TITANS OF NUCLEAR

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Michael Crabb [00:00:59] Hi, this is Michael Crabb and I'm joined today by John Chaplin. As I think our listeners know, usually Titans of Nuclear is a feature of folks who are in the nuclear industry; their backgrounds, their experiences, what they do. Today, we're starting something a little bit different: our first Nuclear Nexus series. And this one will be focused on a really timely subject: data centers. I'm kind of excited to dig in.

John Chaplin [00:01:25] Yeah, it's kind of hard to pull ourselves out of the nuclear world and realize we're adding solutions to the marketplace. What are the best ways that that fits in? I think that's a good subject matter to dive down in on. Data centers are a perfect match for nuclear, and yeah, looking forward to the conversation.

Michael Crabb [00:01:42] Yeah, and it's funny... I'm sure your parents are the same, right? Putting something on the cloud. As a new parent, I think I've got 4,000 pictures over the year that are sitting on the cloud. But the cloud's not actually in the cloud; it's infrastructure that's built in the real world and has real requirements and real implication on the environment and the community that we're in. It's the reason we're able to communicate to our audience right now. And so, I think the intersection of how nuclear power can impact the cloud and the data centers that power that and enable it is really quite interesting. We'll see.

John Chaplin [00:02:21] Yeah. And I'm looking forward to, throughout this series, diving down into experts, learning more about the applications where nuclear fits into this data center space, and how it can be leveraged to really expand the infrastructure profile, and also, facilitate the new AI development that's really driving the growth.

Michael Crabb [00:02:39] Yeah, that's a great transition to the scale of the conversation, right? So, we'll have a host of different folks who are from the nuclear space, from the data center space, the development space, perhaps even the political and regulatory space talking about how these two industries can come together. And it's the scale of both of these things that is so tremendous, right? I think data center power, globally, would be a top 20 energy consumer in the world, from a country perspective.

John Chaplin [00:03:05] And that's today, compared to where it's going to go with AI having a 10 to 20 fold increase in that power consumption to be able to run all this computing for these training of these models.

Michael Crabb [00:03:16] Yeah. No, it's really crazy. I mean, I think some of the stats that our team pulled together are worth emphasizing. In 2022, data centers used 300 terawatt hours. So, about 1% of total global energy consumption. In the UK alone, they're 3% of the UK energy use. And as you said, that's just the tip of the iceberg, right? We're going to use 10x more moving forward.

Michael Crabb [00:03:43] Okay, so what are the some of the things that we need to focus on, I guess, as we talk to these experts? What can folks expect?

John Chaplin [00:03:50] I think really tackling and understanding how nuclear can really come in and solve those issues. The immediate issues, but also the long-term issues as it scales out. Near term, there are a lot of issues around power sustainability, being able to get that carbon-free power, but also just grid constraints and being able to meet the needs of this growing demand that's coming from this industry.

Michael Crabb [00:04:14] Yeah, I think the grid constraint one is one that isn't fully understood in the nuclear space, right? It's not really a problem that we have or have dealt with and mass, but more and more I'm hearing that's really driving data center location and data center developments. And there's been a few recent announcements with that intersection, right? The Amazon acquisition of the Talen data center, outside of their nuclear facility. And that's just an example of, "Okay, well, there's an existing power generation unit. How can we locate near them in order to benefit from the power?" You know, Microsoft, Google, many of these folks have similar campaigns. Tell us more. What do you mean when we say "grid constraints?"

John Chaplin [00:04:57] I think legacy nuclear that's large build has always been long-term planning and ability to basically connect to the grid their full load; they're able to plan that. As we move to more distributed generation with small modular reactors or micro modular reactors, the ability to be able to connect to the grid becomes a larger issue that can't be planned. And you want to be able to get to those grid connections quickly. And with renewables coming in, you have tons of different energy generation sources trying to connect to the grid all at the same time, and that causes a long backlog.

Michael Crabb [00:05:28] Yeah, and it's really both sides of the equation, right? Us on the supply side, and in the nuclear space, you hear about the supply issues, right? Generators trying to connect, but load has to connect as well in this sort of complex transmission system. And both parties are frustrated, because I think the bottom line is there just isn't enough capacity, right? There isn't enough space in the straw, so to speak, to have as many electrons as are needed.

John Chaplin [00:05:54] Right, and I think that's where nuclear can come in, because it can do behind-the-meter solutions, connect directly to that power consumer, especially those data centers, and be able to facilitate their growth while they're still waiting for that grid connection.

Michael Crabb [00:06:07] Yeah, totally. And it's cool that we're seeing that actually in practice, right? Like literally, there are running data centers that use nuclear power. And so, excited to scale that together.

John Chaplin [00:06:18] Both seeing it in practice and also seeing... A lot of the hyperscalers realize that this is a significant strategy that they need to deploy and are building their own internal teams to evaluate and prosecute that strategy.

Michael Crabb [00:06:28] Yeah, absolutely. Okay, well, that's grid connectivity. We'll have real experts talking about that over the coming weeks. There are some other really key value propositions, I think, at the intersection of both nuclear and data centers. I think a key one is price volatility, right? Or, price reliability in this case.

John Chaplin [00:06:44] Right, exactly. When you're thinking about data center development and the economics of their development, power consumption is a large cog to what they're selling. So they need to have that, one, reliability of what their cost is going to be. So, under long-term power purchase agreements, you might be able to get that from solar or wind, but since they are intermittent resources, you still have to understand how to balance that and manage that price risk for when those technologies aren't producing. But with nuclear being that physical baseload power source, you're able to really get that consistent profile.

Michael Crabb [00:07:17] Yeah, fixed cost is really important. And I've sort of observed that there's almost wrong-way risk when you've contracted a low price for renewables. Or, when renewables are on, they tend to all be on and market price is really low. And then when they're off, your PPA does nothing for you, but energy prices go through the roof. And so, you're sort of paying too much in both circumstances, and nuclear can really create a fixed profile for consumers who, as you said, a large part of their customer wallet is energy.

John Chaplin [00:07:47] Yeah. And with the changing landscape in generation sources, connection backlogs, understanding how that's going to affect the market is nearly impossible. So, the volatility in the marketplace is only going to become more extreme as we move forward.

Michael Crabb [00:08:01] Absolutely. And then, we can layer on top the desire to be sustainable on top of all of this, right? There's really a global recognition of nuclear's role to play in a sustainable future. And the way I see it, there really is no other option.

