end of the contract.

Okay, great. Thank you for sharing that. Yes, in simple terms for everyone to understand it in the audience, when a data center customer approaches you, they basically hire you to design and build the plant and later to operate and maintain them. Is that correct?

Yeah. So they're generally the they want us to own and operate.

They take the physical power, they want the renewable attributes as well in most cases.

Sometimes they want all of the attributes of the plant, sometimes they don't. The pieces that they don't will manage. The pieces that they do, we'll get to them.

Okay. Great. And is all of your development on-site generation behind the meter or is it also sometimes front of the meter?

Almost all of ours is utility scale front of the meter. We've got the largest battery, for example, in California that's that's operating in the US, five hundred megawatt Belfield. It's associated with a five hundred megawatt solar plant as well.

I will touch up on that battery plan a little bit later on on the episode for sure. In which regions do you operate in the US and if so, globally as well?

So, I only manage the the US, so that's really all I can I can dig deep into?

I know that we are in South America and we are in Europe, but I I don't know the specifics. In the US, we are in every market except for Cirque, the southeast US USA.

So from, like, South Carolina down all the way to Florida and then over to roughly Louisiana, Alabama area, that's the the one area we're not in yet. Okay. But we are actually looking at projects right now. Okay.

Great.

Now jumping to your trading sites.

You have traded across the whole arc, you have a lot of experience in the trading world and the energy industry. What's one specific recent market moment that captures how different clean, heavy grids with high renewable penetration feel compared to even five or ten years ago?

When I read this question earlier, I was thinking what what stood out to me? And everybody's been following the whole duck curve in in California. Everybody saw that developing and then you go, oh, that's interesting and and that was really caused by a regulatory laws that came into effect that said you will build all this solar. If you're gonna build new new construction, you have to have solar panels. So there was a massive overbuild of solar in California that everybody else was watching going, that's interesting and it's causing this low prices during the middle of the day. Sometimes negative.

And when solar started to move into ERCOT, there's in my mind, I was like, ERCOT is an open market. It's not being forced to build this stuff. There's no way that it gets to that type of duck curve very quickly. If it happens, it's gonna maybe be a flattening.

It's gonna but it's gonna take a while because it's an open market and you have so many other market forces happening rather than just a regulatory push.

But it happens so fast in Urshad. We we in roughly three years, we went from a normal I say normal, but a normal non duck curve kind of a hourly price shape to now all of a sudden we have a very California like duck curve.

And I never would have I would have bet against that. I would have taken the over by several years for sure.

From a trader's perspective, when these moments are coming or big changes are happening in the market, how do you think about the opportunities that arise and about the different technologies to make use of those opportunities? And how do you assess the timelines and timing to capture those opportunities?

Yeah. Based on what I just said, I would've I would've been making the wrong trades if if those were available at the time.

That event, that that happening created markets that we saw coming that weren't there before.

Usually, you trade a six by sixteen product or a five by sixteen, depending on the market. Can you explain what that means for our audience?

Sure. That's five days a week, sixteen hours a day, and depending on which market you're in, could be seven to twenty two, I run seven in the morning, twenty two at night for ten o'clock.

Yes.

Or eight to twenty three if you're on the East Coast.

But and again, a five by sixteen five days a week or six by sixteen in California, and then the weekends.

And then the nights, the one by eights. So usually those are the blocks that are regularly traded. But now a a solar block and a non solar block has also developed in the market. So you can actually trade that duct curve shape against the non duct curve when the the solar's not there.

Okay. Thank you for sharing that.

You have a big portfolio in Kaiso, in California. Where does the value of that battery portfolio actually come from in Kaiso? And how does it compare to the value coming in ERCOT?

Let me answer the first part. The value in California, I would say it comes from, in general, three different buckets. Whether it be capacity, energy, and ancillaries.

Capacity in California is called resource adequacy or RA. So that's that's usually a pretty big bucket of value for the battery. In California, they're all four hour batteries versus ERCOT which is only one to one and a half hour batteries for the most of them. I think people are just starting to look at longer duration, two, maybe four hours, but that is to my knowledge, that has not happened yet.

