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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Joe Wisnal and I'm Tracy Alloway.

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Speaker 2: Tracy, how about that reopening of a three Mile Island

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Speaker 2: nuclear facilit You.

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Speaker 3: Know what, I saw that headline kind of float by

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Speaker 3: and it seemed like a big deal. So I think

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Speaker 3: Constellation signed a deal with Microsoft to reopen the three

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Speaker 3: Mile Island nuclear plant, which everyone remembers from the disaster

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Speaker 3: that happened there in the nineteen seventies. What I did

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Speaker 3: see was Constellation's share price just exploded higher, like up

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Speaker 3: thirty percent in a day. Maybe I shouldn't say exploded

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Speaker 3: in a context of three Mile melted up. That's right,

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Speaker 3: it melted up.

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Speaker 2: You know a couple things about this, So one, I'm

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Speaker 2: kind of not surprised because we all know that the

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Speaker 2: big hyperscalar tech companies have all this demand for electricity,

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Speaker 2: they have a desire to not use further fossil fuels,

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Speaker 2: and nuclear is an obvious theoretical solution to how to

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Speaker 2: get more clean energy. You know, I will say one

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Speaker 2: thing about this deal, and it's very exciting, and I

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Speaker 2: don't want to diminish it in any way. But there's

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Speaker 2: one aspect of it. I didn't realize that one of

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Speaker 2: the reactors at Three Mile Island had only closed down

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Speaker 2: in twenty nineteen. So I only know there was like

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Speaker 2: something bad happened in the nineteen seventies and the probably

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Speaker 2: contributed to the US as general pulling back from nuclear.

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Speaker 2: But I hadn't realized that actually, you know, there was

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Speaker 2: still nuclear being produced at Three Mile Island up until

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Speaker 2: twenty nineteen. Does it make it a little less exciting,

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Speaker 2: But it's not like we're fully turning back the calendar

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Speaker 2: to nineteen seventies.

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Speaker 3: Well, I think there's a nice narrative, full circle aspect

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Speaker 3: to this, right, which you just touched on. After the

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Speaker 3: Three Mile incident. I mean that really kicked off the

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Speaker 3: death of nuclear in some respects in the US, Like

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Speaker 3: there is a lot of hesitancy and fear really about

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Speaker 3: building new plants, and so in some ways, we're restarting

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Speaker 3: at least one of the reactors. Yeah, it's a nice story,

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Speaker 3: let's put it that way.

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Speaker 2: So, okay, so this operation is going to get restarted,

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Speaker 2: And you mentioned the death of nuclear and how we

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Speaker 2: basically went forever without building new There was that Georgia plant.

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Speaker 2: I think it came online sometime last year, the Votal plant.

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Speaker 2: But it does raise the question of, like, how much

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Speaker 2: was the fact that we more or less stop building

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Speaker 2: nuclear a function of the fact that we got scared

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Speaker 2: of nuclear regulations, it became too cautious, et cetera, versus

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Speaker 2: the fact that we just had as multiple guests we

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Speaker 2: now have pointed out this sort of flatlining of load growth,

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Speaker 2: this sort of flat lining of overall demand, which is

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Speaker 2: something that's now changed in the last few years with

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Speaker 2: the reacceleration of demand for data centers. And to how

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Speaker 2: much is this a story of we got scared of

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Speaker 2: nuclear and we overregulated it versus how much did the

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Speaker 2: economics just not make sense when there was not growing

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Speaker 2: demand for lectures.

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Speaker 3: Yeah, I think that's a good point. I mean, there's

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Speaker 3: another tailwind that's sort of behind the potential nuclear resurgence now,

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Speaker 3: which is there's a lot of government fundings floating around

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Speaker 3: the IRA and programs like that, and so that's another

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Speaker 3: thing that maybe is making maybe this time is different.

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Speaker 3: There have been a lot of predictions about a nuclear

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Speaker 3: renaissance over the years, but maybe maybe this is it.

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Speaker 2: Let's learn why the stars have aligned the constellation, if

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Speaker 2: you will, why the stars have aligned you for this

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Speaker 2: seeming revival of nuclear in America with the restarting of

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Speaker 2: the Three Mile Island Reactor. We really do have the

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Speaker 2: perfect guest. We've had them on the podcast multiple times.

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Speaker 2: Truly one of our favorites in the fan. We're going

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Speaker 2: to be speaking with Jiggershaw. He is the director of

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Speaker 2: the Loan Program's Office at the Department of Energy, a

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Speaker 2: key player in all of the Inflation Reduction Act's efforts

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Speaker 2: to stimulate clean energy growth in the US. With the

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Speaker 2: Inflation Reduction Act, his office went from a lending authority

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Speaker 2: above forty billion to over two hundred billion. A big

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Speaker 2: advocate of nuclear and other sources. Jigger, thank you so

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Speaker 2: much for coming on at Lots and great to have

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Speaker 2: you in the studio. It's the first time we've talked

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Speaker 2: to you here in studio.

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Speaker 4: It's so great to be in the studio. Thanks for

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Speaker 4: having me.

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Speaker 2: Thank you so much. So I'm going to start off

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Speaker 2: with this question, which is, Okay, we went for a

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Speaker 2: long time basically without building new nuclear power plants. It's

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Speaker 2: starting to pick up again. How much is it because

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Speaker 2: something has changed policy wise with you know, subsidies and

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Speaker 2: tax credits, et cetera versus demand is back. Therefore the

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Speaker 2: economics of nuclear makes sense or would you say it's

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Speaker 2: not binary?

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Speaker 4: Well, look, I think that when you think about what

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Speaker 4: happened through historical contacts teen seventies, we had high inflation, right,

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Speaker 4: and nuclear power was subject to high inflation, and so

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Speaker 4: you know, part of this is people were already worried

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Speaker 4: about building new nuclear plants before the incident occurred because

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Speaker 4: things were just getting more expensive, right. And when you

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Speaker 4: think about the utility bankruptcies that occurred right way back when,

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Speaker 4: it was because it had cost overruns on nuclear power, right.

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Speaker 4: And so so I think that in general, it goes

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Speaker 4: to when America stopped believing in itself and its ability

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Speaker 4: to do big things in infrastructure. And I think this

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Speaker 4: moment with load growth and with the President saying we

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Speaker 4: are going to build big things here like has gotten

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Speaker 4: people thinking again, Hey, what would it take to actually

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Speaker 4: figure this out this time around?

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Speaker 3: This is actually exactly what I wanted to ask you

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Speaker 3: about because I was reading that the initial construction cost

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Speaker 3: for Unit one of three mile was about four hundred

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Speaker 3: million dollars, and I guess like today the cost of

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Speaker 3: building a nuclear plant would be like five billion, ten billion.