John Chaplin [00:08:21] No, I mean, we've touched on some of the reliability and security, but also being able to have that consistent power load. When you're running these models, some of them can take weeks or months to train. If you lose power and you stop running that model, that's loss of time, that's loss of revenue. Those are costs out the door you're not going to get back.

Michael Crabb [00:08:41] Yeah. Well, and the reliability concern is obviously a key focus for data centers even outside of the AI stuff. Like, Instagram went down for two hours and everyone freaked out, right?

John Chaplin [00:08:55] Right. Yeah, with data centers, even for just cloud services, I think I've heard some of these hyperscalers say that reliability is their main concern. If you go to Google and the search bar isn't there, that is an absolute critical importance to Google. It's always got to be up and it always has to be available. So, having these data centers rely on intermittent resources that might not be available when they need them is a critical risk that they have to manage.

Michael Crabb [00:09:21] Yeah, and I'm kind of excited to dig in with some of these folks in the field doing this work. Reliability levels are like... Being reliable means different things to different people, right? And we're in the nuclear industry, very proud of 94%, 95%, 96% uptime and reliability. But that's not 99.999%.

John Chaplin [00:09:41] Right. And there are always strategies on the back end. You hear about data centers adding n+1, n+2 redundancy and having different strategies for how they manage that. And I think it's always going to be a mix of different energy sources and different solutions, but nuclear stands to really benefit be a large leg of that solution.

Michael Crabb [00:09:59] Yeah, really the anchor, right? I mean, you can get 95% from one solution and then you can fill in the gap. And you really were touching on size as well. That's maybe the final aspect in both the data center market and the nuclear space. And they're going in opposite directions, but I think they're meeting in the middle.

John Chaplin [00:10:17] Yeah, today some cloud services have been 10 to 60, maybe even 100 megawatt sized for power consumption to be able to run those. But with the advent of AI, those are increasing by multiples. Now we're seeing 400, 600, 800 megawatt data centers being developed. That is a large power drain on the grid and requires a lot of planning. So I think there are definitely power sources like SMRs that can come in and meet that demand.

Michael Crabb [00:10:46] Yeah. And I just think there's something poetic about historically focusing on 1,200 megawatt nuclear power plants and 10 megawatt data centers. And yeah, we'll meet somewhere in the middle at 500 with and n+5 reliability as our fleet of nuclear power plants. Yeah, it's really exciting. And I think nuclear's ability to really be site agnostic is really important as well. Because data centers have requirements around latency, around proximity to networks, to network gateways, so it'll be really interesting to see how the different business models evolve.

John Chaplin [00:11:24] Yeah, absolutely. Especially that's true for cloud. With AI, they have the ability to be a little bit more flexible because these are really spent training and doing large compute without the need to connect to the network. But as we see more of that build out, we'll see these large, distributed generation sources, whether that's AI or continuing to build the cloud infrastructure in large demand areas like major cities.

Michael Crabb [00:11:50] Yeah. It's going to be really interesting to hear how these concepts are being implemented in real life. Yeah, we look forward to sharing some of those stories. I can't wait to hear from the experts.

John Chaplin [00:12:03] Yeah, me neither. I think the other thing that we didn't really touch on is the de-carb goals. We hear a lot from data centers, and I think the tech sector has been a leader in pioneering solar, pioneering wind. And I think they're going to be a leader in pioneering nuclear. They're really pushing for the market demand, that 24/7 time match. To date, we've been trading credits, and solar and wind has been able to trade some of those renewable energy credits, during when they're all producing, say, solar in the middle of the day, to make people have a clean profile throughout the day. But if you really are going to push for a requirement for 24 hour, nuclear is really the one that stands to benefit the most.

Michael Crabb [00:12:44] Yeah, at the time, everyone knew RECs was sort of an interim goal, right? And then, we got really excited about it and we forgot it was an interim goal. And then, we realized we really weren't doing what we said we set out to do. And so, yeah, it's going to be exciting to see how that pushes the data centers and others towards nuclear.

John Chaplin [00:13:04] Absolutely.

Michael Crabb [00:13:04] That wraps up our first episode of The Nuclear Nexus for data centers. A really relevant topic; excited to hear from the experts. And we'll have some other conversations in similar veins at a couple of key conferences coming up. At Data Center World and Datacloud ESG Summit. I'm sure there'll be a few more as this starts to gain steam. Looking forward to sharing those topics and more with the audience in the future.

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Michael Crabb [00:00:58] Welcome to another episode of Titans of Nuclear. Our guest today is Josh Snowhorn, the founder and CEO of Quantum Loophole. Josh, great to have you on.

Josh Snowhorn [00:01:08] Thank you for having me.

Michael Crabb [00:01:09] Yeah. Before we get into what Quantum Loophole is and does, tell us a bit about you. Where are you from originally?

Josh Snowhorn [00:01:16] Oh, jeez. Originally, I was born in Berkeley to hippie parents, but that's a long story that I don't remember.

Michael Crabb [00:01:23] Oh, you remember some of it...

Josh Snowhorn [00:01:27] Yeah, I have no idea what's in my DNA after that experience, but Berkeley in 1970? I'm old enough to... You can imagine it was a little wild then. I mostly grew up in South Florida. I started in this industry about 25 years ago.

Michael Crabb [00:01:41] And this industry is like, what? At that time, it was data, telecom. How do you basket this industry?

Josh Snowhorn [00:01:48] Telecom was probably my biggest start, I would say. I was more telecom than data center, originally. Retrofitting telecom hotels in the CLEC era, when everybody was trying to put up new voice switches when voice meant "anything" and the internet data centers were just getting going. And certainly, internet exchanges existed, but they weren't of the scale we see now. So, I was just running around down in South Florida. That was the focus, down in Miami, retrofitting buildings and being involved in that.

Michael Crabb [00:02:19] And what was the intro? It was just you were a young kid looking for a job and it was the thing that came along? How did you get involved?

Josh Snowhorn [00:02:26] I was actually in my late 20s. I was skipping work at the time. I was working at a friend's construction company doing business development stuff, and there was a good swell, and I'm a surfer. So, guess what happens? All the way since I was in middle school... The same thing happens as an adult... I disappear and go surfing. And I was out in the water, probably with like 12 guys. It was one of those days when it was a perfect, beautiful swell and every other idiot had no clue that there was a great swell, which is just a beautiful day.