So, again, four hour batteries, RA and Kaiso is is a good bit of the value. Roughly, call it, nine to ten dollars a k w a month. The energy, you're really looking to capture the top four versus the bottom four hours. So the bottom four the the highest price four hours is where you wanna discharge. Yeah. You wanna charge during the very lowest four hours.

And so that's kind of the minimum level of energy capture you're looking to to capture with the batteries. So then you've got the capacity, you've got the energy capturing the capturing the TV four, and then ancillaries is like a kind of a bonus bucket Yeah. So to speak. Generally speaking, you've got roughly fifty to fifty cents to a dollar per kw a month ish in ancillaries.

The more batteries that pile into this market, the more those markets get crushed. Not only the the t v four getting flatter, so it used to be very peaky, now it's getting flatter. In the ancillary markets, when batteries first came in, we were looking at, call it, I don't know, three to seven dollars a k w a month. Now you're looking at closer to fifty cents to above.

And compared to ERCOT in terms ERCOT, you're looking at a a one to one and a half hour battery, the modern majority of them.

And the first movers were all the the very small scale, less than ten megawatts. So the interconnection process for small batteries is dramatically faster than utility scale at a hundred to a five hundred meg battery. So you can get them in faster. You can prove the concept. You're not gonna disrupt the market dramatically with a ten hour battery.

Even if you're using it for for example to offset congestion, you're really not going to stop the market or or stop this arm. You're just gonna capture the value with a small scale battery.

And from a trader's perspective, which one of the two markets is more interesting, or do you have more room to have a higher upside scenario?

A higher upside.

And with limited risk while hedging at the same time?

I would say the Kaiso only only because ninety I I I am I'm not aware of any that are just merchant batteries. So in general, you have the entire thing or at least sixty seventy percent of the the value of the battery is captured in a PPA. You're gonna sell it to a hyperscaler. You're gonna sell them to energy. You're gonna sell them to wrecks, especially when they're when the battery is connected to a solar. So they get the energy, the wrecks, the ancillaries, and then maybe we we carve out the capacity and we'll sell that separately to another load certain entity.

But most of the time when you go to the bank, it's just a much cheaper use of capital to say, I've got this entire thing locked up versus in ERCOT where the majority of them are just merchant. So it's your all your own capital and you're taking all the risk. Now the first movers in ERCOT made a lot of money. They essentially, in my view, they were proving a concept and then once batteries started piling in and those first ones, the companies are now getting flipped, they're they're realizing that that arm is going away.

And now with the fast pace and changing revenue conditions, as you mentioned, erosion of unserviced revenues, compression of TB spreads.

How are you adapting to these new trading market conditions? How can you maintain a competitive advantage and keep those revenues up?

I think that's the key then is the off take agreements.

Even if the spreads get compressed to flat, as long as the off take agreement is such that they're taking the value or they're willing to pay for the value of that, then then you can take that to the bank and get it get it financed.

Generally, the market will it's like a bubble. Yeah. Yeah. Yeah. You press on a balloon and something pops out somewhere.

So, one piece may get squished, but then something else pops out. So, energy may get squished, but REX may make it more valuable or capacity may get more valuable. Yeah. In ERCOT, you've only got energy, don't really have the capacity market that's gonna pop.

So you're really counting on volatility and price points.

Great. Thank you for sharing that perspective. You mentioned off take agreements.

Could you please explain on a high level what that means for our audience to understand it? And there are a lot of different off take agreements. From your perspective, which ones or which one are or is the most interesting off take agreement with current market conditions?

On the West Coast, we have we sell a seven by sixteen product. So we'll we'll pair a battery with a solar and sell a seven by sixteen relatively flat block to a data center. Yeah. They have a very flat load.

They're they're the same all the time. So they're looking for a flat energy block. So we can create that with the solar and the battery, and we can they need the power for a long time, and they need to guarantee it's there. And we need an off take agreement for fifteen to twenty years for the financing.

So it's a win win situation there.

In PJM batteries don't work.

