Making sense of advanced nuclear’s stumbles

What’s behind the recent troubles for nuclear startups? And can global nuclear capacity actually triple by 2050?

The Carbon Copy podcast from Latitude Media

The nuclear power industry is grappling with several issues: high interest rates, rising commodity prices, supply-chain constraints, limited fuel availability and a regulatory environment that has been slow to adapt to new technologies.

In the West, nuclear know-how has faded over the decades. Even with a surge in policy support and public interest, development is stagnant and capacity has fallen. Momentum has moved over to Asia, mostly China.

While global renewables have tripled in just over a decade, net global nuclear capacity has barely budged upward. The reality is that we may need to see capacity double — or even triple — by 2050 to keep us on a net-zero path, on top of tripling global wind and solar capacity.

So this week, we’ll revisit the stories shaping nuclear power in 2023. Are we getting anywhere closer to unlocking real growth? Or will the industry stay in a perpetual holding pattern?

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Transcript

Stephen Lacey: So did y'all see this panel that was held at COP28 this year on responsible yachting?

Lara Pierpoint: No.

Stephen Lacey: Something I'm concerned about.

Lara Pierpoint: I want to know, Stephen, what were they actually proposing besides scrapping all existing yachts in the world and never building another one?

Stephen Lacey: They were talking about the technical solutions to making the yachting experience more responsible and sustainable, which includes more sales, more sustainable and hybrid propulsion systems and nuclear reactors, of course.

Lara Pierpoint: Of course.

Stephen Lacey: What do you do with a yacht that's making the climate sick?

Eric Wesoff: What do you do with a yacht that's making the climate sick, Stephen?

Stephen Lacey: Take it to the dock, of course.

Lara Pierpoint: Oh my goodness. Well, the bar has been set now for jokes on this episode.

Stephen Lacey: This is The Carbon Copy. I'm Stephen Lacey. The nuclear industry is a little like operating a nuclear plant itself. Once you turn it off, it takes a lot longer than other resources to turn back on. In the West, nuclear know-how has faded over the decades. And even with a surge in policy support and public interest, development is stagnant, costs have risen, and capacity has fallen. And so momentum has moved over to Asia, mostly China, but that is not nearly enough. While global renewables have tripled in just over a decade, net global nuclear capacity has barely budged upward. And the reality is that we may need to see capacity double, maybe even triple by 2050 to keep us on a net-zero path, and that's on top of tripling wind and solar. So this week we'll revisit the story shaping nuclear power in 2023 and ask are we getting anywhere closer to unlocking real growth? Or will the industry stay in a perpetual holding pattern?

Welcome to the show. I'm the executive editor at Latitude Media. I'm here with Eric Wesoff, the editorial director at Canary Media. Hey, Eric.

Eric Wesoff: Hello.

Stephen Lacey: You've been covering the climate tech space since the early 2000s, and you've periodically covered the hopes, dreams, and stumbles of the new generation of advanced nuclear companies.

Eric Wesoff: An amazingly fascinating topic.

Stephen Lacey: And, Lara Pierpoint, who is the director of the Early Climate Infrastructure Program at the Prime Coalition. She's an expert on a wide range of climate tech, including nuclear. She was a director of tech strategy at Exelon for five years and the director of the Office of Energy Supply Security at the Department of Energy before that. Hey, Lara.

Lara Pierpoint: Hello. Great to be here.

Stephen Lacey: So I want to start the conversation with a look at the challenges in the advanced nuclear industry this year. How deep do they run? And before we get into the overview of those issues, I do want to pause and have us define what we mean when we say advanced nuclear. So, Lara, advanced is this broader catch-all that includes small modular reactors, microreactors, but also other designs and safety features. So can you just explain this category for us?

Lara Pierpoint: Absolutely. So it's a really broad category, and of course like most things in the climate world, there's no single accepted definition of what it means to be an advanced nuclear reactor. So you will often see folks who will say advanced nuclear is anything that includes improvements on existing nuclear reactors, which basically means that anything that's getting built right now and anything that could be built in the future qualifies. But I think it's helpful to narrow that definition a little bit. And so when we think about advanced nuclear reactors, we really are thinking about things that are, first of all, different than the majority of the reactors that are currently operating. The majority of the reactors that are operating globally right now are light-water reactors. That means that they're cooled by water, and it means that that's the heat transfer mechanism. They're powered by uranium, and they also tend to be very large, so usually around gigawatt scale if you really want to get strong economies of scale, although they go down in size to upwards of, or I should say downwards of 500 megawatts.

So an advanced nuclear reactor starts to change a lot of those dimensions. So one of the most important things about advanced nuclear reactors is that they often include different kinds of fuels. And that can mean that you increase the efficiency of the reactor operation. It can mean that you increase the opportunity for heat so that you could supply much higher heat and potentially couple with industrial heat processes. Many advanced nuclear reactors are smaller. And so obviously you've mentioned the category of microreactors, which is a really interesting category of nuclear right now and certainly qualifies as advanced. You also have different kinds of heat transfer fluids, everything from supercritical CO2 to heavy water to molten salt, so, again, advantages that you get in how you operate the nuclear plant, the waste that you ultimately get at the end of the process and the kind of heat that you can supply, and then ultimately the efficiency and cost of your process. So a lot of different dimensions that you can improve when it comes to advanced nuclear, and there's some really exciting designs out there.

