Transcript

Rapid Response: Power moves for the planet, w/GE Vernova CEO Scott Strazik

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Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. I think the good news in the world is we're kinda past the point that most leaders are denying the dynamic of climate change.

This is real and time is not in our favor. We can set many long term goals, and they're important. But we need to act now. Mm. What I would tell you is the technology exists to a larger extent than the world appreciates, and the challenge is how do we industrialize that technology and scale.

We need to drive action and move the needle now. That's Scott Strazik, CEO of GE Vernova, a new energy offshoot from General Electric. I sat down with Scott in front of a live audience at the Climate Conference in Boston to better understand the state of renewable energy in 2024. GE Vernova helps power about a quarter of the world's electricity, and Strasic explains how nuclear plants, offshore wind farms, and carbon capture. Will be an increasing part of our future. He also talks about the limitations of the US power grid and why it needs what he calls a new brain.

I'm Bob Safian. And this is rapid response. I'm Bob Safian, and I'm here at Climatech 2024 in Boston with Scott Straisic, the CEO of GE Vernova. Scott, it's great to be here with you. I'm thrilled to be here. This is a cool setting. It's a good Tuesday in Boston. Thanks for doing this with us, Bob. Yeah, this is great. GE has been around a long time. GE Vernova is

Brand new. Yes. There are a lot of new choices that you had to make in running this global organization. And one of those was where to base the company. Yes. And you could have put the headquarters anywhere. And you chose right nearby here in Cambridge. So How and why did you decide to bring GE Vernova?

Here. You bet, Bob. And I think just a little context, as you said for everyone, I mean GE Vernova is a two month startup at this point. We spun out and separated from General Electric in the hundred and thirty three year old history of GE. on April second and Today we our equipment powers about twenty five percent of the world's electricity, so real scale and Why we chose Cambridge is for a lot of the same reasons that This room is together in this group. This is a

Epicenter of innovation. When you think about the US and where there's real climate enthusiasm, especially let's say north of DC. Boston quickly became the spa. You think about the hundred and fifty thousand plus college kids here and For me and what I want GE Vernova to become We talk to a lot of young people we talk to a lot of young people that talk about climate change being one of the biggest things for their generation.

And we wanted to go where the kids were also because the reality is we want them coming into this industry and working with us because the challenges we have a had with authentically electrifying the world While simultaneously decarbonizing it. It's gonna need a whole nother generation of leadership. Yeah. So so this this name, uh Vernova. Vernova. Vernova. This is a this is a made up name, right? You guys created this.

They're Sounds like green. Yes. No. Got it. Uh not all energy companies have always been uh enthusiastically green. And uh some people might say, Oh, is that greenwashing to put green in your name? How how did you uh make this this choice? I mean the first question we had to decide is did we want to retain the G E in our branding? Because the reality is the world is changing.

And we needed to change with it. And that is where Vernova came from. Verde Green, Nova New. New green innovation. Okay. Yeah that doesn't mean we're running away from our past and our history. We're proud of that. But with the objectives and the challenges that the world has ahead

There's gonna have to be a different way to work and a different way to operate, and that was Implicit and explicit to all of our stakeholders with Vernova. that this is a new company, this is a new day, and we're gonna operate in a different way. Not all energy company leaders have always agree that human actions impact climate change.

How does G. Evernova, think about it. The time is now. At the end of the day, I think the good news in the world is we're kind of past the point that the Most leaders are denying the dynamic of climate change. This is real and time is not in our favor. We can set many long term goals, and they're important.

But we need to act now. We need to use the technology that exists today to drive action and move the needle now. Because if our goals are too far into the fr future and too grandiose, it may not matter if we get to those If we don't make progress today. And the technology exists today to do

What you Can do or want to do today or There are some things that you're still hoping for. It's a combination of both, but what I would tell you is the technology exists to a larger extent than the world appreciates, and the challenge is how do we industrialize that technology and scale. Mm-hmm. The reality is we've built up an electric power system over a century.