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Speaker 3: Obviously the four hundred million isn't, you know, adjusted for

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Speaker 3: nineteen sixties prices. But it does seem in general like

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Speaker 3: it's more expensive to build nuclear plants certainly since the

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Speaker 3: nineteen sixties. Where did that additional cost increase actually come from?

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Speaker 4: So when you think about building things, like if you

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Speaker 4: were to build multi family housing, and you would build

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Speaker 4: one multi family housing building versus building twelve right throughout

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Speaker 4: the city, you can imagine if you're using the same design,

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Speaker 4: it would be cheaper, the workers would get better, you know,

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Speaker 4: the first one would cost more, the second would cost less,

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Speaker 4: the third would be even less.

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Speaker 5: You get faster.

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Speaker 4: I mean you see that when you go into like

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Speaker 4: a new home construction place. The first home takes it

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Speaker 4: seems a lot longer, and then suddenly, like the homes

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Speaker 4: start popping up every week. Right, this is the same

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Speaker 4: with nuclear power. We trained thirteen thousand people to build

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Speaker 4: the Vocal nuclear plant in Georgia, right, and then we

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Speaker 4: were done, And where did all those workers go?

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Speaker 3: To?

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Speaker 4: Other jobs? So, now if we wanted to build units

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Speaker 4: five and six. We wanted to rebuild you know, VC

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Speaker 4: Summer in South Carolina, which is like one hundred miles away, Right,

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Speaker 4: we'd have to go and find other thirteen thousand workers, right.

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Speaker 4: And so one of the things that we have to

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Speaker 4: figure out how to do is to figure out how

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Speaker 4: to build ten right and have those same workers that

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Speaker 4: we trained, all those same EPC contractors, all of those

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Speaker 4: same suppliers not have to stop and start, but we

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Speaker 4: you know, continue to like to do these one off things.

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Speaker 2: This is why I recommend everyone should go read. Your

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Speaker 2: office puts out a series of reports called Pathways to

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Speaker 2: Commercial Liftoff, reports about what it takes to really commercialize

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Speaker 2: various types of energy, not just nuclear. And you always

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Speaker 2: talk about the importance of the order book going forward

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Speaker 2: so that people know that there's a second and a

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Speaker 2: third project and a fourth project out there. So I

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Speaker 2: want to get into that and also talk some more

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Speaker 2: about the workplace development, but just on this project a

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Speaker 2: little bit more. Tell us what happened. How did the

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Speaker 2: stars align such that Constellation thought it's worth taking on

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Speaker 2: the operational risk to get this going Again, Microsoft neat

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Speaker 2: thinking that yes, this is the best solution for their

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Speaker 2: clean energy needs, and what is the role of supply

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Speaker 2: and demand, and then the role of various tax credits

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Speaker 2: and such within the IRA that made this all happen.

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Speaker 4: Yeah, I mean it's a juicy tail, right. I Mean,

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Speaker 4: when you think about the nuclear energy industry, there aren't

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Speaker 4: really any entrepreneurs, right. Constellation is a company that bought

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Speaker 4: up a lot of other people's nuclear plants. They are

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Speaker 4: the best operator of nuclear plants in the world, right,

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Speaker 4: and then they got spun out of Exelon right into

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Speaker 4: their own stockticker. But you know, I think we all

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Speaker 4: have to acknowledge that if it wasn't for the Palisades

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Speaker 4: Nuclear plant in Michigan that we announced a conditional commitment

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Speaker 4: for and that we're you know, closing the lon On here,

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Speaker 4: there's no way that the rest of these projects happen.

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Speaker 4: Right in Palisades is owned by hole Tech, which is

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Speaker 4: a genuine entrepreneur, Chris Singh right, private company, right, one

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Speaker 4: of the most successful entrepreneurs in the nuclear industry, right

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Speaker 4: and in the whole world. And it's one of those

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Speaker 4: weird things where he woke up one morning and said, well,

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Speaker 4: I've just got a contract to dismantle the Palisades Nuclear plant,

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Speaker 4: and you know, we went to him and said, would

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Speaker 4: you think about restarting and he said, do.

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Speaker 3: You think about doing the complete opposite? Perhaps?

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Speaker 4: Yeah, And he said, well sell me. And I was like, well,

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Speaker 4: here are the incentives out of the Inflation Reduction Act

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Speaker 4: you can get, you know, the forty eight E and

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Speaker 4: some of these other at tax credits.

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Speaker 2: Walk us through the specific what are the what do

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Speaker 2: you get in there?

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Speaker 4: So when you restart a nuclear plant, right, the nuclear

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Speaker 4: plant is viewed as new additional capacity, right because it

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Speaker 4: was shut down. And so as a result, this technology

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Speaker 4: agnostic credit that was created by you know, Senator Widen right,

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Speaker 4: because remember we always had the solar tax credit and

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Speaker 4: the wind tax credit and all these other things. So

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Speaker 4: over time, like the IRA moves us to a technology

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Speaker 4: neutral tax credit, so that everything that is clean gets

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Speaker 4: this technology neutral tax credit. It's you know, it's a

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Speaker 4: pretty lucrative tax credit, depends on the technology. But let's

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Speaker 4: say three cents a killo what hour? And so now

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Speaker 4: you're in this place where you actually have a bonus

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Speaker 4: production credit. Now you separately can choose to get an

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Speaker 4: investment tax credit. Right. But it happens to be that

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Speaker 4: the production tax cred is more lucrative for these restarts

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Speaker 4: of nuclear plants. But if you decide to do the

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Speaker 4: investment tax credit, then you get the thirty percent tax credit.

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Speaker 4: Then there's bonus tax cred So if it's part of

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Speaker 4: an energy community, you get an extra ten percent, right.

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Speaker 4: If you have a lot of domestic content, you get

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Speaker 4: another ten percent.

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Speaker 5: Right.

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Speaker 4: So you could imagine that some of the folks you're

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Speaker 4: building brand new nuclear plants might go that direction. But

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Speaker 4: as a result of these incentives, nuclear power is now

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Speaker 4: very cost effective. Then the question becomes like who actually

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Speaker 4: wants to buy this power? Right, because wholesale market prices

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Speaker 4: have been low, and so then the question becomes who

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Speaker 4: was to buy it? And it happened to be that

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Speaker 4: two different utility groups in Michigan competed over wanting to

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Speaker 4: buy all the output out of the Palisades restart, and

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Speaker 4: so he you know, picked one of the groups to

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Speaker 4: buy that power, and then that led to you know,

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Speaker 4: the project becoming financiable, right, and so once that succeeded,

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Speaker 4: then you know, Constellation was like, hell, maybe we could

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Speaker 4: do this.

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Speaker 3: So when you say with the tax credits and those

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Speaker 3: other changes. It suddenly becomes cost effective or it becomes financiable.

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Speaker 3: Walk us through the actual math, like what is changing here?

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Speaker 3: Is it the discount rate or the future projection of revenue?

