What's Next for Rising Energy Prices - with Sean Kelly from Amperon Artwork

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What's Next for Rising Energy Prices - with Sean Kelly from Amperon

September 04, 2025 • Sean McMahon • Season 4 • Episode 6

Sponsored by KPMG

With rising energy prices poised to remain a hot topic in the months ahead, Amperon CEO Sean Kelly stops by the show to dive into the underlying reasons for energy price increases. Sean and I discuss what utilities, policymakers and other market participants can do to address rising energy costs associated with increased power demand from AI data centers. We also outline what energy traders are doing -- and the tools they are leveraging -- to respond to the price volatility. This episode is not about pointing fingers or placing blame. We focus on what’s happening, why it's happening and perhaps most importantly ... what’s next?

More Resources from KPMG

Episode Highlights

The impact AI data centers are having on energy demand - (3:51)
Are PJM's most recent auction results a sign of things to come? - (7:24)
"All of the above for everything" - (9:30)
The role for nuclear - (12:35)
Energy forecasting in this environment - (16:13)
How power traders a managing price volatility - (18:34)
New trading tools and capabilities - (21:17)
Bold predictions: What are we going to be talking about in 2-3 years? (24:48)

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(Note: This transcript was created using AI. It has not been edited verbatim.)

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Sean McMahon 0:49

Yes, what's up everyone? And welcome to the Renewable Energy SmartPod. I'm your host, Sean McMahon, and since we started this show, I've always opened it with that same rhetorical question, ‘What's up everyone?’ It's a little bit of a shtick and a little bit of an ode to my SoCal surfer roots. But today, that question isn't rhetorical. You want to know what's up? Energy prices. It certainly seems like rising energy prices are poised to become a political hot potato for months, maybe even stretching into next year's midterm elections. So today, we're going to dive into some of the underlying reasons for those climbing prices. In a few minutes, I'm going to be joined by Sean Kelly, the CEO of Amperon. Amperon is an energy forecasting company. So Sean and I are not only going to talk about how we got here, and yes, AI data centers are certainly going to be part of our discussion, but we're also going to look forward and chat about what policymakers, utilities and other market participants can do to address rising power prices. And of course, considering the line of work that Sean's in, we're also going to talk about what energy traders are doing to respond to price volatility. Now, let me make one thing perfectly clear, Sean and I are not going to be pointing fingers or assigning blame, because there's plenty of that to go around. We're going to focus on what's happening right now and, perhaps most importantly, what's next.

But before Sean and I kick off our conversation, just a quick reminder that if you haven't done so already, please check out the most recent episode of this show featuring Jessica Libby from KPMG. Jessica is an expert on tariffs, trade policy and taxes, so we had a great chat about the speed with which everything is changing in those areas under the Trump administration.

And if you want to learn more about geothermal energy, specifically how geothermal is being put to use in urban areas like Manhattan, give a listen to the episode featuring Brightcore Energy President and former New York Rangers goalie Mike Richter, Mike and the team at Brightcore are delivering some amazing energy solutions in very tight spaces.

And finally, as always, if you'd like a daily dose of renewable energy news delivered directly to your inbox, head on over to SmartBrief.com and sign up for the Renewable Energy SmartBrief, or just click on the link in today's show notes

Right now, let's talk about the forecast for energy prices in the US, and get things rolling with Sean Kelly from Amperon. Sean, how are you doing today?

Sean Kelly 3:38

Doing well. Thanks so much for the opportunity to join you today.

Sean McMahon 3:41

Yeah, I'm excited to bring you on. You and your organization are in the in the business of forecasting energy, and we're here to talk about what the power generation landscape looks like right now for the US. So you know, when we take a lot all the headlines that have been out there about growth and demand from things like aI data centers and whatnot, what's your view exactly on what that forecast looks like for the future of power generation in the US.