Stephen Lacey: So we're going to be sort of unpacking the small modular and microreactor space. And, Eric, according to the Axios Deal Tracker, venture investors have put about $3 billion into this category in the last couple of years, and that includes people such as Bill Gates, Sam Altman of OpenAI. How do you define this category and the private investment activity we're seeing in it right now?

Eric Wesoff: Advanced reactor kind of means whatever you want it to. Many of the new advanced reactor designs are not exactly new. They date back to 60 years to the Manhattan Project and the early development of nuclear. So things like fast breeder reactors, gas-cooled reactors, we have experience with all of these for many, many years. The venture capital funding that's gone into advanced reactors has come, like you said, from Bill Gates, Sam Altman. I think at a certain point when you're poisoned by your billions, you either invest in longevity, rockets, or fission or fusion, or you buy a newspaper. Buying a basketball team is old hat. But I think the problem with the venture capital going into fission is that it's not the same as going from COBOL to FORTRAN or a new Python compiler. We have these hordes of software developer billionaires thinking that they can disrupt the nuclear industry just like you can disrupt the software industry. And I think they're going to be sadly disappointed very soon.

Stephen Lacey: Well, we're going to get into why that might be the case, but, Lara, do you want to just quickly talk about the venture investment that you're seeing in this category and the expectations of venture investors versus the reality of commercializing some of these technologies? Or is there a misalignment?

Lara Pierpoint: I think it's a great question. I think just to say this first of all, which is that, yes, Sam Altman and Bill Gates are two folks that are investing in nuclear. There are a lot of others that are investing in nuclear technologies too, including very serious venture firms. Oil companies even are putting money into fusion and fission startups. So there is a lot of activity out there. Certainly agree that when it comes to the places that I would back, watch what the nuclear engineers are doing and where they're aligning their interests and where the utilities are aligning their interests. So I think there's a lot of activity. Some of it's smarter than others. All that said, this is a really hard industry. And I know we're going to get into this, but if you're going to be an entrepreneur, choosing nuclear as your technology is literally choosing hard mode. And I think a lot of venture capitalists understand that, but also see the importance and the potential that this technology has.

Stephen Lacey: Well, there's been a bunch of news just in the last months. So this brings us to some of the realities that have hit some of these startups in recent months, many of which have been at this for a while. NuScale Power the 16-year-old designer of small modular reactors, withdrew a critical deal with a Utah municipal utility in November, citing escalating costs. X-energy, which also designs small modular reactors, canceled plans to go public, had to reduce its workforce by 100 people, citing tough market conditions. And then the microreactor company Oklo had its license application rejected by the Nuclear Regulatory Commission last year... That was a big story... and in November lost a military contract after a competitor challenged its bid. And so these are very different stories, but they do come back to cost in some way. And so the industry is grappling with a lot of different issues right now, high interest rates, rising commodity prices, limited supply chains, fuel availability, and this regulatory environment that has been slow to adapt to new technologies. So, Eric, when you look at some of these setbacks, do you put these stories in the same pool of problems? Or are they very different?

Eric Wesoff: Well, the three companies you mentioned are vastly different points in their corporate development and have vastly different technologies. And the three problems they encountered are also they're all a population of one. There's no commonalities between those stumbling blocks that they've hit. But you mentioned the NuScale. Let's make a differentiation between NuScale and Oklo. NuScale sort of represents the old nuclear club. It's a modification of a light-water reactor, of which we have 90 in the United States. It's something we understand. The fuel we understand, and the NuScale is a integrated smaller... Although small is not the right word to be using with their SMR. It is not. I'm sorry. I know I'm jumping around. So if the SMR from NuScale represents sort of the traditional mode of thinking, the microreactor from Oklo is a completely different way of tackling nuclear. It's 15 megawatts electrical, it's something that could be transported on a barge or a truck, and it's a fast breeder reactor, very different from the light-water reactors that make up the fleet in the United States. So vastly different companies with vastly different technologies and expectations.

Stephen Lacey: Yeah. So why did this NuScale deal fall apart? Let me start there.

Eric Wesoff: Most of the reactors we're talking about today are what Admiral Rickover would call paper reactors. And this is a cliched memo from Admiral Rickover, but he makes a big distinction between... He's not with us anymore, and this is in probably the 40s, but paper reactors are not being currently built. They're simple. They're light. They are cheap, small, as opposed to actual reactors, which are being built now are behind schedule. They're very expensive, large, heavy and complicated. And all of the reactors in the advanced reactor population are paper reactors. We haven't built them. We haven't tested them. There's many, many obstacles for us getting to advanced reactors. I also would suggest that the S in these small modular reactor that NuScale is building... I want to define that... the individual module, the 50 or 77 megawatt electrical modular reactor from NuScale, is 76 feet tall. So if you're thinking it's the size of a bread box, it's not. It's 76 feet tall. And when you're building a 12-pack of these modular NuScale reactors, the size of the civil works that you have to engage in to site these is enormous. In fact, it's larger than the size of a typical 1.2 gigawatt light-water reactor.

