Month: November 2025

The Return of Renewables and ESG

Posted on by Leonard Pham

Here’s my first prediction for 2026: Yeaup, it’s that time of year again, Turkey, holiday decorations, and prognostications.

I’ve done the math, mostly in my head, but sober, and my mental models suggest that the demand for power generation, transmission, and transformation is so ungodly huge, that renewables make the biggest comeback since the second half of Super Bowl LI. You look skeptical.

Ok, if you want to purchase a gas turbine, the lead time is one to seven years. And what do you suppose it costs to lease a gas turbine? Yeah I have no idea either, but if the stock price of GE Veranova is a leading indicator, biz-ness-is-a-boomin! But you know what’s relatively cheap, and can be constructed co-located next to your datacenter in ~18 months? Rhymes with polar. Now all you need is to buy a few power distribution transformers, oops, wait time on those is…you don’t want to know.

My point is that if you’re eating french fries, and a bottle of Heinz costs nine skillion dollars and a bottle of Hunt’s costs a nickel, you make do with what you got. (Note: Don’t you ever serve me Hunt’s. I will come at you like a spider monkey)

What the hell was I talking about? Oh yea, ESG is making a comeback because of Datacenters. Crazy right!? I think Alanis Morrisette wrote a song about this on her second album Jagged Little Pill, which, for my money, is one of the top ten albums of all time. Laugh at me if you want, but there’s not one bad song on that album.

That is all.

Too Big to Fail: The Sequel

Posted on by Leonard Pham

Let’s start with the fact that I did not major in finance or economics. BUT, I am a student of history, and well, let’s just say that I’ve seen this movie before.

I’ve been trying to make sense of all of the AI financing that’s been happening over the past several weeks. If I’m being honest, the way some of these deals are being financed are a bit over my head. Do I think another financial crisis is coming? Ehhhh, no not really. I feel uneasy about the massive piles of debt the hyperscalers are accumulating, but I’m not panicked either. If there’s any good news, companies like Google (aka Alphabet), Microsoft, Facebook (aka META), and Amazon all have solid businesses with lots of room for growth, and that’s without future demand for AI.

To be clear, it’s not the size of debt these companies are taking on. Their bonds are all investment grade (see above, they make huge profits). It’s everyone else who’s taking on debt to buy these bonds. It’s also where this debt is showing up. I.e., pension plans and 401ks. If you’re a fixed income fund manager, I imagine you’d probably get fired if you told your boss you bout US Treasuries or anything that yields less than the 10 year bond.

“Ay, there’s the rub” - Marvin J. Hamlet, former Prince of Denmark

Investment-grade debt markets are the deepest part of the credit system. Private Credit with complex and obscure cash flows are also issuing debt to fund datacenters. I will go out on a limb and suggest that a non-trivial amount of this cash is tied to people’s retirement funds.

That’s the bad news. Here’s the good news, sort of: I’ve seen this movie before and IF it all goes south, and I’m not saying it will, but if if if it all goes south, the US government will have to issue a bailout. And if you thought the last bailout was huge…