Sean Kelly 4:05

First off, as someone who's done this for over 20 years, it's finally nice to actually be popular talking about electricity, and people haven't talked about electricity and demand growth. I mean, you look in I mean, PJM has been flat for so many years that it's just it's nice to be in the headlines as an industry. And so demand is definitely coming. We're seeing this. I mean, I live in Houston, Texas, and demand growth here is, it's impressive. I mean, I look back on the hottest summer that I remember. I started my career as a trader, from 2005 to 2016 and 66,000 megawatts was the hottest the peak load for the hottest summer that we had in 2011 here we are just blown through 86,000 like nobody's business at 20 gigs of load growth in only 14 years. And so I think that Texas has seen it, because we've really incentivized people to come here, but now you've got other people incentivized. Seeing people such as Dominion you're seeing as well some of the western states, some of the northern states as well, up in the Pacific Northwest, saying, hey, we'd love to have you here. Then when they actually show up, whoa. Wait a minute. Did you bring your own generation? Or are you are you looking to so demands definitely coming.

I do think it has been a little overblown in terms of the numbers we're actually seeing. I do believe we're going to see some efficiencies. I'm an advisor to a cool company called Emerald AI, which is working on data centers and basically helping them be more basically flexible and act appropriately. There's been some really good papers out at Duke with and around this as well, that I'm excited about, and then we're also seeing them being co located, but also having to go and get just generation at all costs. Unfortunately, some of this is coal getting extended. Natural gas is obviously getting a lot of headlines, but you're also backed up on your turbines. And solar, plus batteries are showing up as well. And you've got other people buying, like old wind assets that are in places that aren't great from a commercial standpoint, but if you tie a data center with it, make a ton of sense.

I also think with this demand, we are going to continue to get creative, and that is nuclear, and so I'm very bullish on the SMRs with aloe Kairos, both having projects coming up. I believe in in Idaho and Tennessee, respectively. And then we're actually bringing nukes back. Palisades is back. I remember checking that plan all the time when I was trading PJM and miso, just to see what was going on in Michigan, and it's just really cool that something that was gone for three years, they brought it back as building nuclear, as we learned down in the southeast with Vogel, can be a little challenging and but no hope to see a lot more of this, because the thing that we're not seeing enough of right now is A bipartisan generation stack, and nuclear is the bipartisan generation stack. It's clean which one administration liked, and it's base load, which the current administration likes. And so I do think we're going to have to continue to see this. But with the demand, it's literally turning into byog, bring your own generation.

Sean McMahon 7:18

Yeah, I got you. I appreciate you kind of painting that whole picture for us, what the landscape looks like. You know, I kind of want to talk about recently the PJM auction results, those kind of popped into headlines, and it seems like that's kind of sparked even more knock on headlines about energy prices going up. So what was your reaction to those auction results? I think the prices were up 22% and you know, what do you see going ahead with that?

Sean Kelly 7:44

It ain't getting any cheaper. I mean, it's, it's up into the right as far as I see, just because we're running low on juice. I mean, I believe it was last summer versus this summer. There's 12 EA1 alerts in PJM. It's not good. We're there weren't any rolling blackouts. But again, this is not where you're shooting for you. You don't want to scare the general public. Capacity is just going to keep on going up. I mean, in line with the price cap, I don't see someplace like a Dominion just having like a really meh capacity auction anytime soon. So it's, uh, it's definitely coming. But the the $16.1 billion number is a really, really big number. And I hate to be the bearer of bad news, but somebody's got to pay for this. And it's not going to be PJM proper. It's going to be passed on as everything is in some way, shape or form, to the end user. And that is, again, why load growth is coming and the capacity is not getting any better. So I don't think the auctions are going to get much better. I think we're going to continue to see this in like the MISOs and the SPP. But what's the point of a capacity auction? It's to tell you what to do, and so it's telling you to go build new generation. And so I definitely think it's a big wake up call on load forecast.