Stephen Lacey: Well, this is an interesting point. And, Lara, I want to get your opinion on this, because this kind of brings us to the underlying challenges, some of which is related to the size of NuScale's reactor. And the reason why I kind of lumped a lot of these stories together is because there do seem to be some commonalities. But Ted Nordhaus and Adam Stein of the Breakthrough Institute penned this piece in late November outlining many of the issues faced by the industry, and they targeted NuScale specifically. And because of the regulatory nuances, NuScale had to actually increase its reactor size in the design process, and then that was just a much more complex design. And while it was getting regulatory approval, we saw this rapid rise in the cost of steel and other commodities, and then that derailed the project because the price of power was too high. So how do you think about how those factors played into the derailment of this NuScale project? And what does it tell us about the tension between market forces and the current regulatory process and how these projects get approved?

Lara Pierpoint: Yeah, absolutely. So I think this is a great discussion. And the way that I would kind of categorize this... I mean, we talk about nuclear being hard mode, right? So I'll talk about why it's hard mode. I think there are kind of three categories of challenges. The first category is a set of things that is a common set of challenges across all of clean tech. So a really common one is, hey, you want to revolutionize an existing incumbent sector usually by selling some sort of commodity into a very low-priced market. That's something that anyone who's trying to reduce greenhouse gas emissions and electricity is going to face. And so nuclear faces all of the challenges that are inherent in those market dynamics. Then for nuclear, you kind of have a set of challenges that are, I would say, common across a lot of clean tech, but hit nuclear harder. So that's where you have things like inflationary pressures. Obviously, that's been affecting everyone across clean tech. We've seen wind projects that have gotten canceled. I think in the same category is the fact that the production price index has increased by 15% over the last two years. So we've seen big increases in prices and supply chain costs, again, affecting the whole clean tech sector, contributing to other project cancellations.

But because nuclear is so construction-intensive, those kinds of issues hit nuclear so much harder than other kinds of clean tech sectors. So that's a special problem that nuclear is facing. And that really, I think, is the crux of what happened here with NuScale, is that in addition to some of the things that Eric mentioned that are regulatory in nature... And that's the third bucket I'll get to... you have a lot of these pressures, a lot of these cost-increase issues that really fundamentally made this power incredibly expensive. And then, okay, we have the regulatory piece of this, and this is very specifically unique to nuclear. It's a very different regulatory regime. Everybody obviously faces regulation from the Federal Energy Regulatory Commission, from all sorts of state regulators. Nuclear also has a Nuclear Regulatory Commission that very specifically governs nuclear safety. And that's a big place where you see a lot of costs, a lot of tension, because at the end of the day, you want to obviously ensure safety, and everyone who builds a nuclear reactor wants to do that. That's the job of the NRC, and doing nuclear safely means costs sometimes go up. So that's another factor that's affected NuScale and many of the other advanced reactors that are working to develop right now.

Stephen Lacey: Only 25%, 20% to 25% of the cost of a nuclear site stems from the actual equipment itself, the reactor vessel, the fuel rods. 50% of the cost of a nuclear project is due to the cost of installation, the cost of building reinforced concrete and the steel that's necessary to create the nuclear island. So I will emphasize that this is a construction project, and all of the cost savings that you can make in the nuclear equipment pale in comparison to the construction costs. I'll give you an analogy, in solar. In residential solar, the cost of the solar module continues to fall. It's approaching zero actually. But nevertheless, the cost of residential solar is expensive because of permitting, labor, construction. These are the same segments that are much harder to trim costs from in solar residential roof and in a massive 1.2 gigawatt Vogel project.

Lara Pierpoint: Yeah, that's right. And just to foot-stomp that a little bit more too, I mean, Eric, you mentioned paper reactors, and that's exactly what I was thinking about when you opened up the discussion here, is that when I was in graduate school and studying nuclear engineering, we talked a lot about paper reactors. And particularly in the mid-2000s when there hadn't been really any construction to speak of in the United States for decades, that's what nuclear engineering departments did, was they designed paper reactors. And what's interesting is I think in the last couple of decades there has been really strong recognition that paper reactors that are really fun to design and have really cool neutronic characteristics are really irrelevant. And so everybody has been working very hard to start designing things that are going to be less expensive, that have realistic economic advantages.

That said, you are so right. It is so different to design a reactor on paper compared to actually building one. I had the opportunity earlier this year to go visit the Vogel site when they were just about to commission the Vogel Unit 4, and it was breathtaking what I saw. And one of the interesting conversations that we had while on site is that there's this phenomenon of construction engineers, which is to say engineers who not only know how to design something on paper, but have built something, and so they know what it means when you put it into practice. And because we haven't really built nuclear plants in the United States at all for the last couple of decades, those kinds of people are in incredibly short supply. So you get a lot of really brilliant mechanical and nuclear and electrical engineers designing your nuclear plant, but they haven't ever had an opportunity to build one. So that was one of the biggest challenges that they had, was really practically implementing the designs in some really simple ways. So that's something that we're going to have to overcome as a hurdle.

Stephen Lacey: Yeah, it's such a good point. And this is what I meant when I said we lost some of the know-how and how to build nuclear in my introduction. And that is playing a huge role. And in this Breakthrough Institute analysis of what's going wrong in the advanced nuclear market, they also point out that there's this paradox, which is that nuclear reactors use a lot less steel cement and materials per kilowatt-hour of electricity generated, but they're generally more vulnerable to swings in commodity prices because they just take way longer to build. And so they're just much more exposed to these massive fluctuations in commodity prices. So definitely a unique challenge. Eric, what about these other stories that jumped out at you? So if we look at the X-energy story, does this tell us anything about the company's technology or more about just the fact that the SPAC market, that this reverse merger market, is dead in the water?