Josh Snowhorn [00:02:51] And there was a guy out there, a big guy named Sean, that I was chatting with and had a great camaraderie. And turns out, he was doing telecom data center construction, retrofitting CLEC hotels and things like that. By the end of the day, he offered me a job. Ironically, he never really paid me, but that's okay. I spent a bunch of time sponging up information and it became my career choice. So, I will thank Sean for never paying me. It was probably the best thing ever.

Michael Crabb [00:03:19] That's amazing. Yeah, there's some joke in there about surfer bums being surfer bums and just sort of bumming around, right?

Josh Snowhorn [00:03:26] Yeah.

Michael Crabb [00:03:26] Okay, so you just were a sponge for some period of time, hopefully not too long. And then what? Eventually you said, "Hey, I need a paycheck," and, "Let's make this a career?"

Josh Snowhorn [00:03:38] Yeah, it's all little steps of luck as you follow along things. What happened is I met a gentleman named Michael Katz, ironically, out in Beaver Creek. I seem to meet people when I screw around more than I do when I actually work. But I was out in Beaver Creek. I was slightly inebriated. I had found a pearl in a muscle; not a joke. I put it on the bar as my drunk self and waiting to eat at this Italian restaurant, it rolled off, and I was crawling around on the floor looking for it when everybody was waiting for a table. The manager there introduced me to Michael; he knew me. I reached up from the floor and tried to shake his hand but said, "I gotta find this pearl," so immediately he thinks I'm a crazy guy. I stood up and never found the pearl that I'd found in the muscle; it was gone. That was my trade. And it turned out Michael was the president of a company called Terremark. And they were about to build NAP of the Americas, which I end up getting involved in. I happened to be the smartest guy in the room, which meant I knew, like, one tenth of one thousandth of a percent more than anybody else, you know? And that was it. But I got very lucky, and my career started that way.

Josh Snowhorn [00:04:43] I ended up being Employee #6 at Terremark, as people rolled out, and ended up building the biggest data center in the world at 750,000 square feet and 130 megawatts, and that became my claim to fame. So, it was pretty wild. I was there for 11 years, and then Verizon bought us for 19 times EBITDA and I stayed on with the golden handcuffs there for a year. Resigned the day after that expired, and did a bunch of other stuff after.

Michael Crabb [00:05:10] Wow, yeah. I mean, I'm sure 130 megs at that time seemed enormous. Now we sit here and... We'll get to some of the work you're doing, right, as like an afterthought.

Josh Snowhorn [00:05:24] Yeah, it was incredibly massive at the time, and people doubted it would ever... You know, "Oh my God, that's crazy," and, "How can you do that?" and all that stuff. Now it's a puny building. And it was the biggest in the world. And the power numbers are like, "Yeah, so what? That's one data haul." It doesn't even register any more. And now as we go to liquid cooling, that could be a tenth of a data haul. It's crazy.

Michael Crabb [00:05:48] Wow. Okay, keep walking us through this, this trajectory of yours. So you said, "Okay, I can't do big corporate. I need to do something more exciting." And that was what?

Josh Snowhorn [00:06:01] No. Well, I did do big corporate after that, too, so... I did Verizon for a year. I would say that was an eye-opening experience to being an ant in an ant hill with 230,000 employees that they had at the time or whatever it was. I had power because we'd been acquired and they hadn't quite shackled me, so I was able to have some fun and do some good things for at least nine months; the last three months were terrible. But at the time, I was being recruited by multiple companies trying to bring me on to join them. And I ended up choosing to join Cincinnati Bell. Gary Wojtaszek was the CFO there, and they were about to spin out CyrusOne. So, I joined to run the telecom and interconnection business, which was really an irrelevant part of the revenues and needed to be bolstered. They had zero content or internet-centric companies as customers, just a lot of Fortune 1000s, which is great, but not of the scale for the web-scale stuff they were going to chase.

Josh Snowhorn [00:06:53] So I came in, I was part of the IPO team. Got to ring the bell on the NASDAQ. Got my picture all over Times Square on big screens; it was pretty cool. I was wearing a tie; that's pretty rare. And I was there for about six-and-a-half years.

Josh Snowhorn [00:07:06] Then I left. I joined up with some folks to try and form an edge company, sort of in an intermediary kind of role. Did that for a few months, then decided it was time to take a break and get my head together and congeal the ideas for creating this business. And in October of 2019, before the pandemic, which I of course predicted and anticipated...

Michael Crabb [00:07:28] Didn't we all?

Josh Snowhorn [00:07:29] Yeah. I sold a bunch of my crazy cars and did all this stuff and convinced a bunch of people to work for me for free for a while, which is always good when you start a company. And I went out and started Quantum Loophole.

Michael Crabb [00:07:39] Amazing. Okay, so tell us about... What order should we do? Tell us about the origin of the idea and then how that started to manifest itself.

Josh Snowhorn [00:07:50] So, I started Quantum Loophole... I guess there was always this niggling feeling of mine that we're missing something; the scale isn't there. We're running around scampering and choosing, a 20, 30, 40, 50 acre, even a 100 acre parcel. So what? We were choosing that next to a substation, building a bunch of data centers, getting all the fiber guys to spend a bunch of money to build in, deploy their telecom hardware. Sell it off to one customer, 2, 3, 4, maybe multi-tenant data hall, whatever it might be. And off we go doing it again to the next one. It wasn't an efficient use of time and money. It was also that there was nothing unique to it. It's a rubber stamp approach. Everybody could go do it. You could raise in for money and charge out and do that. So, that was one piece.

Josh Snowhorn [00:08:35] Then, just in a random visit with my friend Job Witteman, who was the founder of the Amsterdam Internet Exchange... He brought me up to Eemshaven in the north of Holland to go and see the NG gas turbine facility, combined cycle turbine. I'd never actually been in one. I was super excited, nerding out, and couldn't wait to get in. Google had a data center up in the north of Holland, right next door off of that campus. And I get in there and everything's quiet. Crickets. Like, not a noise. Couldn't hear a thing; pin drop level. And I'm like, "What's going on?" And they're like, "Oh, we're a peaker plant now." This is pre-Russia and Ukraine stuff and everything else. There was too much power out there and they couldn't do anything with it. I'm like, "A combined cycle peaker? That doesn't make any sense." It takes them days to turn up and all that stuff.