And again, the hyperscalers are looking at this, and they're understanding what the what the proper cost is going to be, whereas if they were, they're specking out their data center three years ago, that number was definitely not included on there, but it's a real number that they're going to be stuck footing the bill with. But it also encourages them to, as I mentioned earlier, like be flexible and be a good steward of the grid when prices are high, when, when load is scarce, and or just again, have generation on site or backup generation. Yeah, you

Sean McMahon 9:30

Yeah, you mentioned that, you know, the auctions kind of tell you what to build. Do you think that's going to happen? Or do you think it's going to be, you know, a little bit of build, little bit of, you know, load flexibility and, you know, more efficient management, or all the above?

Sean Kelly 9:44

The answer right now is all of the above to everything. What type of generation do we need? We need all of the above. Who do we need building it like all of the above? We need everyone doing everything they can, or we're going to lose the AI race. And so if you don't have the. Generation. This is, again, why energy is top of mind. Because everyone knows that with AI, you have to have something to power it, and we're going to have to do this, or we're going to lose the race to China and possibly others and so, I mean, states need to, we need to distribute this across multiple states, as opposed to just slamming it all right next to DC. I mean, I understand, from a national security standpoint, we definitely need data centers, like right next to our capital, but I also realized that there's, there's a lot of land here in Texas, across the whole western US, I mean, Middle America, there's a lot of places that could would love the job creation. And so more states, in my opinion, need to get friendly to these data centers and go in and help them provide cheap power, or we're going to lose this race. And I really don't think this is one we want to lose.

Sean McMahon 10:46

All right, as a proponent of kind of the all the above solution, I would assume, well, I don't want to put words in your mouth. What was your take on the administration's they seem to be putting up hurdles for wind and solar. What's your take on that?

Sean Kelly 11:00

I wish everything wasn't so polarizing. I mean, you look at the last administration, they demonized natural gas, and so natural gas got beat up for four years, and renewables were up into the right and then this administration decided to come get them back, and neither one they're both right and wrong all at the same time, like we need all of it. And so this is where I'm I'm a huge proponent of like, wind in Texas, when it works, it's amazing solar, especially paired with the battery, pretty reliable. I mean, Amperon does both wind and solar forecasting on an asset level, going out for 15 days, five minute granularity, because it changes all the time. Yes, it's intermittent generation, but it still shows up when it's normally supposed to show up if it's if it's hot in summer, it's normally Sunny. And so we do know that we've got some serious issues to deal with our ending 19, 20, 21 which, for those of you who don't keep up in our ending world, is like 7pm 8pm 9pm where you're thinking, I'm still at my house. I'm still up. Kids are up, but sun's not exactly up, and that's when batteries really come in. And so, again, that's something that we did so well under the previous administration and and incentivized it.

And then now we're all in on natural gas. But again, the turbines, it's, it's a supply chain issue. You can want what you want, but if you can't get a hold of it, then, um, you got another way to deal with it, and and again, that's why, as I mentioned earlier, I am very bullish on nuclear. I feel this is the, the one thing we've actually been able to agree upon in a long time, because it's both clean and base load.

Sean McMahon 12:33

Yeah, well, let's talk nuclear for a second. Any concerns that that won't be available quick enough? You know, it seems like the build out time for those is multiple years as well. SMRs, maybe a little shorter. But how do you, how does that all fit into this matrix that we're talking about of getting everything online as fast as possible?

Sean Kelly 12:52

Nuclear is really hard. I mean, the permitting process is the piece that we I mean, not an expert on on Chinese policy. But I believe one person, if they say that it's a go, it's a go. Whereas in the United States, we've got checks and balances across the board. Not the checks and balances are bad, but we do need to, I mean, these nuclear plants need to get built. You look at the issues that Vogel had just taking forever. The SMRs are great, but you're looking at 1020, 35 megawatt projects. That's a long time to replace the coal unit. That's a lot of 35 megawatts to knock out 1000 megawatts. So again, obvious, but yeah, I'm very concerned that nuclear is not going to be built, but you got to start somewhere, and a Palisades is a huge step in the right direction, actually turning something on that was on in my career. So just to give a little color as to why I love nuclear, I was at EDF lectureside de France in 2000 end of eight and then nine and 10, and I actually got to help in the integration of nine mile and a into the New York market, where we bought 49.9% because that's what foreign entities allowed to buy of those two nuclear plants, as well as Calvert Cliffs from constellation. And it was an absolute treat to see those run. I ran some plants down as well down in the southeast when I was managing Cobb County, which is Atlanta, Georgia. So I guess being being able to say that you've run or scheduled five nuclear plants is probably not the normal run of shows.

