Jigar Shah on the DOE's Role In Accelerating The Energy Transition

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:17)

Tracy, attention that we keep coming back to, I think, is that in this moment of high inflation, high energy costs, there seems to be, I guess, maybe the way to describe it is a tension between long-term planning and short-term pain. And so in theory, this is a good case to be investing in sort of new energy, perhaps decarbonization, technologies that reduce our reliance on fossil fuels in the countries that have particular access to them.

But at the same time, there's also a lot of impulse to just get the price down right now.

Tracy Alloway (0:54)

Yeah, to me, it comes back to just the cyclicality of the energy industry. And if you think back to 2015, when we had the oil prices going down quite suddenly, and everyone was talking about a glut in shale oil, and all this energy industry capacity had expanded too quickly, and now there wasn't enough demand to actually justify it. And then fast forward to today, and it seems like we're in completely the opposite problem. And so it just seems kind of crazy to me to be swinging from excess to shortages on a five to seven year timeline.

And it seems like it's really bad for, as you mentioned, planning for the future, right? How are you supposed to attract investment into the space if you're going from feast to famine all the time?

Joe Weisenthal (1:46)

So I guess one question that arises is, can the state, can the government play a role in ameliorating the swings on both sides, essentially reducing the volatility? And the government has this infinite balance sheet. It doesn't have to optimize for profits itself.

Obviously, in theory, it doesn't want to waste money, but itself does not, the government itself doesn't have a profit motive. And can there be sort of a role for planning, for thinking strategically, for public investments such that we don't have these, so that we actually have like a strategy, a vision, that's not just sort of at the whims of these incredible swings that we have in what seems like a fairly short period of time?

Tracy Alloway (2:30)

Absolutely. And I think you put it well, like that's the question, whether there's a role for the government to come in as a source of stability in an extremely cyclical market. And also, I don't think anyone's really talked through exactly what the different roles are for the government versus private investors. And I still think, you know, when you look at ESG, for instance, there seems to be a lot of onus placed on private capital and this idea that, well, capital is going to come in and fix everything. But actually, I still think you need the government to come in and do a lot of this. But anyway, this sort of question about what the different roles are for private versus public capital, I think is a fascinating one.

Joe Weisenthal (3:16)

Right, and there's one other phenomenon. You know, we talk a lot about gas and gasoline prices.

And the other thing that's going on in energy to especially going into the summer is concerns about the grid. Like various regional grid operators warning that blackouts are going to increase this summer, or potentially lots of concerns once again about the Texas grid. But not just Texas, it's really everywhere. There's worry that this sort of like baseload power has seen under investment. And so lots of big questions about the sort of what role can the public sector play and all of these challenges both short term and long term.

So I'm very excited. We have a very special guest today. We're gonna be speaking with Jigar Shah. He is the Director of the Loans Program Office at the Department of Energy and in a prime spot to be thinking about and addressing some of this stuff. So Jigar, thank you so much for coming on Odd Lots.

Jigar Shah (4:11)

Oh, it's great. Thanks for having me. It's a, you're a staple in my podcast.

Joe Weisenthal (4:17)

Listen, thank you.

Absolutely flattered to hear it. So why don't you tell us, like just give us the sort of quick summary of like what you do at the DOE and your background, like how you got into this role.

Jigar Shah (4:32)

Yeah, no, it's a good question. I'm a mechanical engineer by training. And my career has really largely been about figuring out why technologies that are already fully proven don't scale, right? So I started in the solar industry and, you know, started Sun Edison, which largely invented the power purchase agreement, which has now attracted, you know, over $2 trillion of capital into solar projects, right? Around the world, using that financial structure. And then, you know, after that, did some nonprofit work with Richard Branson and understood a lot more about lots of other sectors.