Josh Snowhorn [00:09:19] And then we got on the rooftop. And my disappointment, they showed me a giant turbine building that was about to get turned down. In Eemshaven, there's wind turbines going everywhere. There's gas turbine facilities, there are multiple... It's just pretty wild, right up on the North Sea there. And they said, "Yeah, that building's going to get torn down and there's a whole bunch of spare land." So I'm like, "Wait, I could retrofit that building into a data center and take up all the spare land and build it and I'd have no transmission costs? And you guys would be primary and backup for me? And now I've created... I've saved everybody..." So, the idea sprung. That's where it originated.

Josh Snowhorn [00:09:56] That wasn't always reasonable here in North America because the power plants weren't geographically located in the right location or they were coal. That's big, bad. And so, it didn't always work.

Michael Crabb [00:10:09] Right location from a fiber perspective? What was the constraint there?

Josh Snowhorn [00:10:13] Yeah, our tolerance is generally, from an optical limit, 65 km from an internet exchange. The further you go... Call it 50 miles. The further you go, the more expensive it gets. We build very expensive fiber optic rings that cost well north of $2 million a mile at the scale we build it at. So, unless you want to keep slapping down... Each path being 50 miles. You've got to do a ring. That's a $200 million ring in the best of circumstances, and that's if you get a perfect easement with the best straight-line route. So, it's tough.

Michael Crabb [00:10:44] Yeah, rights of way are brutal.

Josh Snowhorn [00:10:47] Brutal, brutal. And especially at our scale.

Michael Crabb [00:10:50] Yeah.

Josh Snowhorn [00:10:54] As we built the team and did everything, we started hunting around for those right locations with customers in tow; big hyperscalers. We were under the covers. Very early days because of the skill and reputation of my team; we'd all come from the industry and were well-respected from the telecom, data center, energy, across the sector. So, we started our hunting process. And we were originally searching all over Virginia, but we got very, very lucky that Maryland passed legislation for tax incentives. And we didn't find out about it until a month later, but at the time, we got lucky enough to get engaged with Alcoa. They had a former aluminum smelter located in Frederick, Maryland, just 20 miles as the crow flies from Equinix Ashburn, the theoretical center of the internet.

Josh Snowhorn [00:11:35] And we were able to convince the team at Alcoa that we were the smartest guys in the room and that we would raise the money even though we had no money... Or, just a little bit of dollars in the door at the time, just private capital. And then, we'd be the best parties to be good stewards of the land, from an environmental perspective, that had a history of cyanide and fluoride and things in the soil from the smelting process.

Josh Snowhorn [00:11:59] It had already been environmentally mitigated and it had covenants that went along with it, but imagine a site, 2,164 acres, 1,500 acres of zoned industrial land which is by right, entitled to build data centers. We can do 14 plus million square feet of data center space on it. And it multiple 230 kV lines literally dangling on the property, waiting for a new substation to be terminated. It was like a dream come true.

Josh Snowhorn [00:12:24] Alcoa was just very difficult to acquire the property from; that's why nobody had done it before. They wanted a high price for it because they knew what they had, and we were willing to pay that. And we also got lucky that we found a great capital partner after our process in TPG, TPG Real Estate, to be specific. They're a $220 billion fund. And closed on the property and off to the races we go.

Josh Snowhorn [00:12:49] Very difficult; it's the biggest data center campus in the world, with the most amount of single energy delivered to any single location in the world at 2,500 megawatts, probably more in the end. But that's our detailed load study. That's massive. That's two Vogtle nuclear reactors just that haven't even been stood up yet. And it took 18 years and $34 billion to stand those guys up. So, it gives you an idea of the scale.

Josh Snowhorn [00:13:12] We had a lot of fiber optics around us, but it wasn't new. It was some new; mostly old. It would have been great for wave gear and stuff like that, but not of a scale for the hyperscale industry. We have built or are in the process of completing the largest fiber optic ring ever constructed by fiber capacity. We have 34 two-inch ducts and can do 235,000 strands of fiber. And it goes 90 ft. below the bedrock of the Potomac River; we bored underneath like a giant gas pipeline. Hardest thing I've ever done, to be honest with you.

Josh Snowhorn [00:13:48] Our project is bigger than the city of London; it's 3.5 square miles in size. It's the biggest piece of industrial land in the state of Maryland. Immensely difficult, every step of the way. There's not one easy thing that we have done. But we'll turn what was a $100 million initial purchase into billions of dollars of value, so we're pretty proud of that.

Michael Crabb [00:14:09] Crazy, yeah. What a slog. I want to come back to the power question because I knowing what I know or think I know about Dominion in the service territory or whichever service territory you sit in, you're going to need something to help maybe bridge some transmission constraints.

Josh Snowhorn [00:14:29] We're not on Dominion, we're on FirstEnergy's system.

Michael Crabb [00:14:31] Oh, okay. Okay.

Josh Snowhorn [00:14:32] FirstEnergy's only wires; they own Potomac Edison, the distribution company as their franchise. But they're a wires company. Maryland decoupled production generation from wires. It's a nice benefit for us because it means you have an open market. So, just having the the arteries... Thinking about it like your blood vessels, right? We've got those. We have Doubs, which is one of the biggest substations in the region. And then, if you take that and you create an open market, it allows people to acquire PPA's and opens the world up to nuclear, to wind, solar, everything. And I think it's going to be a smattering of all of it to make it work.

Michael Crabb [00:15:13] Are you doing that virtually over those wires, or are you going to create your own microgrid on some footprint there on the site, or TBD?

Josh Snowhorn [00:15:23]  Maryland's tough from a regulatory standpoint. From the Public Service Commission itself, to MDE, to the history of the property, to our neighbors who are farmers who've been there since the 1600s, their families there. They're not still alive since the 1600s, but you get what I mean. So, I don't know if that's the best place to do something like that. If I asked everybody in the neighborhood to raise their hand and say, "Hey, you want a gas turbine in your backyard?" Or, "Oh, no, let's just do some reactors. It'll be great, guys. They're safe, I promise." It'd be tough. There's the perception issue. There's emissions issues. We're in a non-attainment area. Trying to do that blend is tough. But having those wires coming into us... We're just 16 miles from the West Virginia border. There are options there. The grid itself is a beautiful thing.