So I've been a big proponent of nuclear since really being introduced to it in 2006 at Eagle Energy Partners, which became Lehman, became EDF. So nuclear is is definitely high on my list. It's going to have to get cheaper things. I think one thing this administration is showing is you've got to stand on your own two legs, that you can't just rely on subsidies. Subsidies have their place. I mean, the Texas wind has been a great case study and massive subsidies, and now it makes money for the most part, and helps the grid a ton. But I mean the nuclear standpoint, I mean, this is a 10 year journey, but. You know how to start a 10 year journey? You got to start at some point, because it's still going to be a 10 year journey. So that's what I'm hoping that we can get across this and again, hopefully it's bipartisan. Is, I guess, our elections flip flop about as often as there are elections.

Sean McMahon 15:13

Yeah, I hear you on that the uncertainty is a little difficult to to appeal to investors. When everything's swinging back and forth

Sean Kelly

100%.

Sean McMahon

We'll be right back.

Just a quick reminder that this episode of the Renewable Energy SmartPod is brought to you by KPMG.

Amid booming demand for energy, KPMG is at the forefront of helping organizations navigate new energy development and energy efficiency. With an industry-based structure, KPMG brings together versatile, multidisciplinary teams comprised of individuals who have the precise skill sets needed to serve this sector as it grows

To learn more, visit kpmg.com/us that website, again, is kpmg.com/us or just click on the link in today's show notes.

Sean McMahon

And now back to my conversation with Sean Kelly from Amperon.

So we talked about, you know, kind of a sense of urgency out there in power markets across the board, and lot of that involves just dealing with what's in front of us, right? What's the need? Right What's the need right now, or maybe forecasting a little bit out, like you and the team at Amperon do. But looking farther on the horizon, are there any issues within the system, perhaps on the policy front, that you're thinking, Gosh, I've got these problems right in front of me I got to solve. But wow, I'm really kind of worried about that coming at me down the road.

Sean Kelly 16:39

The interconnection backlogs is definitely something that we need to be cognizant of. I mean, if you want to build something, obviously, again, these are all necessary steps, but that that queue is getting backed up, but you also have things that are less of the ISO is fault of like people putting in multiple sites, and so they'll say, Hey, I'm going to build one of these four sites, or the same like the same site might be bit in by multiple private equity backers all saying, If I win this site, then I will build something there. And so I the double and triple counting. It's real. And so there's a few companies that are starting to, like, really help with those interconnection backlogs that's huge. And this is something that software can help with, right? This is something that, again, utilities need to, I guess, pay attention to the latest and greatest AI processes at times. And I mean, we sell to utilities on the forecasting standpoint, and they'll want to know what their demand is on that 15 day window, which we update with weather from four different weather vendors, but also on kind of that five or 10 year horizon as well, which is something that we'll put out, normally weekly, some actually for every day. And so they'll go look at this.

I hate to tell you that my biggest competitor is probably, you've probably heard of this company, Microsoft Excel, and so that is probably one of our biggest, if not biggest competitor in the utility space, which is kind of scary. There's only so many lines that you can do in an Excel spreadsheet that when you're working with AI and machine learning and running algorithms that blend multiple forecasts, because there's never one that's always the right answer. So the utilities are really going to have to take that next step to adopt AI, the thing that's causing this is also going to be the thing that saves us.

Sean McMahon 18:28

Yeah, well, I mean that, that itty bitty startup, Microsoft, we'll see if they last. I'm not sure.

Sean Kelly

I don't know. Man, I don't know.

Sean McMahon

So, you know, when it comes to the to trading all this energy, right? If I'm a power trader, what keeps me up at night, right now and then, eventually, when it gets to, kind of, what they're asking you for, how, how far they want to see down the road, what they can get ready for, you know, around the corner?