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Speaker 3: Like what is it exactly that changes in the equation.

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Speaker 4: So for a restart, you generally choose a production tax credit,

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Speaker 4: not the investment tax credit. And that's because the cost

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Speaker 4: of restarting a reactor is a lot lower than the

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Speaker 4: cost of building a brand new reactor. Right, so you

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Speaker 4: make more money by getting that extra three cents of

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Speaker 4: kill what hour for the next you know, twenty years.

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Speaker 4: So the math there is you put up, it depends

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Speaker 4: on you know, where the final costs runs outpu let's

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Speaker 4: call it one to two billion dollars to do the restart,

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Speaker 4: And then you get this three cents kill what hour

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Speaker 4: multiplied by the number of kill what hours that that

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Speaker 4: plant creates. And remember a nuclear power plant runs on

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Speaker 4: average in the state's ninety two percent of the time,

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Speaker 4: So that's a lot of killo what hours that comes

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Speaker 4: out of that plant, whereas with a solar farm you

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Speaker 4: might get twenty five percent of the time production right

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Speaker 4: with a tracking system. And so so the math means

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Speaker 4: that you could get almost all of your money back

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Speaker 4: on the one to two billion dollars from the tax credits, right,

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Speaker 4: and then you've got the sale of the power right

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Speaker 4: that you're signing a long term contract for, and you

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Speaker 4: know that's where you make your return, right, Which is

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Speaker 4: why I think Constellations stock price jumped so much because

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Speaker 4: they have so many existing sites where a lot of

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Speaker 4: those nuclear sites have one reactor and they were made

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Speaker 4: for four reactors or five reactors, but we never built

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Speaker 4: the rest and so while this one was the easiest

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Speaker 4: way to get in right because it was a restart,

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Speaker 4: there's all these other sites where you could build new reactors.

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Speaker 4: And now that Microsoft has come in and said we

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Speaker 4: want to buy all that output because we are taking

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Speaker 4: seriously the commitments we made to twenty four x seven

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Speaker 4: clean power by twenty thirty, then you now have the

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Speaker 4: makings of an equation. And if you heard but like

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Speaker 4: Meta came out right after that and said, we are

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Speaker 4: also all in on nuclear power and meeting that twenty

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Speaker 4: four x seven requirement.

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Speaker 2: So we have a lot of physical capacity or just

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Speaker 2: space capacity right now to add more reactors. And so

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Speaker 2: that's sort of the exciting aspect walks through a little

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Speaker 2: bit more of the math with the three mile Island deal. Specifically,

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Speaker 2: for consolation, it's going to cost them one point six billion,

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Speaker 2: I think, is what I've seen reported to get this

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Speaker 2: reactor back up and running. And then Microsoft makes some

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Speaker 2: sort of commitment where they're going to be a buyer

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Speaker 2: over I don't know, X many years, like talk to

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Speaker 2: us a little bit about more about this particular deal.

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Speaker 4: Yeah, So I don't know what the final cost of

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Speaker 4: the Constellation restart will be, just because I think they

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Speaker 4: still need to do more engineering work to figure out

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Speaker 4: exactly what needs to be fixed. But there's some massmates

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Speaker 4: floating around. The way that Microsoft and others sign these

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Speaker 4: contracts is they don't actually buy the power. What they

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Speaker 4: do is this thing called the contract for differences, okay,

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Speaker 4: and so power generally gets sold into the open market

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Speaker 4: to look into the PGM, and Microsoft says, depending on

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Speaker 4: what happens with this power, we will make you hole

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Speaker 4: on the payment. Right. So if we said that we're

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Speaker 4: going to pay you know, nine cents coed hour, and

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Speaker 4: you end up getting seven cents of code hour, we'll

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Speaker 4: pay that two cent difference. And that includes not just

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Speaker 4: the kill a what our price, but also includes the

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Speaker 4: capacity payment.

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Speaker 5: Right, So you may have.

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Speaker 4: Heard that the PGAM had a very large increase in

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Speaker 4: the price that the capacity payment cleared. And the capacity

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Speaker 4: payment is essential because it convinces the coal plants or

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Speaker 4: the natural gas plants or others who are sort of

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Speaker 4: at the end of life to make investments to last

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Speaker 4: a little longer because they got paid a capacity payment

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Speaker 4: to stay open. So the pieces that come here are

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Speaker 4: both the capacity payment and the energy payment. And Microsoft

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Speaker 4: is saying that we get all the attributes, so we

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Speaker 4: get to call our usage green, but separately like, if

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Speaker 4: for whatever reason, the wholesale market value for what the

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Speaker 4: nuclear power plant is creating is less than the strike

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Speaker 4: price that we agreed to, then we will.

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Speaker 5: Make you hold.

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Speaker 3: So you mentioned the idea that there are some nuclear

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Speaker 3: sites out there already that have spare capacity that could

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Speaker 3: either be restarted or with new reactors or units built.

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Speaker 3: So I guess I have two questions based on that.

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Speaker 3: But one, if you have space in your nuclear facility,

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Speaker 3: is that space specifically designed for one type of reactor already? Like,

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Speaker 3: are you wetted to a particular model that you have

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Speaker 3: to follow? And then secondly, what's the actual process to

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Speaker 3: build a new reactor? Like I can't imagine you open

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Speaker 3: up the nuclear reactor catalog and you know, you go like, ah,

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Speaker 3: I'll take this one. How does it work?

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Speaker 5: Well?

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Speaker 4: So, just to start with your last question, first, it

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Speaker 4: used to be that you did have a nuclear power catalog.

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Speaker 4: Oh and that's the problem, right, that's why we have

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Speaker 4: ninety you know plus reactors and only four of them

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Speaker 4: are exactly the same. And so it used to be

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Speaker 4: that used to be able to customize your and that

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Speaker 4: led to a lot of inefficiencies. And so I hope

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Speaker 4: and pray that this time around, when people build new

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Speaker 4: nuclear they build the exact same cookie cutter thing every

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Speaker 4: single time and we get our costs down. But to

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Speaker 4: answer your question, so the Department of Energy commissioned to

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Speaker 4: study to look at all of the fifty four sites

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Speaker 4: that we have with nuclear plants. Some of them have

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Speaker 4: one reactor, some of them have to, a couple have three,

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Speaker 4: and then only one. The Vogel Nuclear Plant has four.

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Speaker 4: And we can build any type of reactor on those

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Speaker 4: empty sites because really it's just land that's behind a

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Speaker 4: security perimeter, right, and that's what you care about is

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Speaker 4: a security perimeter. And so we have about sixty five

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Speaker 4: thousand megawatts of capacity at the existing nuclear sites, which

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Speaker 4: is massive. If we use small modular reactors, right, which

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Speaker 4: are the ones that are sort of in that three

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Speaker 4: to six billion dollar range, and if we use AP

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Speaker 4: one thousands, which is what we built at the Vogel,

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Speaker 4: then you could build almost ninety five thousand megawats at

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Speaker 4: those same sites. But those are more like ten to

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Speaker 4: four fourteen billion dollars each, right, And so you have

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Speaker 4: to decide whether you want to spend that much money.