Eric Wesoff: I think it's a SPAC issue. In fact, you did mention that this morning that X-energy, with the SPAC failed, they received $80 million in venture funding from Ares, which they were spinning up the SPAC. So instead of a SPAC, it's now turned into venture capital funding. So yeah, that is a SPAC issue. But while we're talking about nuclear SPACS, Oklo is also going through the SPAC process with Sam Altman and others. So hopefully there won't be a repeat of that SPAC problem.

Lara Pierpoint: That's right. I mean, I think, yeah, this falls into sort of my category one bucket of things that are affecting the entire clean tech industry. So let's be clear that this is major headwinds. And, again, it's for everybody. In as much as SPACs are going to be less common or problematic going forward, in general, I think there's been obviously some constraints in the venture capital system over the last year or so, and so hard to say how it's going to look particularly for companies that are trying to reach later stage rounds coming up in 2024. All of this is going to affect nuclear as well.

Eric Wesoff: Stephen, I wanted to add one thing concerning advanced reactors. There are too many advanced reactor designs being looked at by the DOE and the industry. That's an enormous problem right there. We need to pick a design and stop this first-of-a-kind nonsense. But most of the advanced paper reactors that are being considered, whether it be the Bill Gates Natrium and any of the other advanced reactors, need a different type of fuel than is currently fueling all of the reactors in the United States and most in Canada. The fuel we use in our reactor fleet is known as LEU, low-enriched uranium. It's a 3% to 4.95% concentration. All of these advanced reactors require something called HALU, high-assay low-enriched uranium... Forgive me... which is 5% to 19.5%. The problem is the only supplier for that is TENEX, which is a Russian company and a division of Rosatom, who makes Russia's weaponry. Russia supplies 46% of the enriched uranium in the world, and the United States buys about a billion dollars worth of enriched uranium from Russia because we don't have our own domestic supply of HALU, which is needed to fuel all of these advanced reactors that are under development and with money by the fractions of billions being pumped into it by the DOE. So we are building reactors with a fuel that we don't have a secure domestic supply.

Lara Pierpoint: Right. Well, not yet, but that said, there are big strides being made to that extent. And I just want to actually pause for a second because I love that we call this high-assay low-enriched uranium instead of just medium-enriched uranium. It's like we had to combine high and low into the same acronym, but moving on from that being highly amusing to me, yeah, I think everything Eric said is correct, but also the Department of Energy has realized that this is a major issue and that this isn't super simple, because obviously folks are not going to invest in developing the cascades required to produce HALU unless there's a really clear market for it. And right now what we need is to demonstrate some reactors, which is going to require some HALU. So happily, Congress has stepped in and provided $500 million to actually support the starting of a centrifuge in the United States operated by Centrus Energy Corporation. And in the shocking pattern of one good news story coming out of DOE, that centrifuge cascade is currently up and running two months ahead of schedule. So a lot of the advanced reactor companies are breathing much more easily than they were just a matter of a year ago because there is actually going to be some HALU that's available particularly for the demonstration projects.

And I think one of the things to acknowledge is that enrichment in particular as a step in the process is extraordinarily sensitive from a security perspective because the technology used to make low-enriched uranium is fundamentally the same technology used to make weapons-grade uranium. So this is something that has to be sort of carefully monitored, and the handoffs throughout history among various stages of the fuel cycle and the private sector and the government have been anything but smooth.

Stephen Lacey: So what about some positivity? What are some positive storylines that you're following in this area as we head toward the end of the year?

Lara Pierpoint: So I've got a couple. HALU, I think, actually is one, the fact that we're actually making progress toward ensuring that at least there's enough HALU to get things going with respect to the demonstration capacity that's required in the United States. Again, that's, I think, a big and important step. I would say another one that we're seeing as a really interesting trend, which is a lot of corporate interest in advanced nuclear, so a lot of folks who really see the need to decarbonize industrial processes or electricity that are really interested in some of the particular characteristics of nuclear power, specifically that it can supply heat and also that it's obviously pretty much always on, that you can have really reliable capacity with respect to nuclear. A third one is nuclear hydrogen production. I'm super excited and proud that Constellation has actually gotten their hydrogen electrolyzer up and running at the Nine Mile Point nuclear site in upstate New York, since that was a project that my team helped originate several years ago.

Stephen Lacey: Are we still calling that pink hydrogen? Is that what it is?

Lara Pierpoint: Oh my gosh, please, let me not do rainbows of hydrogen.

Stephen Lacey: I'll agree that Centrus coming online with their small demonstration cascade is a win for the nuclear industry, who's desperately in need of wins, which is why the NuScale contract issue is such a disappointment. So I'll say that the relaunching of our HALU industry is a reason for hope that we can actually build advanced reactors in the United States.

Lara Pierpoint: I think that's fair. And actually I want to add one more thing to the list. I don't know that we can classify this as a win, but let's go back to Oklo for a second. I think they've obviously been having a really interesting time, the fact that they just essentially... I mean, I think what I would say about this is that this isn't as bad a headline as the newspaper headlines might make you think.

