Doing data centers the not-dumb way

In this episode, I welcome back my old friend Jigar Shah to discuss the current hullabaloo around explosive electricity demand from new data centers. We dig into why its stupid for tech companies to build their own behind-the-meter natural gas plants, how this approach is wrecking equipment and destabilizing the grid, and a better, smarter, faster path forward. 📌 Instructions to add paid episodes to your preferred podcast app via mobile / desktop (PDF transcript) (Active transcript) David Roberts Hello everyone, this is Volts for April 15, 2026: “Doing data centers the not dumb way.” I’m your host, David Roberts. Regular listeners will be aware that I have been somewhat obsessed with two related subjects lately. One is the hullabaloo around data centers and their effects on grids and ratepayers. The other is the rising cost of electricity across the country. A great deal of thought is going into the question of how to accommodate explosive growth in electricity demand without sending electricity bills, or greenhouse gas emissions, through the roof. As it happens, I know a guy who operates squarely in the center of this world and is deeply involved in all these debates. You know him too, since he has been a Volts guest several times already. I am talking, of course, about our old friend Jigar Shah. It turns out that, since leaving the Department of Energy’s Loan Programs Office at the start of last year, he has been extremely busy. He co-founded Multiplier, an advisory firm helping clean energy startups with financing and exits. He chairs Deploy Action, a nonprofit focused on state-level grid reform. He co-hosts not one but two podcasts. And he recently published a white paper laying out a near-term roadmap for states trying to bring electricity bills down without waiting for the federal government to do anything useful. He does not sleep, apparently, but he does share his opinions, and today we are going to dig into all kinds of hot controversies. With no further ado — Jigar Shah, welcome back to Volts. Jigar Shah Thanks. I just slept like a baby last night. David Roberts You must have exquisite scheduling powers. You must be good at a disciplined calendar. Is that true? Jigar Shah It is true. I also am very good at surrounding myself with extraordinary people. David Roberts That’s a good trick. Maybe I shouldn’t be such a misanthropist and I would have an easier time of it. But I don’t want to get into all this stuff you are doing because we could talk about it all day. I do want to ask just quickly about Energy Empire. You have this podcast Open Circuit, which is a revival of the old Energy Gang pod, which goes way back to — Jigar Shah 2013! David Roberts 2013. Amazing. And you guys are back. That’s fun. But now you’re doing this other pod called Energy Empire. Just tell us briefly, what’s that all about? Jigar Shah Everyone is becoming an expert today about the Straits of Hormuz, and it is shocking to me how big our industry is. We did $2.2 trillion of clean energy finance last year. Only $1.1 trillion of fossil fuel finance last year. David Roberts That’s global. Jigar Shah Global. But we only talk about startups and venture capital all day. And I just think that when you think about ExxonMobil as a household name, but are the companies doing $2.2 trillion worth of deployment household names? We have to fix that. David Roberts You’re profiling big players in the industry. Jigar Shah Yeah. But also profiling politicians who are doing extraordinary stuff in the industry, and profiling the fact that you and I both know that now that we have gotten so big, we are national security, we are energy security. People are not talking about our stuff that way. They constantly talk about A rounds and seed stage financing. David Roberts Yes. As though we are eager freshmen. There is a need for the industry to put its chest out a little bit. Let’s get into all the stuff. Let’s start here. Here’s where I want to start with you. Right now, as we’ve discussed many times on the pod, people are hurrying to build data centers. Everybody wants to build data centers. This is all the rage. And right now, whatever people are saying, it appears that what people are doing by and large is building behind-the-meter natural gas plants. This seems bad to me for obvious greenhouse gas reasons. You argue that it is also bad for many other reasons, including from the data center’s own perspective. I believe your phrase was “a fairy tale concocted on the back of a napkin.” Tell us why this quest to power big data centers with your own natural gas plants, which is what X is doing, which is what Meta is doing — why is that the wrong approach? Jigar Shah We want to start with the fact that data centers are providing us load growth for the first time in 20 years. Load growth is good. When you have load growth, whether it’s from EVs or heat pumps or other things, it allows you to lower electricity bills for everybody. I’m not anti-data centers. I’m anti doing data centers in a dumb way. We want to start there. The second piece is that data centers have been operating for the AI training illegally on the grid. People don’t understand that since the 1950s we have had standards on how loads operate on the grid. You can’t ramp your load from 20% to 80% loading five times a minute. David Roberts Is that law or regulation, or where is that? Jigar Shah It’s regulation with the utilities. There are ramp rates, there are all of these things that you’re supposed to do to not screw up the grid. Data centers have been in gross violation of that. When you think about what’s wrong with data centers, they have load volatility, which we just talked about, then they decide to power it with behind-the-meter natural gas generators. These natural gas generators, their shaft is supposed to last for seven years. It’s lasting 10 months because of all the cycling. David Roberts This is because they’re designed to run steady and they’re being made to fluctuate? Jigar Shah Totally, and when they can’t fluctuate, just so you understand, data centers — when a natural gas turbine fluctuates, it fluctuates in seconds, not milliseconds, or it fluctuates in minutes when it comes to a turbine. And it’s not made for this purpose. Then you say, “Why don’t we just put a battery in the middle of it?” Lithium-ion batteries don’t have unlimited cycling. If you cycle them five times a minute, they degrade and they stop working after five or six months. Now you’ve got interconnection delays. You’ve got the cooling issues, which we all know about in water. Then they have harmonics and frequency destabilization for the entire grid. If you look at some of the press releases out of Crusoe and Oracle, ERCOT is not happy. David Roberts Let me just ask you, physically, how are they doing it? As you say, natural gas — these are jet engines, basically modified jet engines being made to do this, which is insane. But as you say, they cycle in seconds, not milliseconds. How are data centers getting reliability out of them? Are they just overbuilding the crap out of them? Jigar Shah They’re breaking them early. I think the average data center that’s trying to run off-grid has 50% extra capacity behind the meter so that one third of the turbines can be broken at any one time so that they can run. It’s literally the dumbest thing that human beings have ever attempted to do. David Roberts But obviously, when rich people are doing something so evidently dumb, there must be reasons, there must be forces pushing them in that direction. They are not just deciding that out of the blue. Why do they feel they have to resort to this? What is the constraint? Jigar Shah This is the conversation I’d love to have with you and your expertise. You and I both know that there are multiple ways of doing this. We wrote the VPP Liftoff Report while I was at the Loan Programs Office. I know we have a disagreement on the word VPP. Then we wrote the Grid Moder…