Not yet. The batteries that were initially deployed in PJM were all small frequency type reacting to frequency and those are essentially worn out at this point. But the spreads just aren't there to make sense and the capacity market doesn't pay for batteries. So in PJM on the East Coast, we have the twenty four seven, the Google agreements, the Microsoft load following agreement, where we pair wind and solar and match it as best we can to try to create a relatively flat profile against a flat profile in data assembly mode.

We'll jump into the twenty four seven product now the upcoming questions, but before that you mentioned that you're operating the largest battery in Kaizo Yep.

As of today.

Can you tell us a bit more about that battery? What makes it so special and where it sits?

It's called the Bellfield facility. It's almost all of our solar projects are in the high desert area.

So if you look at LA to just to the east of the mountains, there's the high desert area starting in roughly I would have helped you, but I have no idea about it.

Area.

If you've never been there, you're not missing anything. But there's there's a racetrack there. It's called Willow Springs.

Okay.

And that's the very southern part all the way up to Bakersfield in this high desert plains. That's where almost all of our solar and batteries are.

And Bellfield is roughly halfway up between that area and Bakersfield area. It's a five hundred meg battery. It is a Tesla battery.

It's paired with five hundred megs of solar and it just recently hit COD.

And what is the duration of the battery?

It's a four hour battery.

Four hour battery. Okay. Could you tell us, because I find this very interesting, one of your big bets throughout your career as a trader, and in what situation it was, what you what opportunity you saw, and what it led to?

If you'd have been in the market ten years before Yuri happened, you'd have seen Yuri coming and knew what was gonna happen. And that's when I was a very active ERCOT trader. And we saw this cold front coming and it was, generally speaking, I was always a contrarian ERCOT trader. I was always short.

Always. Yeah. And if I saw where the the market was getting close to the edge, I would just it was too risky to go long because then it was kind of priced in. So I would either go flat or when the market reacted to create a much higher price, then I would sell at the higher price.

But when this event was coming, I saw it and I was like, this this looks nasty. It's gonna happen right away in the morning when load starts coming up. It's the pipes are gonna freeze where the gas is is not gonna be there. And so I went long roughly five hundred megawatts from our ending seven to our ending twelve.

And at that time, the cap in ERCOT was nine thousand dollars.

We're printing or no. I I take that back. It was three thousand dollars. We are printing the cap from our ending six until our ending twelve or thirteen. So and I will tell you, it made my stomach churn as badly as if I'd been on the other side.

Yeah.

It was a big day though. It was seven million dollars or something at that time.

Yeah, know. That's Thank you for sharing that moment.

What was the second part of the question?

So the second part was actually the most interesting project that you have worked on in the past, or one of them.

Since I made the shift from traditional energy or traditional energy companies like so I was at TXU, Arizona Public Service, I was at Direct Energy for twelve years.

Over to AES, we've got some really interesting projects with the seven by sixteen products in Kaiso. Managing that is always interesting. The load side is so if you've ever been on a a trading floor that that manages retail loads, Retail load is all over the place, but the generation is relatively flat.

In these cases, the load is very flat and the generation can be all over the place. So it makes for an interesting dynamic. You're you're constantly in the market either buying or selling specifically around the PJM wind projects for example. You've you've got the wind on average is expected to be hundred megs. Yes. But on a given day it could be zero or it could be two hundred.

And you're constantly having to say, what's it gonna be tomorrow? What's gonna be next hour? And how do I fill that need or sell that need in the market?

So it's a you're constantly moving all the time with renewable cargoes.

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Enjoy the conversation.

Jumping back to something that you mentioned before, some twenty four seven clean energy projects, and this is a service that AES also offers.

You offer this package to big corporates, such as, for example, Google. What has to happen on the trading and scheduling sites to make that promise real? How does complexity increase or decrease?

One of the things you have to realize is there's a limit to how much you can say recovering with renewables. And it all depends on price. So at a certain price, we can layer in solar and wind to use a solar profile, you know, during the day, roughly hour ending eight to sixteen ish. That creates a relatively flat block. And then you use wind to overlay that against a flat block data center load. Now you have to upscale them so that you've got constant coverage, but then you're also gonna have gaps when the winds not blowing, when the solar is not there.