Sean Kelly 18:46

Yeah. So in the short term basis, they're really focusing on those hours that there's no solar and if wind decides to join it. So as I mentioned, kind of that that 7pm to 9pm right? We're in summer. Sun's up much later than during winter time. And so we're really, really focusing on that hours. The market in Texas, for instance, batteries are normally one to two hour batteries, so it actually can't take care of that whole peak. California has done a good job and actually has four hour batteries. Again, it's just the way that the market's incentivized to provide their battery. Obviously, there's not that much difference in engineering from from California and Texas batteries, a lot of players in both spaces. But that is definitely top of mind. If you're a trader and what you're looking at, everything's really turning just because of renewables. It is turning into a binary market at zero, which is like in the teens, like 10, $15 a megawatt, or it's 1000 and like, oh my gosh, everything is like, we're running out of power. This is something you can definitely see in Australia, who struggles really heavily with the duck curve. It'll be pretty negative 1000 Australian dollars per megawatt, and then it'll go to, like, positive 10,000 and so you're just like, whoa. And so we're starting to head that way with solar. Solar in places like California, the Western imbalance market, parts of Texas as well. And so those are the things you're looking at as a trader. But honestly, on the short term, if you're a trader and you're trying to make your money, there's, it's there's not a lot of predictability, so you're starting to move out the curve. And then if you're a term trader, so a term trader is someone who looks at what we would call like Cal 26 Cal 27 so that's calendar year 2026 calendar year 2027 they're focusing on as far out as there's liquidity, which is like, give or take, 2029 2030 Well, the macro is a mess. I guess you now have to follow social media to figuring out what's going on from a macro standpoint, with whatever the latest tweet, or whatever we're calling it is, and so the macro traders, the term traders, are having a hard time making money. So people are really coming in the the term traders are coming in, and the cash traders are going out. So it's really following on that kind of like seven ish month range.

Well, now we've seen a ton of improvement in weather just with the adoption of AI. So you're seeing kind of that seven month mark. And so that's something that Amperon is really studying. If you do have real weather around, then what could it look like? And so you might see something fun from us in the near future, just around that kind of time horizon.

Sean McMahon 21:17

A right and then, you know, what are the capabilities are traders looking for? You know, when they come to Amperon, they're like, you know, it would be great if I had this, this and this, you know, what else is on the list?

Sean Kelly 21:24

That list goes forever.

Sean McMahon 21:27

Aside from the social media monitoring, right? They want all the social media feeds followed.

Sean Kelly 21:32

No, I mean, they're definitely asking for renewable forecast. And so they're wanting to know what wind and solar across the state or across the ISO are doing? So that is something we provide on a 15 day forecast as well, updated hourly they're also asking for price. So that's something we launched in Texas. Texas is our biggest market. Really nice price cap. I live here a little partial. And so in just the ERCOT market, just not having capacity, being an energy only market, it has a lot of liquidity, and so price forecast is something that they're asking for. Some of the things we don't provide that are super interesting to me is looking at things more on a nodal level. And so we're really good at the zone and the hub, but going down to the nodes where there's, like 10s of 1000s across the United States, is not something that Amperon does currently, but is definitely asked for. And top of mind because we're seeing more and more congestion, we did a really fun we do this thing called energy nerd internally at ampereon. Wait, energy nerd. Energy nerd, yeah, right on what energy nerd is. About once a month, we go in and just deep dive in on on a topic. And so we, last Friday, dove in on on nodal pricing. So that's definitely something that people are really looking for, because they don't my wind farm doesn't directly tie to West Zone, or doesn't necessarily tie to, like zone three and miso. And so I really need to know what's happening at my particular zone and what my price is going to be on a short term and a long term. So I'd say that's something that is that's definitely being asked for outside of the the longer duration. Probabilistic, again, when there's uncertainty, people want probabilistic forecast so that they can get a range of outcomes and they have smarter models, so understanding what a potential range of outcome can be, so we can pick up these tail events. Because, I mean, we're having a tail event every couple months now. I mean, we used to call it a one in 100 year event, but when they keep on happening, I think we're gonna have to find a find something new to call them.