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Speaker 3: Are you limited at all? Or does space maybe become

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Speaker 3: a factor in the sense that the hyperscalers want to

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Speaker 3: be co located close to the plants.

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Speaker 4: So they're not going to be within the security perimeter.

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Speaker 4: They be outside of the security member. And most of

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Speaker 4: these nuclear plants are in fairly the middle of location.

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Speaker 4: These are somewheres I grew up near a New time side,

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Speaker 4: but you know, but they're going to be well, let's

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Speaker 4: say five to seven miles away, and so you don't

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Speaker 4: need to use a transmission infrastructure and tax it. You

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Speaker 4: can create your own line directly from the nuclear plant

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Speaker 4: to the data center. And so that saves a lot

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Speaker 4: of cost because now you don't have to pay for

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Speaker 4: the transmission. And so that's why a lot of this

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Speaker 4: colocation makes us sense. It also disrupts the grid the least.

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Speaker 4: And then the other thing that is so great about

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Speaker 4: this colocation idea is that the people who live around

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Speaker 4: a nuclear power plant love nuclear power plants. The public

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Speaker 4: perception of nuclear is that ninety plus percent around a

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Speaker 4: nuclear power plant. And so you know, instead of going

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Speaker 4: to a brand new spot where you might have a

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Speaker 4: mixed reviews, it's easier publicly to use existing sites.

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Speaker 2: It's good to know. Yeah, here's a random question. I've

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Speaker 2: been one of those things that wanted to ask someone.

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Speaker 2: I probably could have just tweeted it years ago. Sometimes

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Speaker 2: I see these things it's like, oh, there's like a

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Speaker 2: three year wait to like plug some new production of

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Speaker 2: any sorts of energy into the grid. And I'm always like,

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Speaker 2: is this just like someone like like go out and

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Speaker 2: plug a line into the wall or something. What's that

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Speaker 2: all about? And like why does it have to be

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Speaker 2: that long?

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Speaker 4: It's it really is an extraordinary thing, right. I think

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Speaker 4: that you know, most people view electricity like water, right,

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Speaker 4: so you just put a bigger pump in, you put

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Speaker 4: in more pipe, it gets to your house.

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Speaker 5: You got hot water.

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Speaker 4: That's great. It's not like that at all. There is

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Speaker 4: this complex physics equation that you have to solve.

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Speaker 2: For because the greatest to be in perfect balance all

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Speaker 2: the time.

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Speaker 3: Right.

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Speaker 4: Well, so there's the there's the perfect balance between supply

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Speaker 4: and demand, but then there's also figuring out, you know,

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Speaker 4: what the constraints are of each individual segment on the

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Speaker 4: transmission line.

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Speaker 3: Right.

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Speaker 4: So if you're using power in New York City and

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Speaker 4: you're creating a lot of extra power in out of

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Speaker 4: the nuclear plants in Illinois, right then that power has

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Speaker 4: to go via Indiana and Ohio and then through Pennsylvania

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Speaker 4: to New York City, and they may or may not

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Speaker 4: be able to carry that much, right, And so they

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Speaker 4: have to do these studies. So every time you try

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Speaker 4: to add something to the grid, they have to do

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Speaker 4: a study, and they have to figure out whether that

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Speaker 4: capacity is there, how often it's there, whether it would

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Speaker 4: continue to be balanced, or whether it be imbalanced. And

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Speaker 4: so the big fight there is that. So in Texas,

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Speaker 4: what they do is they just look at the safety

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Speaker 4: part of it, but they don't look at the capacity

403
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Speaker 4: part of it. They just say, you like, connect at

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Speaker 4: your own risk, and if we're clogged, we're just going

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Speaker 4: to tell you to shut down, and that's on you, right.

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Speaker 4: So that's why they're proving people super fast, whereas with

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Speaker 4: a PGM and others they're saying, not only we're going

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Speaker 4: to do a safety study, we're also going to do

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Speaker 4: a capacity study, and we're not going to let you

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Speaker 4: connect until this other generator shuts down and frees up

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Speaker 4: capacity for your generator. And so that then makes the

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Speaker 4: wait time much longer.

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Speaker 3: Since you mentioned safety, just then, I got the impression

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Speaker 3: that the other thing that's been holding nuclear back is

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Speaker 3: I guess licensing barriers and regulation and things like that.

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Speaker 3: Has anything changed on that front recently? I saw there

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Speaker 3: was a bill over the summer called, I think the

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Speaker 3: Advance Act or something like that that I think made

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Speaker 3: some progress. But is that starting to evolve too?

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Speaker 4: Yeah, So, I mean there's definitely been a lot of

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Speaker 4: people giving their unsolicited advice to the NRC, saying we

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Speaker 4: want to beat you up because we don't think you're

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Speaker 4: moving fast enough. But when you think about it, it's

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Speaker 4: only the vocal units three and four that they've had

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Speaker 4: to process right, And ultimately what the people who built

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Speaker 4: Vogel did was said, we are going to tell you

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Speaker 4: exactly how we're going to build it, and then you

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Speaker 4: hold us accountable to building it that exact way, and

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Speaker 4: then you license it at the end, right, And so

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Speaker 4: so that's what the NRC did. The alternative pathway is

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Speaker 4: they can go in and say, we're just going to

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Speaker 4: build this thing, like you're going to like preapprove that

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Speaker 4: the fact that the license for the reactor is pretty

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Speaker 4: safe and it's fine, but you're just going to like

435
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Speaker 4: approve the as built drawings at the end right. Now,

436
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Speaker 4: Like when you do that, well then it's a lot

437
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Speaker 4: easier to get away with things being one inch off

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Speaker 4: here and there, which is fine. But like if you

439
00:22:39,200 --> 00:22:41,760
Speaker 4: give them as builts and say we're going to choose

440
00:22:41,800 --> 00:22:45,160
Speaker 4: a licensing path where you hold us responsible to no changes,

441
00:22:45,640 --> 00:22:47,360
Speaker 4: well then when they come in and inspect it, it's

442
00:22:47,359 --> 00:22:49,439
Speaker 4: one inch off, they're like, you got to redo that

443
00:22:49,720 --> 00:22:51,959
Speaker 4: and do it to exactly the specs you told us.