That we need to transform in twenty years max. We need to Rebuild and build this infrastructure faster. In a more efficient way than the world has done before, and that industrial challenge. Is

Really at the heart of what we talk about as an investment supercycle. That's required to both continue to Serve the increasing demand for electricity that we see from many Mac. But simultaneously, every year, we need that system to become cleaner. I mean the power grid in the US, the energy future.

Powes both ways in the grid. It's much more technological. There's AI as part of it. But the current grid Is aging does not have any of that capability. So So you're sort of balancing between fixing and maintaining what's here and building something new from scratch at the same time or like Can you build on top of what's there?

It's a combination of all the above, but what I tell you is our electrification business, as we call it, is our fastest growing business. Now a lot of times people think about that in the context of modernizing and expanding the physical grid today. Whether that be connecting new wind and solar farms to where it's needed or modernizing age transformers or switch gears, and that's all true. But the reality is the system has been built under the assumption that it is powered from coal plants that run twenty four hours a day, seven days a week. in one direction flow to homes. And Bob, exactly as you said,

We're living in a world now where To start the power generation is More variable. more complicated that requires a different system But then the electrons are

Flowing in both directions and that creates its own complexity, whether it be the F one fifty's or the solar panels. And then with that. One of our biggest investments is in grid software. Because we can make all of the physical improvements that we want. If we don't fix the brains of the grid, this is gonna be for naught.

AI would be a big part of the energy grid of the future. There are AI data centers now that Use a tremendous amount of energy. Yes. And they need more sustainable and predictable energy sources. One of them that's being discussed is nuclear power, specifically small if I have this right, small modular reactors. SMR. Yes. So how how close is that technology? How safe is it? How expensive is it? AI is critical to where the macro theme in the sector's going. In the U S

There hasn't been much demand growth for electricity in the last twenty years. AI and the data centers are one of multiple drivers that's changing that dynamic. Um, whether it be data centers, whether it be chip factories in the US, whether it be Electrifying industries that are powered by fossil fuels historically. Demand is up.

One of the ways to solve that demand growth is definitely small modular reactors. And for us, we'll commission the first 300 megawatt small modular reactor in Canada and Ontario in 2029. So it's real. I mean we're finishing up the engineering this year. will be in construction of the first plant next year. Now those early projects are expensive, but the point behind small modular reactor is that By doing the exact same

small three hundred mega watt block of power many times will come down the cost curve in a different way. the nuclear's experience in the past. Because the reality is there are very few nuclear plants in the world that have been on time and on budget. Mm. That's because everyone's been uniquely different.

By modularizing to a smaller solution, we have a high degree of confidence that We'll be able to come down that cost curve. So as we get into the middle of The next decade. This starts to become a very very material part of the electric power system. They're almost like a prefab home. Like you have the pieces and once you know how to put them together, you can put them together more quickly, more easily, more efficiently in new places. You know, it's not one piece by any means, and this still is a m multi year construction process and

Like many parts of the system we need to work through permitting and things like that. But the Lego blocks come together in a much more efficient fashion. But I'm not gonna have a a small modular reactor in my backyard instead of solar panels. Well no. Three hundred megawatts is still a lot. This is more larger scale industrial power still but at the same time the physical space is less than the size of an American football field. Uh let me ask you about uh wind power. It's a core offering for G. E Vernoba. Massachusetts has been a pioneer in the US in offshore wind. For sure. Recently other states.

Have seen their offshore project sort of fall through. Where are you on offshore wind? Like, is it an answer? Is it kind of an anomaly? 'Cause it's complicated. It is complicated, but it's important. The reality is the last let's say two years have been Full of scary headlines. For offshor wind.

And the industry economics have definitely been challenged. All that said, when we look ahead over the next five to ten years. The world needs offshore wind. Places like the North East need offshore wind to both electrify and decarbonize their systems. So we believe offshore wind is critical. For the future.