So you have to scale them higher. So if you have a hundred meg data center load, maybe you need two hundred megs of wind to get an average of of a hundred megs, and maybe you need a hundred and fifty megs of solar. But that still only guarantees you, call it, seventy five to eighty percent coverage. Yeah. And as you as you move up the scale to say, I want ninety percent, what does it take to get there? Well, now you have to layer in more solar, more wind, which is gonna push the price up because now you're gonna have a bunch of excess energy, or you're gonna scale in batteries where they're uneconomic in PJM, and that's gonna have to be priced into the low deal. So as you get closer and closer to this hundred percent, it gets much more and more expensive and and harder to do.

Unless, you know, I'll skip a little bit forward, You cover it with if you wanna go completely green, maybe you cover it with a nukes.

And nukes, there's there's no new ones being built yet.

That's you can talk about that a little bit later, but in my mind that's ten plus years I would take the over on that for sure.

But that's that's almost the perfect data center solution, right?

Twenty four seven flat generation against twenty four seven flat load.

How do you, in in a a strike like the one of Google, do you choose to build a battery rather than going to the market or signing an off take agreement with another generator that can provide green energy.

For example. That's that's really a a conversation in the deal process with Google, with Microsoft, whoever's on the other side.

They have to say how much they want, and we can say, okay, we can cover that amount at this price with this amount of solar, this amount of wind.

If you want it higher and we include a battery, it pushes the price from, I don't know, call it fifty dollars to sixty five dollars.

And and at some point, they'll have to get price sensitive. Does that make sense economically?

And it's it's just a conversation at that point.

Can you give us any figure of how much premium those type of clients will be paying for this type of product compared to going to the grid?

If you're just leaning completely on the grid, yes, if you looked at twenty four seven grid power for, I know, call it cal twenty six coming off, You're probably paying ten, fifteen dollars higher. Okay. That also though gets you the rec value as well, which is not included in that twenty four seven energy. So you'd have to add that in and once you add that in, maybe you're only closer to a five dollar premium.

Okay. Thank you for sharing that.

Yeah. So you're getting energy and recs and you're getting the coverage and the management of all that together. Yeah. So we're saying premium, but there's a you're managing all that too. So it's not that's not free either.

Okay. Understood.

You opened the door before, which is nuclear energy. Okay. What is your view on nuclear energy here in the US for the next five to ten years? Will there be a comeback?

Why? Why not?

I'm a big fan of nukes. I come from the nuclear world. K. I was a reactor operator on a submarine in the Navy for nine years. I got out and worked at a commercial nuclear power plant, Palo Verde in Arizona.

It it was my world for fifteen years of my working career.

I like nukes. They're very dependable. I understand it.

Some people are scared of the the nuclear fuel and what you do with that, how you dispose of it.

I completely get all that.

The last nuclear plant had to actually look this up because I was like, when was the last nuclear plant built and how long did it take? And I believe it was Vogtle three? Two or three. Vogtle two and three took fourteen and fifteen years respectively to get built. And they were, I think, six x over budget. Yeah.

Those two are in Europe, Correct? Or not?

Those are here in the US.

Oh, here in the US. Okay.

And they were they escalated to several hundred million to into the billions.

And now we're saying, okay, we're we're gonna we're build these SMRs, which I get it. It's a it's a modular concept, but in my mind, they're they're saying ten years.

I would take the over plus two years minimum to get these built.

And to do it at scale, I I think you're closer to the twelve to fifteen years.

The regulatory environment and the all of the rules around this, and I guess what something nobody talks about is the manpower that it's gonna take and the the supply chain to get this done hasn't been done for years here in the US.

So I would take the over of ten years. I know there's a lot of people in the space. Bill Gates has has a has a company that's looking at it really hard.

It's it's doable. Again, I'm a big fan, but I I think the time scale is not quite where everybody's thinking of that.

You told me a little bit about your time as a nuclear submarine operator at the beginning of your career. I think our audience will find this fascinating. Can you tell us one of your stories working as an operator there or just how it felt to work in a nuclear submarine?

