The Closest I’ve Ever Been to Changing the World (7) — What are the Risks?

Continuing from the last post, I asked him: “So what are the key risk factors here?”

He said: “If you had asked me a few years ago, I would’ve said the biggest risk was technical risk. But now, based on the final evaluations from all the third-party partners we work with, there’s not much technical risk left. The hardest technical challenges have already been overcome — what’s left now is just field-testing. From the operational side, one of the biggest variables is the electricity cost, since our robots are powered by electricity. But that risk can be hedged using financial tools — signing fixed contracts, using hedges, etc. It’s a manageable risk. Another thing people don’t often understand about this kind of engineering — the entire construction process, including building, transport stations, substations, laying cables, etc., is handled by large EPC contractors (Engineering, Procurement, Construction). All of these projects are insured, so delivery and supply chain risks are covered under bonded contracts. Our role is the technology provider — we use our tech to win large projects in the early stage, and then have the EPC contractors bid for construction. We use a fixed-cost bid model, so all construction risks are borne by the general contractor.”

I asked, “So you’ve outsourced construction risk — but what about capital and CAPEX risks?”

He said: “Yes, it is indeed capital-intensive. Each robot costs about $2.5M–3M, and each project needs around $1M–1.5M upfront for engineering and permits. Each tunnel requires two robots, plus labor and prep work — so around $7M to get shovel-ready. Once a project is shovel ready, we can bring in external financing, mainly non-dilutive financing, to move forward. All the later-stage funds come from construction loans. And these robots aren’t one-time-use — they can be reused again and again. The first tunnel is the most expensive; the second is cheaper; the third is even cheaper.”

I laughed and said, “That’s exactly like a real estate developer model.”

He said, “Exactly. We even coined a new term and registered it as a trademark — ‘Terra Space.’ You know how Aerospace refers to air and space? We develop Earth Space — underground space. You can think of us as underground real estate developers.”

I said, “That’s actually a perfect analogy. On the surface, a subdivision project costs hundreds of millions, but you can start an underground tunnel for just $7M.”

He said, “Right — but $7M is just the startup cost. The total construction cost is about $800M, but that’s all covered by bank construction loans — non-dilutive debt, not equity. Typically, we recover costs in 2 to 2.5 years, because each tunnel generates $20M–$40M per month in revenue. Compared to surface developers, the returns are much higher.”

I summarized: “So you mean each project needs about $7M upfront, which unlocks around $800M in construction loans, generates roughly $400M in annual revenue, and pays back in 2.5 years — and after that, it’s all pure profit?”

He said, “Exactly. And these aren’t made-up numbers — you can check the data yourself. Traditional surface developers working on overhead transmission lines see about the same cost and revenue ratio —the difference is, they take 15 years, while we take 1.5 years. We work underground — 10× faster, lower cost, higher quality, much more stable, and controllable risks. Power cost risks can be locked in; construction risk is covered by the contractor under a fixed-bid structure under bonded contracts — and all insured. It’s the same mature risk management system used in real estate.”

I asked, “But aren’t there no previous cases for this kind of underground work to reference?”

He said, “True, using plasma or another type of thermal spallation method there aren’t — that’s exactly why I say this is revolutionary. But underground transmission and distribution power lines are common around the world. The economic model of overhead transmission lines has already been proven — we’re just moving that logic underground, where it’s faster to permit by up 10x to 20x, more efficient, and more profitable.”

I said, “So your revenue, CAPEX, and return rates haven’t been tested underground yet, but they’ve already been proven for surface infrastructure?”

He said, “Right. All the data is publicly available from the U.S. Department of Energy — cost and return for new transmission line projects are well-documented. Even without end-users, new transmission lines can ease grid congestion, and that alone makes them profitable.”

I said, “Yeah, I’ve actually heard about that. When I was researching GPU mining, I talked with some energy researchers — they said North America’s power grid is extremely congested. In some areas, electricity is produced but can’t be transmitted; the cost of delivery is actually higher than dumping it. Sometimes it’s cheaper to dump electricity than to send it through — and when a power plant has to dump electricity, that’s billions in losses. Even then, it’s still cheaper than trying to move the power 😂.”

Troy said, “Exactly — that’s the core reason I’m doing this. The current grid is outdated and overloaded, wasting enormous amounts of energy. Our underground technology can completely change that dynamic.”

I said, “Your market is huge, you have technological monopoly — this opportunity is irresistible. But how big exactly is this market?”

He said, *“It’s massive. The Electric Utility Transmission & Distribution Market is about $400B–$500B per year, and that’s before the AI boom. Now, just in the U.S. alone, it was originally projected that we’d need 300 new transmission lines. A year later, experts said that’s not enough — we’ll need 500 to 600 lines to meet demand. Twenty years ago, I wrote a book called Clean Power Revolution — back then, we estimated 270 lines; now it’s doubled. On top of that, there’s also the power underground program, which encourages putting power lines underground because surface grids easily cause wildfires. Texas, California, Colorado, Hawaii, Oregon, Canada, Australia — all have had major fires, so underground transmission is far safer. That segment alone is worth about $200B. Altogether, the power-related market alone is $600B–$700B, and that doesn’t even include telecom, water, natural gas, or transport. Anything that exists on the surface can be developed underground — underground storage, underground farming, even mining companies are approaching us for partnerships. Those hard rock mines usually require blasting, but we can help them with the first 5–6 steps of tunneling — vibration-free, blast-free, pollution-free — making the later stages much easier. So I estimate our Total Addressable Market (TAM) could easily reach $1–2 trillion USD.”

I said, “I know the infrastructure market is huge, but I’ve seen a lot of infrastructure deals — the returns are usually only 6%–9%, that’s super low. Why are infrastructure returns so poor, yet so much capital still floods into it?”

To be continued next time!