No. It is gonna be more expensive than on shore wind. It's gonna be more expensive than solar. But the way we need to start to think about offshore wind is the correct comparisons, which is really

Is it more expensive than a new nuclear plant? Is it more expensive than putting carbon capture on a gas plant? Where you have good wind conditions. Where you have shallow enough water that you can navigate to make this work, there's no question in our mind. offshore winds a more economical answer.

It doesn't mean it's comparable to onshore wind or solar. It's interesting is you you talk about it sounds like the right renewable solution for each. Location. for each need has to be assessed based on both the conditions and the economics that are available in that situation. I think that goes back to driving the efficiency that the world needs where you have good wind and solar conditions

You're gonna need to take advantage of that resource every day. Um in the same token. We're investing a lot of money into carbon capture. where that makes sense. You gotta use the resources you have and uh The

Challenge we have to transform this електроpower system. It's gonna require all the above. mindset. And uh that's one of the things I find to be a real privilege for us in Vernova. is we don't walk in the room wearing a wind hat or a gas hat or a nuclear hat because we play across these technologies.

We want to apply. The most efficient economic Technologies to what the location has. You mentioned um carbon capture. I did an episode of Rapid Response about direct air carbon capture, taking it. carbon out of the air anywhere on the planet and you've been putting it in the ground.

What are your thoughts about That whether the economics and it what kind of impact can that have. At our research center today, we have a direct air capture facility that's running pulling carbon out of the air. every day of the of the week. It's hard to pull carbon out of the air because when you think about it, the carbon intensity of the air.

is very low. And one of the things we really debated inside Vernova is do we want to develop a carbon capture technology that Goes after the hardest carbon to catch. direct air capture. Or do we want to develop a carbon capture technology that goes after the highest carbon intensity opportunities like industrial applications.

In the reality is we ended up leaning more towards the direct air capture. Now one of the reasons why we did that is candidly we had a benefit where For a period of time. We had a partnership with US government on what was an air to water program. because one of the largest fatalities for the US military is getting

resources to remote troops. So we developed an air to water technology to pull the water right out of the air. for troops in remote locations, and we're using that exact same technology now. to pull the carbon out of the air. Now

It is expensive. And it's early. But then it comes back to the earlier point, which is there's a lot of technology that works. But what the world needs is an ability to industrialize it at scale. That's our next step. That's something we'll be really starting to advance in twenty twenty five. Because this is not about whether we've got exciting technologies. It's about whether we find the breakthroughs at times to be able to build

thousands and millions of these things quickly. that can move the needle this year. Mm. Scott keeps coming back to this idea of industrial impact. And I think it's something many people fail to appreciate about addressing climate change. The existing energy system is so vast and so efficient. that to have measurable impact, we need large scale industrial scale solutions.

Unfortunately, industrial scale organizations often struggle to act with the kind of speed that the climate crisis demands. We'll talk more about that and how Scott is trying to channel a startup ethos at GE Vernova after the break. Stay with us. When you build substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious.

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Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford CEO to NAS administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

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Before the break, CEO of GE Vernova Scott Strazik talked about the state of renewable energy right now and how speed and scale can come together to have impact. Now Scott shares how he's teaching his organization to take what he calls big swings and the leadership challenges he's grappling with, balancing patience and urgency. Let's get back into it. You have ambition to get a lot done. GE, which you spun out from, was around a long time, had a certain way of operating. I know that you want to take advantage of some of the good things about that and at the same time upgrade some of the limitations, make things faster and more like a startup.

How do you do that in an organization that's been around a long time and is as big as G. E. Vernova. I think great companies find a way to problem solve and deliver in the near term while Finding the oxygen or the space to work on the long term breakthroughs.

And at the heart of the company we're trying to create is with a I often talk about a wee culture that protects for the organization to Be accountable to tomorrow. But that Can Feel protected.