444
00:22:52,440 --> 00:22:55,879
Speaker 4: So now all of the different reactor companies are deciding

445
00:22:55,960 --> 00:22:59,959
Speaker 4: to go with this new pathway because it would be

446
00:23:00,080 --> 00:23:03,199
Speaker 4: a lot cheaper. But you know, like then you have

447
00:23:03,240 --> 00:23:05,199
Speaker 4: to wait till the end for them to say that

448
00:23:05,320 --> 00:23:09,399
Speaker 4: something you did wasn't like a safety concern, and so

449
00:23:09,440 --> 00:23:11,920
Speaker 4: it could cause you a lot more cost, which is

450
00:23:11,920 --> 00:23:15,000
Speaker 4: why people generally don't do that, right. And so my

451
00:23:15,080 --> 00:23:17,160
Speaker 4: thing with the NRC is that they have a job

452
00:23:17,200 --> 00:23:20,720
Speaker 4: to do, not unlike the fed's dual mandate, right, Like

453
00:23:20,760 --> 00:23:22,439
Speaker 4: the NRC now has a dual mandate.

454
00:23:22,520 --> 00:23:22,680
Speaker 1: Right.

455
00:23:22,760 --> 00:23:25,080
Speaker 4: So with the Advance Act, it used to be that

456
00:23:25,119 --> 00:23:27,959
Speaker 4: they just were safety minded. Now they're safety minded and

457
00:23:28,000 --> 00:23:30,920
Speaker 4: they have to support the building of new nuclear right.

458
00:23:31,000 --> 00:23:33,240
Speaker 4: And so the way this kind of stuff works is

459
00:23:33,240 --> 00:23:34,200
Speaker 4: you got to flood the zone.

460
00:23:34,600 --> 00:23:34,800
Speaker 5: Right.

461
00:23:34,880 --> 00:23:39,280
Speaker 4: So if you actually build ten reactors, it'll be amazing

462
00:23:39,320 --> 00:23:41,919
Speaker 4: how efficient the NRC will become. But if you have

463
00:23:42,040 --> 00:23:44,600
Speaker 4: all these people working there and you only do one reactor, well,

464
00:23:44,600 --> 00:23:46,800
Speaker 4: then a lot of people are like, well, we have

465
00:23:46,920 --> 00:23:48,800
Speaker 4: a lot of time on our hands and we're going

466
00:23:48,880 --> 00:23:51,439
Speaker 4: to like study your application a lot more, right, And

467
00:23:51,520 --> 00:23:54,200
Speaker 4: so the efficiency comes from people using the NRC more

468
00:23:54,560 --> 00:23:57,000
Speaker 4: and actually like pushing a lot more reactors through.

469
00:23:57,320 --> 00:24:00,280
Speaker 3: Joe, I can't wait for the Phillips curve of your

470
00:24:00,320 --> 00:24:02,520
Speaker 3: incidents versus capacity built.

471
00:24:02,359 --> 00:24:05,879
Speaker 2: Out Whenever the day that that is a debate. You

472
00:24:05,920 --> 00:24:08,800
Speaker 2: can be sure that we are going to cover it.

473
00:24:09,160 --> 00:24:11,199
Speaker 2: We talked a little bit in the beginning about the

474
00:24:11,200 --> 00:24:15,200
Speaker 2: market's reaction to Constellation. So the market likes the deal,

475
00:24:15,400 --> 00:24:17,679
Speaker 2: and as you mentioned, the market likes the sort of

476
00:24:17,720 --> 00:24:21,000
Speaker 2: possibility that this has opened up of maybe the Constellation

477
00:24:21,119 --> 00:24:22,720
Speaker 2: isn't just going to be in the business of running

478
00:24:22,760 --> 00:24:26,479
Speaker 2: nuclear but actually building nuclear. You know, talk to us

479
00:24:26,480 --> 00:24:28,880
Speaker 2: a little bit more about the prospect. And it gets

480
00:24:28,920 --> 00:24:31,679
Speaker 2: also back to your point about how for this to

481
00:24:31,840 --> 00:24:34,119
Speaker 2: actually work. It can't just be one offs. There has

482
00:24:34,160 --> 00:24:36,480
Speaker 2: to be a series. It's like that thirteen thousand people

483
00:24:36,480 --> 00:24:38,560
Speaker 2: that build Vogel, then they go onto the next project,

484
00:24:38,600 --> 00:24:41,359
Speaker 2: and they go on to the next project. Where are

485
00:24:41,400 --> 00:24:44,720
Speaker 2: we on the sort of I don't know, second derivative

486
00:24:44,800 --> 00:24:47,639
Speaker 2: question of whether we have the sort of momentum in

487
00:24:47,680 --> 00:24:53,159
Speaker 2: the industry to actually learn from the previous project and

488
00:24:53,359 --> 00:24:56,080
Speaker 2: redeploy talented work and all these things that we need

489
00:24:56,119 --> 00:24:57,480
Speaker 2: to get the cost curve bent down.

490
00:24:58,080 --> 00:25:01,439
Speaker 4: So I think the first piece is right, yeah, And

491
00:25:01,480 --> 00:25:04,320
Speaker 4: I think the why part of this is, as you suggested,

492
00:25:04,720 --> 00:25:07,280
Speaker 4: there are three aspects to load growth.

493
00:25:07,359 --> 00:25:07,639
Speaker 5: Right.

494
00:25:07,840 --> 00:25:11,280
Speaker 4: One is data centers and frankly, AI is not really

495
00:25:11,320 --> 00:25:13,480
Speaker 4: a big part of it. It's mostly just clouds, an

496
00:25:13,520 --> 00:25:15,679
Speaker 4: expansion of cloud But then there's some AI sprinkled in

497
00:25:15,960 --> 00:25:18,800
Speaker 4: that's at least twenty five thousand megawatts of new load

498
00:25:18,920 --> 00:25:19,960
Speaker 4: by the end of the decade.

499
00:25:20,440 --> 00:25:20,680
Speaker 5: Right.

500
00:25:21,080 --> 00:25:24,720
Speaker 4: Then you've got all this success we've had with you know,

501
00:25:24,720 --> 00:25:27,040
Speaker 4: the president's agenda around on shoring and reshoring, and so

502
00:25:27,080 --> 00:25:29,640
Speaker 4: there's a bunch of five inner kilowatt and two megawatt

503
00:25:29,640 --> 00:25:32,800
Speaker 4: and four megawatt manufacturing facilities that are popping up everywhere.