The the first impression most people have is it's it's very, small, very tight, and it's it's bigger than most people think. Most bigger than most people realize. It's it's three stories tall.

I was on a fast attack submarine based off the East Coast out of Norfolk, Virginia.

It's three hundred and sixty two feet long.

Here's another stat for you. Three hundred and sixty feet eight inches at test depth. So, it compresses sixteen inches from front to nose nose to tail at a thousand feet. That's how much it compresses.

That's pretty cool.

Yeah. I don't know why I remember that stat, but that's something stuck in my head.

So it's bigger than most people think, but you're also when you first get there, up until you've been there for probably a year and a half, you're so busy all the time. Yeah. Between trying to get qualified to become useful and also doing all the maintenance.

We're constantly running drills so you're it's a chore just to get sleep. I mean, I here's a story for you. I I learned to sleep on a pile of plastic buoys.

I would literally crash on that for a couple of hours because my I was when you first get on a submarine, you're doing what's called hot racking.

Okay.

You're sharing a bed with somebody, a new junior person.

He's in it for six hours and then he's working for twelve and then you're in it for six hours. So it's but then you may find a few hours where you have some free time that I just need to sleep and I would sleep on this bag of plastic booties.

That's a great story. Thank you for sharing. And if I can ask you, also very high level, what were your daily tasks on the nuclear submarine? What you would you be better with?

The daily stuff, you're you're on watch. You're sitting in a control panel. If you've ever seen a nuclear power plant, it's got literally a room full of panels, but you're sitting in front of a panel, you're watching what's going on with the nuclear reactor. You're sitting side by side with an electrical operator, so he's controlling all the electrical equipment on the submarine, as well as the electrical turbines that's pulling steam that's essentially keeping the reactor cool. Yeah. And then separately, you've got on the other side, you've got the the turbine that spins that makes the the the submarine move.

Yes.

So here's the propulsion, you've got the electrical, and then you've got a reactor operator. And then on the outside of what's the control room, you've got a reactor, a technician running around looking at gauges that giving you information that you can't see on your panels, and then you've also got the mechanical operators. There's a lot of valves that are not you can't just push a button Yeah. And make them open.

Has it they're physically have to have to be have a person there. So they're running around outside the control area. But that's that's about six hours of your day. The next six hours is generally doing maintenance and cleaning.

You're constantly cleaning.

And then the last six hours of basically an eighteen hour day is trying to get some sleep.

Okay, understood.

Well, I will stop asking about these questions. I could keep on for a long time, but we have gone off the road here a little bit. Jumping back to data centers of this type of customer and the twenty four seven matching, I can imagine that in some regions with high renewable resource with wind speed going up, good sun shining for longer in the day, it can be easier than in other regions to to offer this product. So this leads to transmission constraints sometimes because the load is located here but the renewable resources is located somewhere else.

How do you look at this problem and can you give us a concrete example of a project where you have faced this or where you had to turn down a potential customer request because of this issue?

Well, I mean, I I guess to your first point, the the generation, the the solar and the wind resources are not where your big load load pockets are. So your if you're talking to ERCOT specifically, all of your wind and most of your solar is out west. Yeah. So your your Odessa west to Amarillo all the way out to El Paso.

And then your your load pockets are Dallas, Houston, Austin, San Antonio.

So you need big transmission lines to move it from there in.

So that does create an issue. When when the it's too far or you're on small power lines, it does create a basis problem That someone has to take that risk. If if somebody wants this, we can say, we can we have a project, it's located x, where wherever the x is, but it's it's in a bad location. It's gonna cost another ten dollars to move it. We can develop that project, but you're gonna have to help us with the cost because we can't eat all of that.

Now the perfect solution is to put the load where the gen is. So either a behind the fence solution where you have you put a a data center right there with wind or solar. Or all what you're seeing lately is the the new data center campuses.

And you've got small gas generators on-site, but then you've got wind and solar being led directly there. So it's technically all behind the fence of the data center load pocket. And then they lean on the grid to supplement it. Okay. That's that's kind of the the perfect solution. Yeah.