To take big swings. А на став такі вол. My experience with GE І невед абіцін. But at times culturally

We may not have found the right balance between f Protecting to deliver on the near term while nurturing. The long term breakthroughs. And that's a lot of what we're working our way through right now with Vernova. And the the good news is As a two month old startup.

But one that has a history that has a big install base that does a lot of stuff today. Our ability to kind of dual task those thing themes is more Possible. Because we've already got a big install base. We already do a lot of things.

Hm. But I think we have a good read for what it's gonna take to really have step change improvements and we talk about those breakthroughs in a very Different way.

Then we talk about financial corder or meeting the next operational milestone. I'm hopful on this journey we continue to nurture that culture and with it. Our teams continue to get that much more ambitious

To go for the big swings. Personally. Like have to operate differently as a CEO than GE CEOs in of the past? I think Uh certainly I'm two months into a completely new and different experience as a public company CEO. So my role certainly has changed. Um

The reality is when you're inside a big company relative to what I'm doing today. I have the privilege now of having more capacity to navigate the outside world. And we have less internal dynamics to juggle, or at least I do. So that's empowering. But it also is a responsibility because the reality is general electric Was a company.

That um I was so proud to be part of, and I was so proud to be part of it because We led in industries that really matter. Healthcare, aerospace. Power. But when you play across many industries

Sometimes too g many goals can be no goals at all. For us now as a purpose built компані to lead. in the energy transition, the expectations and the responsibilities of us are to Take positions. And to lead in this industry forward and

That's exactly what we intend to do. So when it comes to climate tech. Yeah. Девепін the Teck itself. Із кас.

Or is it like the human elements, you know, inertia getting people and organizations that you work with? To embrace The changes that are really required. There's a lot for us to juggle. The reality, like many themes in the world, many things even with uh energy are politicized in different ways. What we're trying to do inside Vernova, and this is a real shift from where we were inside GE, is we want to be viewed as the partner of choice.

For companies that have good ideas, good product. Leverage our customer reach. Let us help you. In different ways. Reach the largest utilities in the world, and after that effective. Iteration.

With our customer base. use one of our greatest assets which is We have an incredible industrial footprint. And in some cases that industrial footprint we can Evolve. How we use that factory space, how we use the cranes.

Factories near railroads are hard to come by right now that already have the electrical connection. So In my mind, I aspire for Vernova to play a bigger more strategic role with the ecosystem I think we'll make a lot of progress this decade and

Vernova will humbly try to do their part. I wanna ask you one last thing. The human factor. Yeah. I feel like Клама чанж і собі. And

The changes are slow. Yeah. Right. But you need to have progress and keep everyone's energy up. Like how do you think about People moving forward. Um

Patient at the same time. Like you have to be urgent and patient at the same time. The uh Although some of our solutions are long cycle and that is true, the reality is the frequency and the intensity of what we're seeing in the world every day because of climate change is becoming more rapid. And those two dynamics motivate us more and more every day to move faster. It's really hard to live in the world today and not feel like the intensity and importance of our work.

isn't getting more and more important every day based on what we all see with extremes of weather. So Um I think it's quite easy every day to get motivated in a long cycle business to do this work'cause it's it's work worth doing. Well

Scott, thank you so much for doing this. I really appreciate it. Thank you. Appreciate it. Coming away from my conversation with Scott, I was struck by the importance of using multiple levers in tackling climate change. We always want a silver bullet for tough problems, but the reality is usually more complicated and messier. We need to show мір термпрогрес. And also not let today's pressures distract us.

from long cycle efforts. These are traps that all businesses can fall into. Yes, big swings matter, so do immediate results. What drives lasting impact. is the ability to embrace both. I'm Bob Safian. Thanks for listening.

Rapid response is a wait what original. I'm Bob Safian. Our executive producer is Eve Tro. Our producer is Alex Morris. Assistant producer is Masha Makutonina. Mixing and Mastering by Aaron Bastanelli. Theme music by Ryan Holiday. Our head of podcast is Lital Malad.

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