Josh Snowhorn [00:16:14] In markets where we can, we will focus on creating a microgrid where there's a perception that getting beyond peak grid is needed. Peak grid being what in theory exists on the grid today in a detailed load study, without reconductoring the lines, without bringing in new transmission lines and all the fun stuff that goes along with that, or doing direct current or anything you can imagine, right? It's complex and it's going to take a long time to get to it. So, let's call it the theoretical current state peak grid. And then, what we can get to beyond with some augments, there's going to be an end state. And that end state is going to be...

Josh Snowhorn [00:16:54] We know we can do two-and-a-half gigawatts now, which is huge by any measure. Maybe with reconductoring and some other enhancements we get to four or five or... I don't know; that's up to utilities that deliver and our customers to desire it. Where do we go beyond that? Things like liquid cooling are densifying data centers at a 10x click. And if that's happening, then that means the same building that could have done 100 megawatts is now a gigawatt building, as we just alluded to right at the beginning. It could be, who knows, immeasurable amounts of gigawatts.

Josh Snowhorn [00:17:29] And God help us, we start doing quantum computing and everything else. Who knows what the power requirements are going to be? We're just this ultra wholesale deliverer of land, energy, water, fiber. How do we deliver that at a scale to appease our customers? And when these campuses get bigger in other markets... We're looking at 5,000 plus acre campuses in other states that we want to enable. There is no way a grid is going to start to support that kind of scale.

Michael Crabb [00:17:59] Yeah, yeah. In the Maryland campus, it sounds like you're going to do some sort of set of virtual PPAs. I don't know if you're going to do that yourself or subcontract with a retail electric provider or balancing and scheduling entity of some kind. But yeah. what are you looking at? I mean, this is a nuclear podcast, but there are all sorts of generation technologies, right? How are you evaluating those alternatives for these future 5,000 square ft. campuses?

Josh Snowhorn [00:18:32] We're not going to be running out and buying power to resell to customers because that starts to open up a regulatory can of worms. But our energy business will be facilitating that. I've already signed power purchase agreements for future power for entities who are promising to deliver it. I just signed an MOU; didn't cost me a thing. Which is great. And until that becomes real, it won't cost me anything. But we're signing those on behalf of our customers that exist or don't exist yet just to make sure we can represent to them, "Hey, we've involved in this project that we know is going to deliver a certain number of megawatts, and this will be a benefit. And here you go." Because we're not in the business of... We're not consuming the power ourselves.

Josh Snowhorn [00:19:21] Where we will be very beneficial is the ability to start offering battery farms and the ability... Or, potentially centralized, backup systems. Some kind of peaking facility that will allow us to do grid arbitrage, allow us to offer battery services in lieu of generators and things like that. Call it backup diesel or reciprocating natural gas or whatever it might be. It's complex because of the scale. It's also something that nobody else would really do because we're able to contribute hundreds of acres of land to these large battery farms. We're not going to run out and slap up a 100-hour gigawatt scale lithium. That just doesn't work and it'd be immensely huge. Even a four-hour farm would be insane.

Josh Snowhorn [00:20:09] We're looking at something like lithium-ion on the front end with some kind of a flow battery at the back end, connected to the same inverter. Lithium-ion to appease the CBEMA curve requirements of a server so it doesn't ever get a blip. And then, when you say make rust or you have vanadium flow or whatever you're trying to do, that may take 10, 15 minutes to get to full tilt and things like that. But the problem we have on the flow batteries is they really haven't gotten to scale or caught up yet with our ideas. So, we're designing and scheming and whiteboarding and preparing. And as time goes on, we'll be able to offer that like a service.

Josh Snowhorn [00:20:48] Going strictly to atomics, giant fan. Think it's the best thing ever. I see a lot of different technologies out there from pressurized water reactors at the small modular to medium modular to full-scale reactors. I love the idea that the parts are being reduced; they're being simplified. The idea of factory producing them, even though the Senate just, just, just passed new legislation that's still got to be reconciled with Congress and still get out to whatever our president is at the time. And then, I still don't know if that's quite going to get us to where we need to be in this country because the regulatory framework is so difficult. The costs are so massive. Every time somebody asks me about it, I'm like, "Yeah, in 10 years it'll be here." And in 10 years, I'll tell you, "In 10 years it'll be here." And evidence has proven over and over again with cost overruns and time and everything else, it's just absolutely brutal.

Josh Snowhorn [00:21:49] It's tough for us because our customers are perfectly willing to sign a 20-year PPA for steady state, carbon-free power at a guaranteed rate. And they are a 24/7 load base user. Firm power like there's never been anything before. One difficulty you do have is when you're taking firm power at that scale, if I need two gigawatts of power, and you're doing small modular reactors... Let's call it medium modular reactors; let's go to 500 megawatts. You're probably going to have to build me 2.5 gigawatts because of refueling and maintenance and cycle timing and everything else. In a perfect world, so we never have to run backup generators, right? So, that adds... What's a few billion among friends to add 500 megawatts? No big deal, right.

Michael Crabb [00:22:36] But that's a really critical point because I actually think that's where smaller is better. And people will be like, "Oh God, you have to build 100 of them." But like, so what? Building 100 is how you get to cost declines, right? Building 1,000 is how you get to cost declines. And then, you don't have to build one additional... You have an extra 500 megs for an extra $5 billion for N+1. You can build an extra 10 for $1 billion for N+10, right? That to me, I think, is just what makes so much sense. But I don't know, I'm screaming into the wind.

Josh Snowhorn [00:23:10] I love it, but is that a traditional pressurized water reactor? Is that a sodium reactor? Is it a pebble-bed reactor? Can we get to self-breeding plutonium reactors because nonproliferation treaties are lifted and those things can happen. Is it the new MARVEL, little microscopic reactor? I mean, I don't know, you know? The issue ends up being that the only damn thing out there that's approved for anything is a pressurized water reactor, and those are not so simple. They are not inherently... It's tough. It still makes people nervous, you know?

Michael Crabb [00:23:52] Yeah, so I think that's interesting because I think a lot of our listeners may feel that way too. I actually feel like it is more the nuclear industry sort of self-sabotaging their own messaging as opposed to there really being a case that people don't like it. Look, in a previous life I did solar development. We had to have local police officers go to town halls because people were so angry with solar developers, right? You've done data centers; you've done the same thing, right? You've gone into town halls. And people go to town halls to be heard and to complain. That's just what happens. The data that I see, it just doesn't seem all that one-sided. In fact, it might be the only bipartisan supported issue in the country today.