Stephen Lacey: Are we talking about the loss of the military contract? Is that what we're referring to?

Lara Pierpoint: Yeah, and specifically the fact that I think what the headlines that I've seen generally say the Sam Altman-backed startup has lost a military contract. And I'm like, okay, Sam Altman is a really interesting character these days, a little going on in his life combined with this particular story, which fundamentally is a process foul, and it was something that was a mistake made on the Department of Defense side. Oklo is still in the running for that contract. They're correcting basically a mistake they made in the processing of this particular application. So that story is not over. I do think that the regulatory challenge that Oklo has faced is a very real one. And I think we shouldn't sugarcoat the fact that this is, again, incredibly hard. And this third category of how you do nuclear safely, get it through the regulatory system and manage to do all of that in some version of an economic fashion, it's incredibly difficult. And Oklo is really the tip of the spear, especially when it comes to microreactors on all of this. So there's some work to do there, but that said, I think it's not totally unexpected. It's hard. It's a very different licensing paradigm that they're ultimately effectively pioneering. So anyway, I think it's going to be an interesting year to watch microreactors.

Stephen Lacey: Well, let's push out to the broader industry now and dive into some other stories that are shaping the industry. In our last episode, we dove into the nuances of how to triple renewables capacity by 2030, and that's a goal that was being discussed at Global Climate Talks. And it also at this year's COP, there is a coalition led by the US for a goal of tripling nuclear capacity by 2050. And US officials, including John Kerry, have been leading the charge there. And interestingly, Japan, which promised to phase down nuclear after the 2011 Fukushima catastrophe, signed on to that. That tripling is in line with the 400 to 800 gigawatts that McKinsey says we need to build by 2050 to hit a net zero scenario. And it's certainly going to be a heavy lift, and it's going to require the west to reinvest in nuclear in a major way and not just scramble to keep existing plants open.

So what's that going to mean for policy changes and actual build out? And I want to talk about some of the indicators in 2023 that tell us about the path to 2050. This is a global conversation, but I suspect many of the trends we're going to talk about are US-based since there's a lot of activity happening here on the policy front. Lara, first to you, just then that big picture tripling that's getting attention at COP, how colossal is that goal? And what does it mean to have nuclear a big part of the conversation there?

Lara Pierpoint: Yeah, it's a great question. I would say it is colossal. It is sort of just on the borderline of crazy. I think it's potentially doable, but this is a lot of infrastructure getting built really fast. And if you look around at what's getting built right now over the next like five years, it's not consistent with that particular goal. We're going to have to ramp up really significantly from where we are now in a global sense. And I think if we're going to meet those targets, a lot of that is going to be driven by construction outside the US. I think right now you're seeing obviously a lot of construction in China. South Korea has been constructing a lot of reactors and doing so in a way that doesn't actually substantially increase the cost with each reactor that they build. So a lot of these kinds of trends are really important. We're going to have to see a lot of those.

Stephen Lacey: Eric, you've written about this goal. What was your reaction to it?

Eric Wesoff: Well, climate change requires bold scale-up, and certainly tripling renewables or tripling nuclear qualifies. And so these are the types of big ideas we need to confront climate change. I would suggest that the only country that's capable of tripling their nuclear power wasn't a signatory to this agreement. It's China, who's the only one who really seems like it has a chance of doing that. China has 22 nuclear plants under construction today, 22 and 70 planned. So China is ready to double their nuclear by 2035. They'll do it. Yet they did not sign onto the COP28 agreement. I think the globe can triple solar easily. In fact, we can talk about that later, but that's easy.

I don't think the globe, the United States certainly has addressed the cost issues of getting nuclear down to $6,000 per kilowatt to build. And, like Lara said, not having a positive learning curve where each additional build is more expensive than the previous one. That's not the way that's supposed to work. And we have to do that with an order book. We can't have that with 10 possible designs that we're working on that are all first of a kind. We have to have an order book of five AP1000s, 10 AP1000s so that we can get a supply chain going and actually realize some economies of scale and some actual learning curves in our favor.

Stephen Lacey:

And, Lara, what's preventing that order book from being filled?

Lara Pierpoint: I mean, I think this is sort of a classic chicken or egg problem. I think you obviously need folks to order nuclear capacity and to have firm commitments to buy that power. And it's hard to get those when there's such a deep lack of clarity on what the cost of that power is going to actually be. And experience to date, again, particularly in the United States, is not great when you've got a 75% construction cost increase over the last two years that NuScale announced. In addition, the Vogel plants obviously much more expensive than originally planned. The same thing for plants built in France. There are a lot of places where the construction costs as advertised when the reactor was on paper was very different from how things played out. And, again, a huge number of factors. It's hard to restart an entire industry of people to do this, particularly when you've got extra requirements on the safety and quality of the work that you're doing during that construction process. So a lot of folks who otherwise would be buying power, the utilities that might be committing to building these plants are very skittish and understandably so, because of this wide sort of range and high potential, frankly, for cost escalation. So I think question is how do we break out of that cycle? I'm going ahead and asking myself the next question before you, Stephen.

Stephen Lacey: Yes, please.

Lara Pierpoint: I hope that's okay.

Stephen Lacey: How do we break out of that cycle?