And with all of these different projects that you've been working on and they're constantly coming up, how does AES choose to focus on a specific type of service or region in the future? How do you look at new projects and decide which ones to go for or not?

Generally speaking, I mean, we're we're very customer driven. Okay. So wherever the customers are going, you're gonna see us in the same place. So wherever you see big data center pockets or data centers are following this this big it's a cable.

Essentially, they're they're going wherever there is is good connectivity for the data centers onto this, not my piece of the business, but it's a fiber fiber optic line that runs all around the US. They've kind of maxed out Virginia for example in in that Dominion zone. Now they've moved to Texas. They're also moving into SPP and MISO region. So wherever you see them going, we're going the same place. CISO, same thing.

Thank you for sharing that as well. You have lived through multiple market eras and asset types. Looking five to ten years out, what's the most underappreciated risk or opportunity for a renewable heavy portfolio like AES' portfolio?

I I think, when I already mentioned the nukes, I think that the one thing that our nukes aren't near as close as everybody thinks.

And the other thing, and just to be clear, are my opinions and my opinions only. Yes. Do not necessarily reflect those.

Quinturian opinions, actually.

Do not necessarily reflect those, yes. So, that being said, all this data center growth is coming. The hyperscalers are coming.

AI is driving it. We all see that.

But in my mind, the the hyperscalers are building these data centers so fast that the generation side cannot keep up.

Gas, more than likely if you if you don't steal somebody else's turbine from the line, your best case five years, more than likely you're six to seven years out. And that's assuming you're not gonna have to dig a hole for a pipe just to get gas pipe there. So I'm assuming you're putting the gas generator on top of a pipe and close to transmission lines. So assuming all that is is good, I think you're six to seven years out. They're building data centers in eighteen to twenty four months now.

Was it somebody just scaled essentially an inflatable one in nine months. A data center. Well, in my mind there's an inflection point coming where you've got I don't want to put names out there, but there's a lot of AI companies spending a lot of money on debt right now to on all of this this AI coming and they're betting on revenues in two thousand and thirty, two thousand and thirty two. You can probably guess what I'm talking about based on that. But if this growth hits a plateau where you can't grow anymore because your generation can't grow as fast. Your generation is gonna be five to six years out before you can really start making a mark. So I think we get this inflection point where things kind of flatten out or or the the acceleration slows down a lot for a couple years before it can take off again.

And I think those companies in that two year point where things flatten off and now they're they're gonna have to delay their their revenue captures or to try to actually make money on this instead of just capturing it with debt, they're gonna be hurting. So I I think that two year inflection point coming in roughly, call it two, two and a half years, there's gonna be quite a few that get can't can't make it through that that point. They're they're expecting this just to keep going at this current rate and it's not gonna it can't.

That's a very interesting take. We here at Motor Energy focus mostly on batteries. We're expanding into other technologies as well, such as solar. Is there any opportunity tied to batteries specifically that you see?

Of course.

In the upcoming years?

I'll give you guys a little plug. I mean, I've been following Modion Energy for for a while now. You guys are very very good at the analytics.

Better than most my opinion.

That being said, the one technology that can kind of help fill that blank is batteries because you can put in a battery fairly quickly at roughly three years. So that will certainly help.

Nobody's really concentrated on batteries right now to fill that gap. Everybody's concentrating on gas, nukes. Nobody's really targeting batteries right now. They're gonna have to consider it in the very near future, but I think that's the only thing in my mind that can fill that that gap.

And in your projects, you have mentioned the big portfolio in Kaizo, are you still nowadays looking at using batteries for all of your different setups for your clients?

We so we we are, and we're continuing to build the majority of them are solar plus storage Yes.

Because even even if one side or the other of the technology so solar projects lost some value with the whole duck curve. Prices are very low, but then it it created value in the battery.

And the more batteries you put in, it kind of pushes the balloon the other way and solar goes back up. So we're tending to build them as projects together, solar and batteries, and we can help fill a very flat load with that. Now, in other regions like PJM, we do offer batteries as it doesn't make economic sense to, from an energy standpoint, but if you said, I see value in shifting the renewable energy credit value from a particular hour To an hour where we don't have or we have a gap in where the winds falling off and the solar is going down.