Josh Snowhorn [00:24:41] It is. And COP 28 came along and they're saying, "We're going to triple nuclear," and it's all there. I think the interesting piece is going to be the cost side. Who's going to pay for it? I promise you, you have folks like me and customers who are perfectly willing to offtake the power. Siting is going to be immensely difficult, even at a micro modular, small modular, medium modular... Any piece of it is going to be tough because of the NIMBYism that goes along with that.

Josh Snowhorn [00:25:12] Granted that there's only been three major situations in the world... One, the Three Mile Island situation, which was a lot of human error and old technology and overwhelming bits of information. Complete human error and a Soviet-world situation in Chernobyl. Natural disaster in Fukushima. But all of that still sits in people's minds because you can't see it and it's considered dangerous even though a massive amount... Look at how much France is running on fissile material. And we still have 10% of our country running on it perfectly safely and fine. And the waste product is actually tiny. It really is. When you see how much has actually been out there, it's really tiny.

Josh Snowhorn [00:25:54] I would really love to see not just traditional pressurized water reactors, but newer technologies that are self-regulating sodium reactors and things like that. I would love to see that come to fruition and become factory produced. Make it easy. Make everybody comfortable with it that it can shut down on its own. That it takes very little human intervention. That it heats up and it automatically stops the reactive process. I mean, that'd be great. We just have to get there. Accelerate the science.

Michael Crabb [00:26:28] Yeah. Is that the right solution? Because what you said is like, "Yeah, there's a perception issue," which to me is a marketing problem, not a technology problem. What's the stat? You're more likely to be shot by a dog than you are to be harmed by a nuclear power plant, right? This idea of a different technology, making people feel more comfortable...

Michael Crabb [00:26:56] The other analogy I like to use is it's a bit like a vaccine company. There's a group of people that just think Big Pharma is out to poison them and track their whereabouts. If Big Pharma said, "Oh, we hear you. We're going to create a vaccine that definitely doesn't track you," it's not going to make them feel better, right?

Josh Snowhorn [00:27:16] Yeah, yeah, yeah. It's really interesting. I was just on a panel down at Metro Connect down in Miami. 2,300 attendees. Primarily, telecom data center, but mostly financial industry. The panel was about the future of data centers. And I was on with some esteemed colleagues who've built lots of data centers just like I have. A couple of attorneys were up there from big, giant firms who were dealing with the process of things that go along with that. Inevitably, the entire conversation honed into energy, because that is the issue of the hour. And the data center industry has a different issue every hour, but that's the issue of the hour. And we talked a lot about how do we power things today?

Josh Snowhorn [00:28:04] I talked about what I just said before, that we're going to get to peak grid. And that in the state of Georgia, they've had 15 gigawatts over the last 100 years, and now they have 17 gigawatts of demand until 2027, of new demand that cannot possibly be fulfilled. Absolutely impossible. Certainly not with anything that takes a while to build like reactors. Maybe it's then filled with natural gas. You can't do it with solar. It takes 6,000 acres to do a gigawatt of solar, and it's not firm. And then the batteries that would make it semi-firm haven't caught up with that to make it even viable to take on the whole load. So, none of it... It's such an immense problem, especially because data centers have to be at the core of the internet.

Josh Snowhorn [00:28:45] And so, here's the question I asked. I said, "How many people like nuclear?" And a bunch of the audience raised their hand? They're all bankers. We're talking big guys; Blackstone. You're talking trillions of dollars of investment out there, of dollars out there. "How many people want it in their backyard?" Five hands went up. And this is a giant audience full of people, right? That's the issue.

Josh Snowhorn [00:29:06] I'm in Texas, where I live. You can build anything in Texas. But if you told a rancher who's got some influence who's been here since the 1800s or something that, "I'm going to put a reactor right next door to you because we've got a big pond of water and it's near the city center and we want to help ERCOT out and all that stuff," they're going to pull out some shotguns and tell you to burn oil, right? That's Texas. It's always going to be a pickle to solve that and not have to have reactors that are so far away from the actual user that we have to build a bunch of grid that nobody wants in their backyard either. Because nobody wants big giant dangling transmission lines that... You remember the era, the fear that kicked out to the great leukemia and all these other things.

Josh Snowhorn [00:29:52] I won't disagree; it's a marketing issue and a perception issue. It's also going to take a regulatory mandate and things like that to overcome it. And maybe, I hate to say it, maybe some eminent domain stuff coming up in the future to really create the reality of those things happening. I don't know.

Michael Crabb [00:30:15] Yeah, I've heard that argument before, and I actually think that would backfire, like spectacularly.

Josh Snowhorn [00:30:25] Eminent domain? And forcing...

Michael Crabb [00:30:27] Yeah, I actually think. So, acknowledging that NIMBYism exists and NIMBYism exists for everything, everywhere, all the time, right? You definitely want to pick where you go with a business hat on, right? Like, if I wanted to build a gas plant, I would go to Texas, not California. If I wanted to build a solar plant, maybe I'll go to rural California, not San Francisco, right? You have to be smart about it. But I would observe that most people, when they say they don't like nuclear, they say they don't like the cost and schedule. And they don't say that about... Other stuff goes wrong in infrastructure development all the time, but I think it's the government involvement in nuclear. It's all taxpayer money, right?

Josh Snowhorn [00:31:14] Isn't 80% of every reactor a DOE loan, usually? Of like, traditional reactors?

Michael Crabb [00:31:20] Yeah, I mean, historically the industry gets the government on the hook. And then, yeah, cost and schedule runs totally amok, because they've never built anything even close to that before. And so yeah, people are like, "Well, I can't pay my energy bill, and you just gave these guys another billion dollars for a project that's going to start 15 years from now? Like, that's crazy."

Josh Snowhorn [00:31:44] They pass it through to ratepayers, which is... Yeah, yeah.

Michael Crabb [00:31:47] And to me, it's like if you have the government coming in... If you as a business are reliant on the government to tell local people to "Pound sand, this is happening," that is just not going to solve it. Like, maybe you do that once, right?