504
00:25:32,800 --> 00:25:35,520
Speaker 4: Eight hundred new manufacturing facilities that have been announced, right

505
00:25:35,560 --> 00:25:38,520
Speaker 4: and that are under construction or expanding. And then the

506
00:25:38,560 --> 00:25:41,000
Speaker 4: third piece is you have this electrify Everything movement where

507
00:25:41,040 --> 00:25:42,960
Speaker 4: a lot of people are buying electric vehicles and they're

508
00:25:42,960 --> 00:25:45,399
Speaker 4: doing heat bumps and they're doing all these things. And

509
00:25:45,480 --> 00:25:49,040
Speaker 4: so so you've got all three of these, and you know,

510
00:25:49,080 --> 00:25:51,919
Speaker 4: then the question becomes like, how do you want to

511
00:25:51,920 --> 00:25:53,399
Speaker 4: meet the load growth? And for a lot of the

512
00:25:53,400 --> 00:25:57,040
Speaker 4: electric utility companies, remember, you know, they haven't had load

513
00:25:57,080 --> 00:26:00,440
Speaker 4: growth in thirty years, right for sure for twenty years,

514
00:26:00,440 --> 00:26:03,280
Speaker 4: and then very slow load growth in the nineties, and

515
00:26:03,400 --> 00:26:06,800
Speaker 4: so they're now saying, can we do this with the

516
00:26:06,840 --> 00:26:09,640
Speaker 4: tools that we have in front of us, and it

517
00:26:09,680 --> 00:26:12,320
Speaker 4: looks like it's going to be really hard for them

518
00:26:12,359 --> 00:26:14,560
Speaker 4: to do it with the tools that there are used

519
00:26:14,600 --> 00:26:17,520
Speaker 4: to using. And so they're saying, we're going to need

520
00:26:17,560 --> 00:26:19,800
Speaker 4: to figure out this nuclear thing, but also we're gonna

521
00:26:19,800 --> 00:26:22,760
Speaker 4: have to figure out how to use geothermal, expanded hydro,

522
00:26:23,320 --> 00:26:26,520
Speaker 4: et cetera. And so then the question becomes, you know,

523
00:26:26,960 --> 00:26:30,760
Speaker 4: how does one wrap their brain around doing this right?

524
00:26:30,800 --> 00:26:33,320
Speaker 4: Because the electric utility companies are filled with people who

525
00:26:33,400 --> 00:26:38,080
Speaker 4: run them who generally, we're running a dividend yield stock, right,

526
00:26:38,160 --> 00:26:41,719
Speaker 4: Like these are shareholders who are like, we want no volatility,

527
00:26:41,840 --> 00:26:42,800
Speaker 4: we just want our dividends.

528
00:26:42,880 --> 00:26:43,040
Speaker 5: Right.

529
00:26:43,440 --> 00:26:46,000
Speaker 4: And now you see like JP Morgan's Infrastructure Fund in

530
00:26:46,040 --> 00:26:49,280
Speaker 4: others that are taking some of these utilities private and saying,

531
00:26:49,320 --> 00:26:51,680
Speaker 4: we think you're a growth stock and we don't think

532
00:26:51,680 --> 00:26:54,040
Speaker 4: that we could actually do this in the public market,

533
00:26:54,080 --> 00:26:55,560
Speaker 4: so we're going to take you private and give you

534
00:26:55,640 --> 00:26:58,600
Speaker 4: all the tools you need to become a growth stock. Right.

535
00:26:59,000 --> 00:27:02,520
Speaker 4: And so they're some of those dynamics going on, and

536
00:27:02,560 --> 00:27:04,760
Speaker 4: you've got a lot of governors who are yelling at

537
00:27:05,200 --> 00:27:09,439
Speaker 4: the utilities saying, I spent so much time attracting all

538
00:27:09,480 --> 00:27:13,080
Speaker 4: these manufacturers to our territory, and now you're giving them

539
00:27:13,080 --> 00:27:15,680
Speaker 4: a three or four year timeline to interconnect.

540
00:27:16,080 --> 00:27:17,440
Speaker 5: What the heck, right?

541
00:27:17,600 --> 00:27:19,960
Speaker 4: Like, we want to create family sustaining jobs for all

542
00:27:20,000 --> 00:27:22,119
Speaker 4: these people who want just to have a high school

543
00:27:22,160 --> 00:27:24,200
Speaker 4: education and not go to college.

544
00:27:24,280 --> 00:27:24,440
Speaker 5: Right.

545
00:27:25,040 --> 00:27:28,040
Speaker 4: And so the pressure on the electric utility companies is

546
00:27:28,119 --> 00:27:32,280
Speaker 4: getting real, right. And so now you're in this situation

547
00:27:32,440 --> 00:27:35,880
Speaker 4: where the question becomes, Okay, if we're going to do this,

548
00:27:36,760 --> 00:27:38,480
Speaker 4: how do we do it right? And so we have

549
00:27:38,560 --> 00:27:42,439
Speaker 4: been facilitating those conversations with the Nuclear Liftoff Report, with

550
00:27:42,480 --> 00:27:46,080
Speaker 4: lots of conversations around what new tools might you want

551
00:27:46,119 --> 00:27:49,240
Speaker 4: for risk mitigation from the federal government, how do you

552
00:27:49,280 --> 00:27:51,680
Speaker 4: want to do this stuff? In Constellation, for instance, has said,

553
00:27:51,920 --> 00:27:56,760
Speaker 4: we're amazing at running utility scale nuclear plans, but we

554
00:27:56,840 --> 00:27:59,720
Speaker 4: don't know how to build nuclear plans, so we don't

555
00:27:59,760 --> 00:28:01,800
Speaker 4: want to build them. We want other people to use

556
00:28:01,840 --> 00:28:04,359
Speaker 4: our sites and we want them to build them and

557
00:28:04,400 --> 00:28:07,000
Speaker 4: then we'll operate it right, because we're really good at operations.

558
00:28:07,119 --> 00:28:07,239
Speaker 5: Right.

559
00:28:07,280 --> 00:28:10,239
Speaker 4: And so you're starting to see a bifurcation of the

560
00:28:10,280 --> 00:28:12,679
Speaker 4: market where there's some people who are doing development work

561
00:28:13,040 --> 00:28:15,600
Speaker 4: and developing these sites and figuring out how to negotiate

562
00:28:15,640 --> 00:28:18,720
Speaker 4: with the hyperskilled data center companies, etc. And then there

563
00:28:18,720 --> 00:28:20,639
Speaker 4: are other people who are trying to figure out how

564
00:28:20,640 --> 00:28:22,840
Speaker 4: do I construct these things and how do I build

565
00:28:23,080 --> 00:28:25,720
Speaker 4: the workforce, etc. To do ten or twelve of these things.

566
00:28:26,080 --> 00:28:28,600
Speaker 4: And then you've got others like Constellation who are saying,

567
00:28:29,480 --> 00:28:33,280
Speaker 4: we have an interesting financial model, right, because they have

568
00:28:33,320 --> 00:28:35,960
Speaker 4: to do subsequent license renewals of their plants that are

569
00:28:36,200 --> 00:28:40,520
Speaker 4: reaching sixty years old to extend the life to eighty years, right,

570
00:28:40,600 --> 00:28:43,600
Speaker 4: And so a lot of folks are saying, well, you

571
00:28:43,640 --> 00:28:45,680
Speaker 4: know that's also a risky bet. That's probably going to

572
00:28:45,720 --> 00:28:48,200
Speaker 4: be ten billion dollars of capex to do that. Well,

573
00:28:48,240 --> 00:28:50,600
Speaker 4: if I had off take agreements from the hyperskilled data

574
00:28:50,600 --> 00:28:52,920
Speaker 4: center companies, that would be a safer way for me

575
00:28:53,000 --> 00:28:55,920
Speaker 4: to make that bet, right, because they're really risk averse.