Lara Pierpoint: How do we break out of that cycle? I think it's really, really hard. I think we are going to need to build some different reactors that have some characteristics that potentially make them more efficient. We're going to have to do that closer to on-time and on-budget than we've built gigawatt scale light-water reactors. I think some countries, particularly some sort of surprising signatories to the COP tripling agreement, if they actually make a commitment to purchasing a reactor, that could get really interesting. We've also seen throughout the world a lot of nuclear programs have heavy state sponsorship. That's certainly been the case for a lot of the earlier nuclear reactor builds and obviously now in China. And so I think in as much as some of these countries are committing to buy nuclear and it's not just a utility commercial transaction, there's also really a state government behind this for various reasons, often related to, hey, we'd like to decarbonize, and solar and wind isn't going to work in our territory for whatever reason.

I think those are some of the things that are going to start making a difference. But I think Eric's totally right. This is about momentum, and it's about not just one-offs here and there, folks buying reactors and building a completely bespoke design and then imagining that things are going to go well in a different country with a different design. We need to start focusing and getting order books out there.

Eric Wesoff: Telling me I'm totally right is my love language, so thank you very much.

Stephen Lacey: You looked very flattered there.

Lara Pierpoint: I'm here for it, Eric.

Eric Wesoff: I want to make one point. So, Stephen, you asked why there's such a difference in cost in nuclear in the United States versus, say in Asia.

Stephen Lacey: Yeah, pretty wildly different costs.

Eric Wesoff: Good question. Why is that? We talked about how the hardware is a small part of the total project cost. The construction and the design is the big part. And in places like, say South Korea, the folks who design the nuclear plant and build the nuclear plant are also in many cases the same people who operate and maintain the nuclear plant. And all of their incentives are aligned, and there's an integrated construction from design through the actual build. In the US, the folks who operate the nuclear plant are not always the folks who build and design. And that disconnect means there's differing incentives and perverse incentives sometimes to keep the project going because you get paid more. And so I think that what we need to do is we need to change how we integrate construction in the United States as opposed to some silver bullet reactor design that's going to help us. Small reactors... I'm skipping around, but I'm not the first person to say this, but small reactors, SMRs, are a nuclear engineering solution to a financial problem. We need a financial solution to this financial problem. Small modular reactors are a nuclear engineering solution to a PR problem. We need a PR solution to that, not some great engineering design. That won't help the financial or the PR problem.

Lara Pierpoint: Well, yeah, to add to that, I mean, I think there are some elements of the designs, particularly in the advanced and small modular world, that really were aimed at a cost reduction. I mean, one thing that we know is that humans are really bad at megaprojects period. Granted, that doesn't explain why we're so much worse at them in the United States than in Asia. But that said, even in Asia, it's hard to build gigantic projects that have unbelievably huge complexity. It's especially hard to do that, again, if you're restarting an entire industry and working with folks who need training as they're on the job. So part of what small modular reactors were supposed to do is to solve that to some degree by saying, okay, you're not betting your entire balance sheet on a gigantic gigawatt scale reactor. This is potentially a more tractable project. The problem, as we've discovered in the nuclear world, is that by the time you include all of the safety and regulatory requirements in your reactor design, you suddenly realize, gosh, the economics only work if I'm producing a whole heck of a lot of power. And that's one of the big reasons that you saw this shift from a whole bunch of folks that were really thinking like sub-100-megawatt reactor designs all the way up to 300 megawatts and in some cases much higher than that.

So I think we need to be honest with ourselves about how the economies of scale work here. I think it is true that construction is really where we need to focus our energy in terms of cost reduction. To some degree, I think there are nuclear power plant designs that can help with that. One of the arenas that I'm really fascinated to watch is the idea of shipyard construction of nuclear reactors. And this opens a whole new can of worms around what does it mean to have a nuclear reactor that's effectively on a barge offshore. But that said, the idea that you're basically centralizing your construction equipment and ideally your whole entire construction staff in a way that would enable you to fulfill orders in a very different way than you do when you're essentially reinventing the wheel in a completely different location, really a potentially interesting solution to some of the problems that we're seeing.

Stephen Lacey: All right. So, Eric, you're about to publish any day now a very large nuclear year in review, walking through many of the trends, particularly here in the US, some of which we talked about in the first segment of the show. But if we think about how gargantuan this goal is to triple nuclear and the activity that we're seeing in the US, both to preserve the existing fleet and build more reactors, what are the pieces that you're seeing put into place in the US that start to get us to toy around with that goal of building a lot more nuclear?

Eric Wesoff: So the nuclear industry has never had more financial or spiritual support from the US government or our populace, whether it be the IRA's investment tax credit and production tax credits that are aimed towards the nuclear industry, whether it be the bipartisan infrastructure law that is devoting $700 million to HALU and advancing fuel development... You mentioned another $500 million for advanced reactors. There's enormous amount of money going into the demonstration program in the DOE and the Loan Programs, Loans Program? Where is the loan plural-

Stephen Lacey: Loan Program.

Eric Wesoff: Loan Programs Office, they are ready to step in to provide money to worthy projects. So there's never been more financial support from the government. Also there seems to be a sentiment shift where the younger generation is ready to engage with nuclear, and there's an enormous social media campaign for positive nuclear. So that's the shift I see, is that certainly the US government is full speed ahead with promoting nuclear better than it has in decades.