If someone sees value in that that we can't get from the typical energy markets, then there is value in the battery. We just unless someone says I'm willing to pay for that, you can't monetize it. So the value is there. We we do certainly pitch it as part of the twenty four seven. If someone's interested in that, we can certainly integrate it in.

Okay. Thank you for sharing that. Before jumping to the final section, is there any question that you can think of that I didn't ask that could be interesting for the audience?

I would be quite keen to know, right, if I'm out of college a year and I've been on a trading desk today, if you send me back in time fifteen, twenty years, what about being on a trading desk then is gonna shock me? What's what's the different environment like?

I would so it's funny. I I've had several conversations.

I'm pretty open to talking to almost anybody. People reach out to me on LinkedIn all the time, and you have a few minutes to talk. And a lot of times it's just a college game. Yeah. And I'm pretty free with my time. I'm I know I'm at the point of my career where I'm I've kind of peaked and I'm I'm I'm just giving back hoping that other people can learn.

So I have those conversations all the time and when they ask me what should I look at, not necessarily a new trader yet, but they're they're just I'm interested in energy space, What should I do? I see all this stuff coming. Should I learn code?

And one of the things that that we use quite a bit now is obviously we've been talking about AI.

We still use AI a lot.

You don't have to be a good code writer anymore. You can use AI to write your code.

So what what I've been telling them is not to necessarily go after code as a a skill set, but go after those people who can who can write the the most perfect AI prompts.

That is a skill set to to give you a very specific answer. AI in my opinion does really good answer if you give it a very specific, very narrow question.

If you give it the world, you you can come up with some pretty wild things, but Yeah. But that in my opinion is the one thing they could learn that will add value immediately.

That that, yeah, they could step in and being able to write that that, again, that that very tight AI code language, whatever it is, to say, I want this specific answer.

The younger generations will appreciate this advice. Thank you for sharing it, Terry. Also, something that I'm very curious about is how trading desks nowadays have changed compared to twenty years ago. From your perspective and your experience, if you can tell us some story of the old time and now.

Well, I guess one of the first things is when you meet me, most I'm pretty unassuming. I'm not I don't have a big ego.

A lot of trade especially the old school traders Yeah. Had big egos.

I've been doing this for thirty years and to make it this long, have to set your ego aside.

When I first started, it was very regular for the head of trading to to yell and scream, break phones, to berate you. It was it was it was awful. And it's not not my personality, not my my mentality.

It's a it's a very harsh way to learn. It's the way that I learned, but it's not the way that I operate now. And the funny thing is, so our risk group, when they when they speak with me, they they find it interesting that that I I don't come across as harshly as they expect, especially new senior risk people. They're they're expecting the head of trading to be this this monster and I'm I'm not.

And and it shouldn't be. You know, we're all people and the younger people coming in, I I think they they appreciate not necessarily a softer hand, but but someone who's doesn't have the ego. I I don't think I know everything. You know, you have just as much as offer as I do.

I've just been around for a long time. I've seen a lot.

You may have some new ideas that I haven't thought about, then that's great. Let's let's all talk and and put it on the table. So I try to again leave the ego on the side and and try to get them to do the same. And managing newer people. So a mid level trader managing an analyst coming in, try to be a little more gentle.

Bring them along. Don't don't have this this ego. You'll you'll learn whatever you learn by brute force. It doesn't have to be that way.

Yes. And and they may surprise you. I have some very very bright young people that work in my group that if you give them the runway, they will come up with some great ideas as long as you're there to support and and guide. And a a completely different mentality than thirty years ago.

Right.

That's great to hear. For for the audience to understand what a normal day looks as the head of trading of such a big company as as the one you work at, Can you describe it on a high level?

Are you more of a manager, which I assume, or an individual contributor? Do you miss those days when you were an individual contributor?

Of course, you taking a step away from the day to day is is hard. It's really hard.