576
00:28:56,200 --> 00:28:58,160
Speaker 4: I mean even like I would say, up to like

577
00:28:58,200 --> 00:29:02,440
Speaker 4: two weeks before this announcement around the restarting of the

578
00:29:02,520 --> 00:29:05,320
Speaker 4: Crane Clean Energy Center, a lot of folks were like,

579
00:29:05,480 --> 00:29:08,080
Speaker 4: I don't know, like how the stock markets can react

580
00:29:08,080 --> 00:29:11,960
Speaker 4: to us, right, right, So they were really nervous, right,

581
00:29:12,000 --> 00:29:15,200
Speaker 4: And now they've got the validation. I think that it

582
00:29:15,240 --> 00:29:18,800
Speaker 4: gives them even more of an incentive to figure it

583
00:29:18,800 --> 00:29:22,040
Speaker 4: to make more. But also the electric utilities, right, it's

584
00:29:22,160 --> 00:29:25,920
Speaker 4: it gives electric utilities and an incentive to say, like,

585
00:29:26,040 --> 00:29:28,400
Speaker 4: why are we being so risk averse? Like our shareholders

586
00:29:28,440 --> 00:29:31,880
Speaker 4: will probably reward us for becoming a growth stock.

587
00:29:48,200 --> 00:29:51,480
Speaker 3: You explained it very well just then. But in light

588
00:29:51,680 --> 00:29:55,040
Speaker 3: of a lot of utilities starting to look like growth

589
00:29:55,080 --> 00:29:59,680
Speaker 3: stocks AI adjacent growth stocks rather than like boring old

590
00:29:59,680 --> 00:30:03,240
Speaker 3: divis in plays, are there new sources of financing that

591
00:30:03,280 --> 00:30:06,800
Speaker 3: are potentially interested in the sector, Like have you seen

592
00:30:06,840 --> 00:30:10,320
Speaker 3: the actual mix of funding, either the investors or the

593
00:30:10,320 --> 00:30:11,720
Speaker 3: structure start to change?

594
00:30:13,080 --> 00:30:15,240
Speaker 4: Well, I mean, you know, the reason why we're in

595
00:30:15,280 --> 00:30:17,400
Speaker 4: the middle of this is because the Loan Program's Office

596
00:30:17,480 --> 00:30:20,000
Speaker 4: has this expanded authority, and we are in the middle

597
00:30:20,040 --> 00:30:22,440
Speaker 4: of all these conversations because everybody wants to figure out

598
00:30:22,760 --> 00:30:26,000
Speaker 4: whether they can use the money out of the Energy

599
00:30:26,040 --> 00:30:28,280
Speaker 4: Infrastructure Reinvestment program that we were given out of the

600
00:30:28,320 --> 00:30:32,400
Speaker 4: Inflation Reduction Act or our traditional innovative clean energy program

601
00:30:32,480 --> 00:30:35,320
Speaker 4: where we've got you know, probably one hundred and fifty

602
00:30:35,320 --> 00:30:38,600
Speaker 4: billion dollars between the two of those programs of loan authority.

603
00:30:38,880 --> 00:30:40,720
Speaker 4: And then you saw the big announcement from all the

604
00:30:40,720 --> 00:30:44,320
Speaker 4: big banks this week saying that they are now pro nuclear.

605
00:30:44,440 --> 00:30:45,920
Speaker 4: I don't exactly know what that means.

606
00:30:45,960 --> 00:30:47,680
Speaker 2: Yeah, I was going to ask you so, by the way,

607
00:30:47,760 --> 00:30:50,880
Speaker 2: just for those curious recording this September twenty fourth, but yeah,

608
00:30:50,960 --> 00:30:51,680
Speaker 2: keep going with it.

609
00:30:52,000 --> 00:30:54,120
Speaker 4: And so, you know, I think in general, those big

610
00:30:54,160 --> 00:30:56,880
Speaker 4: banks like to do balance sheet related investments, and so

611
00:30:57,360 --> 00:31:00,760
Speaker 4: in some ways, I think they're signaling to the electric

612
00:31:00,840 --> 00:31:02,920
Speaker 4: utility companies, where you know, a lot of these big

613
00:31:02,960 --> 00:31:05,480
Speaker 4: banks own the debt for a lot of these companies

614
00:31:05,480 --> 00:31:08,120
Speaker 4: that say, hey, you know, we're going to be pro

615
00:31:08,200 --> 00:31:11,400
Speaker 4: you guys doing nuclear power. So I think that's good.

616
00:31:11,440 --> 00:31:13,840
Speaker 4: I don't quite know exactly what they're going to do differently,

617
00:31:14,240 --> 00:31:17,080
Speaker 4: but it used to be that they, you know, like

618
00:31:17,160 --> 00:31:19,000
Speaker 4: a lot of the utility companies thought that their stock

619
00:31:19,040 --> 00:31:22,640
Speaker 4: would be downgraded if they announced a new nuclear plant, right.

620
00:31:22,720 --> 00:31:25,080
Speaker 4: So I mean, at the very least, I think everyone's

621
00:31:25,080 --> 00:31:27,120
Speaker 4: sending a signal that we're not going to downgrade you.

622
00:31:27,200 --> 00:31:29,400
Speaker 4: We actually want you to do this stuff. We want

623
00:31:29,440 --> 00:31:32,440
Speaker 4: you to promote economic growth in the United States of America,

624
00:31:32,800 --> 00:31:34,680
Speaker 4: and we're actually going to like, you know, give you

625
00:31:34,760 --> 00:31:37,960
Speaker 4: tailwinds and so I think that message is being sent.

626
00:31:38,840 --> 00:31:42,200
Speaker 2: Since we're talking about funding sources if we step away

627
00:31:42,240 --> 00:31:44,240
Speaker 2: from nuclear for a second. I think it was last

628
00:31:44,240 --> 00:31:47,920
Speaker 2: week I saw this report. There's this geothermal company called Fervo.