Stephen Lacey: Lara, what do you make of that government support? Where is it going to be most impactful? And how long will it be before we really see it actually impact the industry?

Lara Pierpoint: That's the million-dollar question right there. Actually, it's the several-billion-dollar question potentially. But yeah, I mean, the Department of Energy has made some really great strides, and I think the way that they've structured the Advanced Reactor Demonstration Program to focus on two technologies and also simultaneously to support development of others makes a ton of sense. Obviously, the HALU moves have been incredibly helpful. I think another thing that's great that DOE is doing is they're really focusing on effectively what's the longest pole in the tent when it comes to advanced nuclear reactors around things like fuel qualification. And so there's the gateway for advanced innovation in nuclear as a whole program that enables companies to take advantage of the Idaho National Labs facilities to really do some of the work that they need to do. So I think it's really great stuff that's happening towards really developing nuclear reactors.

That said, this question on when is this going to bear fruit and when are we going to see commercial reactors, there was a group of us that was betting on this, like when are we actually going to see the first grid-connected nuclear reactor come online? And I would say that of the folks who are nuclear experts, the predictions ranged from kind of 2026 at the earliest all the way out to 2035. I think we'll see where in that kind of range we land, or if we manage to hit that range at all. I think 2026 is very ambitious, but I think we will get there. I think we're going to see a reactor built eventually. I think that in my mind, the bigger question is almost what happens next? Which reactor gets built? How does it do with respect to its performance metrics, particularly with respect to construction cost and timing and things like that? Because that will mean everything about whether there's a second reactor.

But I'll say too, I think it's true that some of these trends are really kind of amazing. I noted that this year, polling in my home state of California showed that 58% of Californians support keeping Diablo Canyon Nuclear Plant open. And that is very surprising. This has been a pretty staunchly anti-nuclear state for decades, I think as folks well know. Another wild thing that happened this year, just to tell this story, on Thanksgiving morning, my kids were watching the Thanksgiving Day Parade, and I sort of overheard from the kitchen that they were introducing Miss America. And my head snapped around because I was like I know this person. I've had a conversation with her.

Stephen Lacey: Grace Stanke, nuclear engineer.

Lara Pierpoint: Grace Stanke is a nuclear engineer. So there's a very different profile associated with nuclear power, particularly with the younger generation. And I think that's something that is going to be a trend that increases and honestly sustains support to a greater degree for nuclear power than we've seen in a long time.

Eric Wesoff: I'd like to offer a contrarian future. Yes, all these shiny bells and whistles and gas-cooled reactors and molten sodium and micro and all of these new designs, they are a playground for nuclear engineers. That's what nuclear engineers want to work on. They want to work on new things. I would suggest that nuclear at gigawatt scale is the right scale, and that we should be figuring out how to build AP1000s in volume. The US has, I think, four or five combined operating licenses already open for AP1000s to be built, or for traditional nuclear to be built in Florida? Turkey Point in Florida has a license granted for two new reactors, but they're not building them because they're flinchy about the cost. The nuclear reactor fleet has this amazing on-time capacity factor. It's over 90%. It's 92%, or of that nature. It hasn't always been like that. In fact, 30 years ago it was at 50% or 60%. So the nuclear industry has made amazing operational progress in getting more out of their existing plants. We should be doing that. We should be figuring out how to build AP1000s instead of flailing around trying to find silver bullet designs that will rescue this industry.

Lara Pierpoint: I certainly don't disagree that I think the size of the reactor really matters for all the reasons that I mentioned before. When you talk about economies of scale, that's obviously the way the market has actually trended, and there are real reasons for that. I think another thing that is really fair about what Eric said is that particularly because this is a global question, this isn't just about the US. There's a question on what are the reactors that folks actually want in other countries? And it's been a while since I've engaged on this, but I would say probably 15 years ago I was at a meeting in Europe, and I was floored by how few countries were talking about any desire for SMRs. I think there's a lot of need for electricity, a lot of need for clean electricity, and they're not interested for just really basic reasons and looking at reactor designs that are any smaller than roughly a gigawatt.

So I think that's right. I guess the way that I think about this, though, is with various epics, right? If we're going to get to net zero globally, we need to do as much as we possibly can as fast as we can. And so I don't disagree that particularly in the near term, pulling out all the stops to get the most out of our existing, already built nuclear reactors and building more of what we know how to build is incredibly smart. And also I think there's room for other kinds of designs with other characteristics that are on a longer timeline that have the potential to make a big difference ideally from a cost perspective. That said, I do agree with what Eric said. I think a lot of times the nuclear industry gets very excited about nuclear engineering and is not sufficiently excited about raw economics. And so I often get on a soapbox and remind people of that. But, again, I think we're seeing more success with companies that are understanding that and trending in some of those directions. And so I guess I'm a little bit more sanguine about the longer term future for the advanced reactor designs.

Stephen Lacey: All right. Let's go to our final segment of the show where we pick a story that tells us something about the near or far future. It's called The Forecast. Doesn't have to be nuclear-related. Eric, what are you thinking about?