Sean McMahon 23:35

What is something like that do to the algorithms, right? I mean, it definitely has got to expand the band of like, like you said, probabilities that can happen, right?

Sean Kelly 23:43

It absolutely does. I mean, you look at in Texas like winter storm Yuri that happened. I mean, it definitely means that that. I mean, forget the algorithms that's in the back your head. If you were trading, almost every single one of our clients were in the industry in 2021, and so that's always sitting there in the back your head, and then with algorithm again. I mean, the more data, the merrier. And so this is something that they're definitely looking for, because that happened like that. It couldn't exactly happen again, because the price cap is much lower than it was then. It was a $9,000 price cap. But like, it can still something extreme can happen. I mean, PJM had the polar vortex in winter of 2014 and so that continues to be in the back of everyone's mind. I was trading then, and that was a wild day and so or wild week. So, I mean, those are the type of things that it it's definitely the the more data, the merrier. But again, the more outliers you get. You just, you know that this is the potential in a positive or negative just depending on what your what your proper position is.

Sean McMahon 24:45

So, you know, we've talked about, you know, the demand that's being brought about by AI data centers, and it's a hot topic right now, and it has been for a year, maybe will be for another year, but what are we going to be talking about in two or three years? Now, you know, when it comes to power generation in the US, you know, do you have any bold predictions on that?

Sean Kelly 25:07

Yeah, I think, um, again, like, obviously, I've, I've made it pretty clear my thoughts on nuclear. I think we'll have some actual SMRs up and running. Again, you're, you're looking at these projects with, with 2026 2027 dates on them. I hope they hit them. But I do think that that's something just because it's less it appears, I should say less election prone. So I think that's something that we'll be talking about. I still think we're going to be talking about demand growth. I do think that we're going to be talking about it's not quite as crazy as we thought it was going to be. I mean, ERCOT came out with some pretty bold predictions a year ago that they've they've walked back, in a sense, but I don't think ERCOT is going to be at 150 gigawatts, or we're going to be completely out of juice. So I don't think you're going to see that. I think we're going to say, you know, it wasn't as bad as we thought it was going to be, but it's still here. I don't see, like, I don't see the NVIDIA of the world going anywhere. I do think that chips are going to continue to get efficient. Got a really cool session from an AI expert, from a founder, who just kind of gave us the rundown on chip efficiency. And so it was like, okay, that's that's pretty interesting. So I do think we're going to find better chips that use less electricity, which again, drives down these demand predictions. So I think we'll say, hey, demand is up, not as bad as we thought. And then I really hope we say that the queue has gotten cleaner, that things are actually being built, that those are these data centers we want them to be built. It's great for the economy. I mean, generation, it's great for the economy. Power lines, really good to get it from point A to point B is not everyone has the ability to set a data center next to a giant wind farm. And so I think those are some things that we're going to continue to see. Back to the question earlier, I don't see capacity prices getting significantly better. I unfortunately think that the piece of our income that goes to our energy bills is going to keep going up, because, again, these auctions are going out a year or even three years at times, and that's when they start to hit your hit your bank account. And so unfortunately, that's a big cost for so many people. And so I don't think that we're going to see a significant increase here. I think those days are gone,

Sean McMahon 27:15

Alrighty, well, Sean, I mean, I mean, no offense to this, but that's one of those predictions. I hope you might be a little bit wrong.

Sean Kelly 27:20

I hope so too. Man, I'm on the same side.

Sean McMahon 27:24

All righty, well, hey, listen, Sean, I appreciate your time and explaining all this to me, and it's fascinating to hear about what you and the team at Amperon are working on. So thank you for your time today.

Sean Kelly

It's been a pleasure.

Sean McMahon

Okay, well, that's our show for today, but before we get out of here, I want to say one final thank you to the exclusive sponsor of today's episode, KPMG.

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