“The Grid Of The Future Is Being Written Here In Texas” Featuring Pat Wood, Hunt Energy Network

Today we were thrilled to welcome our good friend Pat Wood, CEO of Hunt Energy Network. Pat’s extensive career in power and energy includes serving as Chairman of the Federal Energy Regulatory Commission and Chairman of the Public Utility Commission of Texas during the administration of President George W. Bush. Additionally, he has held several independent director and advisor roles in solar, power, and utility-related organizations. Pat is also a civil engineer Aggie who went and got a Harvard law degree. Perhaps that’s why he calls himself an armadillo – someone who likes the middle of the road! Under Pat’s leadership, Hunt Energy Network has deployed a portfolio of distributed power assets across Texas. The organization aims to reach a portfolio of 1,000 MWs of batteries and peaker generation attached to the ERCOT grid by 2026. It was our pleasure to host Pat and hear insights from his unique perspective as a former regulator turned industry executive.

Pat first provides background on the Hunt Energy Network, the organization’s focus on decentralized power solutions including battery deployment and peaker generation, and the role of gas peaker plants in the energy grid to meet sudden spikes in demand. Pat shares his perspective on the complexities and challenges of managing energy infrastructure, the transition from a regulated utility business to a market-driven approach during his tenure at the PUC, the historical context of power prices, the role of subsidies and ongoing debate surrounding their effectiveness, and the need for innovative thinking and proactive measures to address growing demand for electricity. We touch on market approaches to integrating new technologies into the energy sector, the importance of having a diverse portfolio of power-generating technologies to meet future demands, economic implications of energy policy decisions, the effectiveness of market-driven approaches versus government-led initiatives in shaping energy systems, investing in cybersecurity and grid resilience to protect against potential threats, and much more. Before we wrapped up, we talked about states and countries around the world and the building blocks of getting power policy right. Overall, Pat did exactly what we really needed today as he supplied plenty of optimism and humor in an area (power) lacking in both these days. For some additional power thinking, please click here for a chart Pat provided showing estimated US energy sources, consumption, and “lost energy” from 2021.

Mike Bradley kicked off the show by noting this week was a relatively light week for economic stats, with the PCE deflator release being the only real stat that traders seemed focused on. Broader markets continue to set new weekly highs but could lose some trading momentum in coming weeks given that Q4 earnings (especially AI and Big Tech) are essentially done. On the crude oil market front, he highlighted that WTI (~$79/bbl) is trading at the upper-end of its recent 3–4-month trading range despite large U.S. crude oil inventory builds from historically low seasonal refining runs, but that it will reverse in coming weeks. He noted that physical crude markets have tightened as WTI crude oil time spreads have moved into steep backwardation, and are now trading at levels last seen in October 2023, when WTI price was trading at ~$90/bbl. He flagged that nat gas prompt price has completely reversed gains post Chesapeake Energy’s production cut announcement last week and that the 12-month natural gas strip has rallied, since that announcement, on an expectation that 2024 lower-48 natural gas production will be several bcf per day lower heading into summer. In energy news, he noted energy sector Q4 reporting was essentially complete and also noted another mid-sized E&P merger announcement from last week. He wrapped by highlighting the significant and expanding 5-year capex spend from multiple U.S. electric utilities as electricity growth expectations continued to be ratcheted up significantly. Todd Scruggs noted Qatar’s recent announcement (linked here) regarding a substantial expansion of their LNG output by up to 85% by 2030 and Qatar’s advantage in proximity to emerging demand markets and geopolitical challenges affecting other trade routes. He emphasized the potential implications of these dynamics as a US energy supplier and the significance of LNG permitting issues.

Thanks again to Pat for a fantastic discussion. We all need more Pat Woods in our life and we are lucky at Veriten to call him a friend. We are also lucky for all of you. Thank you for your support and friendship.