Eric Wesoff: Yeah, there's been some recent stories about what the global total for solar will be in 2023, and the number's over 400 gigawatts. And so let's do a little approximate math. That's a gigawatt a day. Over your weekend, the globe installed two gigawatts a day. The nuclear industry... And I'm sorry the comparison doesn't make the nuclear industry look good, but the nuclear industry grid connected about four gigawatts of nuclear to the grid this year. That's four days. Apparently, the sun does go away, and wind does stop. So thank you for that note. But I realize it's not apples and oranges when we're talking about nuclear and solar, but the sheer volume that's coming from solar these days. A gigawatt a day, that's going to start to add up. And in a few years, you're talking about terawatts. And in a decade, you're talking about several terawatts. We're in this water. It's happening every day, and I don't think people realize what it's going to be like in five years. We're going to have amazingly cheap, abundant solar. Combined with storage, we may not need all of these advanced energy ideas.

Stephen Lacey: We definitely need all kinds of other resources to balance out, but solar is definitely eating the world. Fascinating trend. And I think a lot of people five years ago said it would happen, and here it is happening basically on schedule.

Lara Pierpoint: And thank goodness.

Stephen Lacey: Lara, what's yours?

Lara Pierpoint: I think the story I'll tell is the beginning of the pandemic, I basically said, wow, what a rough time to be working on climate change because no one will be talking about anything but health for the next couple of years. And my good news story is, boy, was I wrong. I feel like it stayed very much in the news. It clearly has stayed top of mind for a lot of folks all over the world, generally for some really horrifying reasons. The orange sky day we had here in the Bay Area when the wildfires got really intense that year, I think, was a huge, huge wake-up call. But I think there's a lot of momentum. There's a lot of will. There's a lot of money. Whether that all becomes collective and how far we go with this, I think, is a really big question. But I think that's what I'm excited about for the future, and that's the one thing that keeps me hopeful, is that I think we get it. I think a lot of people get it now, is a question of marshalling resources in the directions that we need to go. And, yes, that means building every stitch of solar we possibly can, and I also think it means making sure we have the nuclear option for the places that can't build solar.

Stephen Lacey: Absolutely. Well, we've been talking about building hard things. And it's not just nuclear reactors that are difficult to build. It turns out EV chargers can be difficult to build too. And I don't know if you've seen this subgenre of Twitter, or I guess X, of people going around to broken EV chargers and saying that it won't charge their credit card or it won't charge. The chargers are down everywhere, and there's a real problem with maintaining chargers in this country, but we also have a problem with building them. And the Inflation Reduction Act allocated $7.5 billion to building out a national EV charger network in this country, and $2 billion of those funds have been allocated to states, but there have been zero chargers built as part of those funds according to an analysis by Politico. And they just put out a really good deep dive into why this is happening. And much of it revolves around the standards that are being set for how these chargers should work. And companies are having a hard time meeting those complex requirements. But ultimately, most of the experts who are quoted on this are saying that this is really tough. It's impacting EV buyers today, but once you have people who have wrapped their head around the standards, you're going to see the EV charger market pop.

And I sort of took a look at this, and I said, okay, this is frustrating, particularly for folks who are looking at limited infrastructure in certain areas of the country. But of course you want to install chargers fast, but you also don't want to install crappy chargers either. And I don't know what's worse, delaying the charger rollout or having a bunch of chargers that have problems and then suddenly you have a bunch of EV owners who are complaining. And so I thought it was a fascinating story. And it's not just big infrastructure projects, big power plants that we have a hard time building. It's also some of the distributed stuff as well, and EV chargers are certainly a part of that.

Lara Pierpoint: I had a friend who worked at Xerox PARC, and one of the things that she said one time is, "Hey, you know what Xerox is really good at is maintaining at a high operational functional capacity a whole bunch of distributed complex technology infrastructure." And I'm like we need to solve this problem. This can't be that hard to figure out a way to increase the uptime in EV chargers. So someone go do that.

Stephen Lacey: All right. So we covered a bunch on this episode, and we will link to many of the resources that we mentioned, including a bunch of Eric's stories over at Canary Media. And, Eric, we're recording this before you have published your year in review. So when will that be out? Will it be out by the time this episode goes live?

Eric Wesoff: I've been hearing this question from my editors. It should be Tuesday or Wednesday of next week.

Stephen Lacey: Okay, great. So the episode may go out before that happens, but we'll add it into the show links after that. And we've got a bunch of other stories that Eric has written on the nuclear industry that we talked about on this show that we'll add as well and some of the other reports that we mentioned. And, Eric Wesoff is the editorial director at Canary Media. Thanks, Eric.

Eric Wesoff: Thank you.

Stephen Lacey: And Lara Pierpoint is the director of the Early Climate Infrastructure Program at the Prime Coalition. Thanks, Lara.

Lara Pierpoint: Thanks, Stephen.

Stephen Lacey: This is The Carbon Copy. It's a co-production of Canary Media and Latitude Media. Go to Apple Spotify. Give us a rating and review if you like what we're doing over here. And find us all on LinkedIn or X and give us your commentary. Nuclear is definitely the subject where we will hear the most from listeners, so we want to hear your takes on our takes. Please let us know what you think. You can go over to Canary Media and click the donate button on the homepage. They are having their year-end fundraiser. Your donation is tax-deductible, and you can support high quality journalism. You can also go over to latitudemedia.com and subscribe to our newsletter, and we are covering a wide variety of stories at the frontier of climate tech. So thanks for listening. We appreciate you being here with us, and we will catch you next week. I'm Stephen Lacey, and this is The Carbon Copy.

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