Josh Snowhorn [00:32:01] Yeah. I mean, I can tell you one thing that we do on the data center side. We purchased entitled zoned land. We haven't asked for a single variance. We haven't done anything. I mean, we got to the point where our team is out there birthing sheep and throwing hay bales up and drinking beer with farmers and making sure that we are absolutely tied into the community. We have to do that because we are essentially foreigners coming into their community.

Josh Snowhorn [00:32:31] Remember, in our case, we have a brownfield property, so they've been dealt a really bad hand by Alcoa. Alcoa didn't mean to do anything, but by the nature of producing aluminum, you had inherent issues in the soil. So, our neighbors who are paranoid after that experience, certainly when we come along... Like, "It's great that you're building data centers. It's good for tax base. It doesn't take a lot of schools. You don't need a lot of roads because there's not a lot of people there. But we still don't trust you. It just doesn't matter."

Josh Snowhorn [00:33:02] That's why when you asked me earlier, would we do something like that there? You know, I just really don't think it'd be great for that community. We could do batteries; nobody's going to be scared of that. But a reactor? Not a chance. A gas turbine, combined cycle gas turbine with big smokestacks? Not a chance. That'll be for other markets, other areas?

Josh Snowhorn [00:33:24] Like you said, there's the right place to do things. I don't think nuclear will ever happen in California. Ever, ever, ever, ever, ever. They're trying to shut down Diablo Canyon. Of course, then they realize they actually like lights on. But other markets, I think inevitably it'll be more appropriate.

Michael Crabb [00:33:43] Yeah. I mean, you said it, right? Whether you're nuclear or solar or gas or a data center developer or a freakin' multi-residence construction project, you've got to use those tools to engage the local community and to listen to what they tell you. You can't go in and be like, "I'm going to go teach them about nuclear," because they don't they don't give a shit, really, right? They want to understand that you care about them such that they trust that you will be a steward of the community just like they and their neighbors are. That's exactly what you just... I'm just paraphrasing what you said and those tactics that you used. Because the nuclear industry needs to hear those things and do those things, and not push their message or whine to "Mom and Dad government" that their classmates aren't playing nice with them, right?

Josh Snowhorn [00:34:34] I agree with that. And I do think that the nuclear industry should look at the worst of our country's sites, meaning the ones that devastated... Superfund kinds of sites, because remaking that into clean energy... A uniquely positioned situation, being a reactor site, to be able to put that in encapsulates it all. And then you're actually using that to produce good things.

Josh Snowhorn [00:34:59] But I will tell you one good thing, too. When I was growing up in South Florida, I'm a surfer and I got to go to Central Florida and surf in front of the nuclear plant. I can't remember the damn name right now; it's skipping my mind. But it was great because the water was always warm and we were right there. And it was a beautiful reef in Central Florida where there probably shouldn't have been one. And I love surfing the warm water, so. Now my hair turned white. Now, I don't know how that happened.

Michael Crabb [00:35:21] Yeah, you can't put it on that. The funny thing is... It's actually the same as a gas plant or a coal plant, right? That heat loop, the heat in the water is just from the cold side of the steam turbine, right? So, it'd be the same. Whichever hot rocks you're going to use, that exists. And it works to be actually quite an attraction for local wildlife because it's warmer, right? It feels more tropical than the rest of the ocean nearby, so it tends to attract certain wildlife and slightly different ecosystems. It's a funny thing about people's perception. Again, perception, not reality. And we need to make sure that we know the difference so that we solve real problems where there are some and we solve perception problems where there are those.

Josh Snowhorn [00:36:15] Yeah, exactly. It's funny because in Iceland everybody sees the Blue Pool. You know, when you go there and you want to go swimming and it's really mineral-rich water and it's really pretty. That's wastewater from a power plant. And it's funny, people don't realize that. They're swimming and soaking in that mineral-rich wastewater from a power plant. I always thought that was kind of funny.

Michael Crabb [00:36:35] I sometimes make light of human biases, but obviously they impact everyday life in all kinds of ways. It's just sort of how it works. We can't shy away from them, but we can't let them command our focus too much because otherwise we'll never actually solve... Like, you never solve human bias. Maybe someone will someday. Maybe Google AdWords... People are powerful enough, they can make anyone think anything, I don't know.

Josh Snowhorn [00:37:03] Yeah. You're going to get advertised a bunch of biased stuff right now because you said it out loud.

Michael Crabb [00:37:06] I know, I know. I'm going to have an advertisement when I go to my phone.

Josh Snowhorn [00:37:11] If you think about power today and you take away solar and wind, which are not firm, and they never will be because the wind doesn't blow and the sun doesn't shine, right? How do we infill this demand for power? And data centers have gotten this big black eye as being the bad guys, but they're really a tiny percentage of the power that the country needs. It's general industrial and population growth and energy use and electric cars and everything else. If we do it with combined cycle gas turbines and as the coal plants are turning down, that's a three to four-year stand up per turbine. A 500 megawatt turbine is $600 plus million dollars, baseline. They still have 10% maintenance a year. They are not maintenance free; they don't just run and run and run.

Josh Snowhorn [00:37:53] The hydrogen economy is utter bullshit. It's $0.19 a kilowatt hour to crack if you cracked gray hydrogen because of steam or methane reforming or using electrolysis to do that. If you want to store it in supercooled tanks which cost hundreds of millions of dollars to use it as backup fuel, that's $0.31 a kilowatt hour. And you lose, by the way, half of the entire carbon energy strength. They're not equal in the same engines or anything else. So, it's absolutely, absolutely bad.

Josh Snowhorn [00:38:22] I think that we need to get to a scenario where we can realistically, from a regulatory framework standpoint, from a manufacturing standpoint and siting and everything, say, "Yes, in four to five years, we can stand up this many megawatts and modually do it and continue to scale it in a modular fashion as needed..." So, if it's a 10 megawatt, true micro nuclear reactor, or is it an SMR or whatever it might be, we need to be able to have that framework so business and industry can have the confidence of execution. So, in these non-attainment areas which are starting to pop up everywhere from EPA where you might have 15 or 25 tons of emissions... Very difficult to achieve that. It's the only solution that will work. So, all that needs to happen. I'm a giant supporter. I wish we'd get there quicker than now, because my industry needs it right away. We would be the biggest user.