But if you wanna grow in your career and honestly, if you wanna have a bigger influence over the organization, you do you need to you need to grow and do that. So my day to day is I I certainly look over the entire portfolio every morning. I look at what happened to p and l overnight. I look at what the position looks like, where we can trim things up, where the market's going. I've got six screens up. I'm I've got all the markets up, so I'm I'm seeing everything.

I'm cognizant of a big picture what's going on. I'm on the calls with with weather every morning, what's going on with all of our assets, and then once I get a kind of a feel for, okay, what happened overnight?

Get a lay of the land for where the position is, what we're looking like on a day to day basis, then I okay. What meetings do I have? What kind of management things are going on?

You know, what what kind of other things, the non trading day to day things management wise that that have to be done.

Yeah. I miss it sure. It's it's a the rush is is like no other. It it certainly is.

I can imagine. Is it stressful or not? Do you like it? Do you enjoy it?

It is, but if you I don't know. It's a sometimes you don't sleep, but you learn after after a while to to get used to the the turning in your guts. Yes. And what that feels like and but it's also, know, the flip side of the turning in your guts is the excitement of being there in the in the game every day.

Yes. I can imagine. Whether you're winning or losing. Yeah. Because, like I said, the one day when my biggest day ever, my guts were turning just as bad as if it had been a losing day.

What's your worst day ever? We talked about the best day ever? Your worst day?

So, that was when I was working at Arizona Public Service, my group was the we supplied the loads or the supply side to our retail group.

And our retail group did a monster deal. It was a two point three terawatt hours of power in California at SP fifteen and MP fifteen.

And on the same day that they did that, Goldman came out and bought somebody's book and the book was naked. And they came in buying heavily an SP fifteen and MP fifteen. And it it all of a sudden pushed what looked like a decent position to cover to oh my god this is getting pushed in my face really hard and they just kept in buying every time I would go to buy they did I lift I lift that off. I'm I'm ahead of you all the time. Oh my god. So I had to buy a tallow in a mid sea and anywhere else I could to try to stay away from California just to try to fill energy and but wearing a lot of bases.

And that day them filling their book essentially pushed me down about seven and a half million dollars. Wow.

And you survived the day?

Was stressful, but It was but, and it took me about six weeks, but after they they quit buying Yes.

The market kind of came back to where it should have and all of those spreads started coming back in and I was able to sell out a Palo by SP, sell out a mid c by NP. And so I came back and I actually made money on the position but I had to take this this very short term mark to market loss that did hurt.

I'm enjoying a lot of your stories. Thank you for sharing them, Terry. Jumping to the final section, unless you have another question in your mind. Is there anything you would like to plug or promote to our audience?

All of our big things, you'll see in in press releases. So I I'm aware of things coming, but I really can't talk about the big things. I would say in the next thirty days, you should be expecting something big from AES.

Anywhere where you see a large data center going in or a data center complex, expect us to be in that conversation. If you don't see us right away, we're there. We're we're there behind the scenes either with helping something happen or as part of the deal.

So even when you don't hear about it, if you see a big data center, we're there.

Okay. Thank you for sharing that. And the final question that we ask to everyone. You are a contrarian person by nature. Try to make your bets on that gut feeling that you have. You have given some contrarian views already, but is there any other contrarian view that you would like to share now that most of the people wouldn't share with you?

Well, I already talked about the nukes.

I think, like I said, the nukes, everybody's saying ten years, I would definitely take the over on that.

Yeah.

The inflection point is certainly one that I'm not sure many people share, so maybe that's contrarian that that I haven't heard that before, and I don't see that happening. The one thing that I guess ISO is finally opening their eyes to the large loads coming in and kind of restricting the growth.

Yes.

Because at the end of the day the consumers are wearing the brunt of that if they don't.

So that kind of, that surprised me a little bit but I guess my my concern, the big one would just be that that inflection point where I think it's not gonna be as fast as everybody talks about because of the generation growth can't happen at the same rate. Okay.

That's a great contour of you. Thank you for sharing it, Terry.

It was a pleasure to have you today with us.

This was fun.

This this was a lot And thank you for coming.

You're welcome.