Michael Crabb [00:39:23] Yeah, I think the nuclear industry has our work cut out for us. I want us to make sure we're focusing on the right problem. Hearing from customers like you, demand isn't the problem. If you could get baseload, carbon-free power, you would take an infinite amount, right?

Josh Snowhorn [00:39:43] All day long. And geographically located very close to me, with all the security. What'll do and is really cool is that if you get that perfect environment where if it's an MMR, micro modular reactor... Is that the way to say it? MMR, SMR, or medium modular reactor? That's still MMR, that's confusing.

Michael Crabb [00:40:02] Just call it a nuclear power plant. The reactor is just the heat source. It's the power plant.

Josh Snowhorn [00:40:09] It is. I know, and I keep giving people crap about it. People bandy about SMR all the time, I'm like, "Do you know what you're talking about at all?"

Michael Crabb [00:40:16] No one does. There's no consistency. It's just made up.

Josh Snowhorn [00:40:20] It's press; everything's out there. Anyway, but if you get me all of that, what's really interesting is that I could actually, potentially, forgo emergency generators, which means I would be even better for the environment. Because they still to be tested; they still have some emissions. All of that would go away. All of it would go away. If we can get that resiliency where I've got 24/7 baseload firm power and I know that within the inherent resiliency of the platform because it's so modular in scale and size, there's almost no chance I could ever be down unless we do have an emergency, and God help us if we do, right? Maybe it still requires gens or it's going to take a while for people to get that warm blanket. I don't know.

Michael Crabb [00:41:06] At the smaller scale, it's sort of trivial, right? It's more of a commercial problem than it is a science one.

Josh Snowhorn [00:41:15] Yeah, yeah. Exactly. So, where are these factories going to be? Who's going to build the first ones?

Michael Crabb [00:41:20] I mean, I've got my bias, but it's not for you to interview me, it's for me to interview you. It sounds like you need them in the US.

Josh Snowhorn [00:41:27] We do, we do. And I know that the regulatory framework there makes it harder for what you want to do. We in particular, as a company, we're asked all the time if we're going to go to Europe and go to Asia. And there are lots of folks who have asked us to do that because our platform is good that way. I've spent my career on airplanes and have realized how much that sucks. And I legitimately don't want to get in airplanes anymore unless it's for a glorious vacation with my wife or something like that. So, we're focused on North America, but I do believe there's an opportunity everywhere in the world for this. It certainly can solve for a lot of needs, especially in my industry, as I said.

Michael Crabb [00:42:07] No doubt. Yeah, well, you're going five gigs at a time. You're going to expand geographies at some point, I imagine. You just seem like too much of a dreamer.

Josh Snowhorn [00:42:16] Yeah, we'll be outside of Maryland, certainly. Texas, Illinois, California; nice little triangle there. And if our customers ask us, infill in other markets. We are tethered to major internet exchanges. That's our formula; we're going to stick to it. We don't chase the shiny object in the industry. When we were first coming to life as a company, a lot of people were chasing the metaverse. They were chasing TikTok's obligation to deploy everywhere. You don't hear a word about that anymore. Now, everybody's chasing AI, and it's about the bubbliest thing I've ever seen besides the Dot-com bubble, which I survived.

Michael Crabb [00:42:57] Is AI transient? Is that just like the flavor of the month?

Josh Snowhorn [00:43:02] It's here to stay, but as far as the hype, it's a flavor of the month. And there are big dollars behind it. Don't get me wrong, I'm very happy to take contracts from customers who want to give me a gigawatt of demand because they're fulfilling something. And the customers doing this... At the moment, we're not doing business with fly-by-night companies or newly-funded companies or anything like that. We're doing business with the big boys who have got a lot of capital and are serious about what they're doing. And I feel confident because of what we do.

Josh Snowhorn [00:43:33] We sell land. So, we transact it. So, that transaction will be cleared and done. We sell or IRU or lease fiber, but enough where we have a nice return on all that. On the energy side, we'll have hard contracts to subscribe to service that we won't build unless it's subscribed to that way and we're reimbursed for substation infrastructure and underground stuff and everything else. If it does die away, I'm on with my life and doing different things. But what we build is baseline, resilient infrastructure that flows through every cycle and every bubble. You need land. You need energy. You need water. You need fiber.

Josh Snowhorn [00:44:10] Water, in our case, we have treated sewage water that goes by our campus every day from the city of Frederick and goes in the Potomac River. Probably shouldn't drink the Potomac River water, but that's our cooling water that we use to cool our data center. So, we do neat stuff that way. Those are the things we do. We focus on big, mass-scale infrastructure. Get all the entitlement in place and have it shovel ready. It's like an easy button for the industry. So, what happens? Doesn't matter if it's availability zone cloud, if it's metaverse, if it's TikTok, if it's AI, if it's whatever is coming along, we are still needed and we still stay the course that way.

Michael Crabb [00:44:49] Yeah, amazing. Hard assets, man. That's where it's at.

Josh Snowhorn [00:44:52] Exactly, exactly.

Michael Crabb [00:44:54] Well, very cool. Anything that we didn't talk about that we should have?

Josh Snowhorn [00:44:59] No, no, I'm not going to talk about Mars. I won't do anything like that, so no, we're good.

Michael Crabb [00:45:05] We'll get a follow-up for Mars. You can't dangle that carrot and then move on.

Josh Snowhorn [00:45:10] I'm not too crazy. I live in Austin, where Musk is certainly here and it's bandied about sometimes, but I'm not doing that. No, look... This is a nuclear podcast and I would just implore any listener who's got the wherewithal and technology to go implement it to reach out to me, contact us and let us know what you're doing. And if you can bring something to market and fruition at a timeline that's going to be attractive to our industry, even if it is 10 years out, bring it to us so we can understand it and see if we can play a part in that. Because it may seem like a long time from now, but I've been in this industry for 25 years, and 10 years doesn't seem that far out to me anymore. So, if somebody can bring something along, we'd love to take it on and provide carbon-free power to our customers.

Michael Crabb [00:45:51] Amazing. What a note to end on. Yeah, let us know. We'll keep an eye out for the announcement of hopefully a couple of projects from this.

Josh Snowhorn [00:45:59] There'll be some great ones, absolutely.

Michael Crabb [00:46:00] Awesome. Well, yeah. Thanks, Josh, for coming on. It was awesome.

Josh Snowhorn [00:46:03] My pleasure. Thanks for having me.

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