629
00:31:48,360 --> 00:31:50,000
Speaker 2: There's always a lot of excitement about and I think

630
00:31:50,000 --> 00:31:52,280
Speaker 2: they've raised some VC money, et cetera. Anyway, the report

631
00:31:52,280 --> 00:31:54,960
Speaker 2: asserted that the problem for them, and I guess maybe

632
00:31:54,960 --> 00:31:57,320
Speaker 2: you can explain it better, but I think geothermal is

633
00:31:57,360 --> 00:31:59,000
Speaker 2: you stick a pipe in the ground and there's heat

634
00:31:59,040 --> 00:32:00,440
Speaker 2: in the earth and it comes to and then the

635
00:32:00,440 --> 00:32:03,160
Speaker 2: heat comes out, and that's energy that the vcs are

636
00:32:03,440 --> 00:32:07,320
Speaker 2: maybe excited. But then project financing is a charge, whether

637
00:32:07,360 --> 00:32:09,959
Speaker 2: it's the lending to actually like Okay, here's the funding

638
00:32:10,000 --> 00:32:12,320
Speaker 2: that it's going to be for this site specific I

639
00:32:12,360 --> 00:32:15,960
Speaker 2: don't know much about this. Who've never done a geothermal episode?

640
00:32:16,240 --> 00:32:18,760
Speaker 2: From where you sit? Is that a real constraint either

641
00:32:18,800 --> 00:32:23,080
Speaker 2: on geothermal specifically or other forms of energy? Which is

642
00:32:23,120 --> 00:32:25,959
Speaker 2: that Yeah, maybe some investors like the idea of equity

643
00:32:25,960 --> 00:32:28,640
Speaker 2: in some of these companies, but like the project financing

644
00:32:28,680 --> 00:32:31,840
Speaker 2: component of whatever we're talking about is still not a

645
00:32:31,880 --> 00:32:32,640
Speaker 2: mature market.

646
00:32:33,520 --> 00:32:36,760
Speaker 4: Yeah, so geothermal is a very interesting technology, you know,

647
00:32:36,800 --> 00:32:39,760
Speaker 4: as you may know. The traditional geothermal is you basically

648
00:32:39,760 --> 00:32:43,600
Speaker 4: have to find a liquid that like sits under the earth,

649
00:32:43,720 --> 00:32:46,000
Speaker 4: like sort of near a hot pocket, and then you

650
00:32:46,040 --> 00:32:48,200
Speaker 4: basically like tap into it and then you let the

651
00:32:48,240 --> 00:32:50,040
Speaker 4: liquid go up and down and then you know, and

652
00:32:50,040 --> 00:32:52,920
Speaker 4: that's sort of how you do geothermal. This new enhanced

653
00:32:52,960 --> 00:32:55,800
Speaker 4: geothermal allows you to create your own pockets and so

654
00:32:56,000 --> 00:33:00,280
Speaker 4: use use modern hydraulic fracturing technologies. You drill you know,

655
00:33:00,400 --> 00:33:02,239
Speaker 4: mile down or wherever it is, wherever you think that

656
00:33:02,280 --> 00:33:04,720
Speaker 4: heat pocket is, and then you fracture the rock there

657
00:33:04,760 --> 00:33:06,840
Speaker 4: and you put pipe in there, and then you basically

658
00:33:07,240 --> 00:33:09,000
Speaker 4: allow the working flow to go down there. It gets

659
00:33:09,040 --> 00:33:10,920
Speaker 4: super hot and it comes back up and now can

660
00:33:10,960 --> 00:33:13,800
Speaker 4: turn a turbine right, And so as a result, you

661
00:33:13,840 --> 00:33:15,200
Speaker 4: can do it anywhere. You can do it in New

662
00:33:15,280 --> 00:33:16,920
Speaker 4: York State, you can do it in North Carolina, you

663
00:33:16,960 --> 00:33:19,200
Speaker 4: can do it in Nevada. You can really do it anywhere.

664
00:33:19,200 --> 00:33:22,560
Speaker 4: Now it's only really cost effective today in six states

665
00:33:22,600 --> 00:33:25,400
Speaker 4: in the West, but once we get really good at that,

666
00:33:26,080 --> 00:33:28,880
Speaker 4: then it should propagate across the United States because it's

667
00:33:28,960 --> 00:33:33,160
Speaker 4: super cost effective. Again, though the first units are going

668
00:33:33,240 --> 00:33:36,400
Speaker 4: to cost more, right, and so Fervo got a clean

669
00:33:36,440 --> 00:33:40,720
Speaker 4: transition tariff signed with Nevada Energy, so Nevada Energy is

670
00:33:40,720 --> 00:33:43,440
Speaker 4: buying their power, and then Google is buying it from

671
00:33:43,480 --> 00:33:47,280
Speaker 4: Nevada Energy, so that Nevada Energy isn't taking this premium

672
00:33:47,320 --> 00:33:50,360
Speaker 4: power and spreading it across all of their repairs, but

673
00:33:50,480 --> 00:33:52,960
Speaker 4: Google will buy it. Right. And then they made another

674
00:33:52,960 --> 00:33:56,360
Speaker 4: announcement recently that they had done more drilling tests and

675
00:33:56,400 --> 00:33:59,640
Speaker 4: everything went far faster, far cheaper than they thought it would,

676
00:34:00,040 --> 00:34:03,320
Speaker 4: and so they're getting closer to the oil and gas

677
00:34:03,400 --> 00:34:08,320
Speaker 4: speed rates than the geothermal speed rates. Right, and Haliburton

678
00:34:08,360 --> 00:34:12,480
Speaker 4: and SLB have said, Wow, this stuff is ridiculously easy.

679
00:34:12,880 --> 00:34:15,760
Speaker 4: We like are happy to do all this drilling because

680
00:34:16,040 --> 00:34:18,160
Speaker 4: this is child's play compared to what we do regularly

681
00:34:18,200 --> 00:34:20,560
Speaker 4: for the oil and gas sector. Now, to answer your question,

682
00:34:20,640 --> 00:34:23,799
Speaker 4: the problem is what the solar and wind industry are

683
00:34:23,880 --> 00:34:26,520
Speaker 4: used to doing is getting money directly from large pension

684
00:34:26,560 --> 00:34:30,799
Speaker 4: funds and pushing all the risk off to the contractors

685
00:34:31,000 --> 00:34:33,479
Speaker 4: who do the work. And the contractors say, don't worry,

686
00:34:33,560 --> 00:34:35,480
Speaker 4: we'll take cost over on risk. We'll do everything else

687
00:34:35,520 --> 00:34:38,799
Speaker 4: because this stuff is crazy easy, and so now low

688
00:34:38,840 --> 00:34:41,600
Speaker 4: cost infrastructure funds can invest in it. Right when you

689
00:34:41,640 --> 00:34:45,439
Speaker 4: go into geothermal. Haliburton SLB say, we don't take any risk.

690
00:34:45,880 --> 00:34:49,080
Speaker 4: You pay us as a drilling company, and sometimes we

691
00:34:49,160 --> 00:34:51,799
Speaker 4: hit gold, and every once in a while we don't

692
00:34:51,840 --> 00:34:54,680
Speaker 4: hit gold, but we're not guaranteeing you gold. You pay

693
00:34:54,760 --> 00:34:56,919
Speaker 4: us for the drilling, you give us the subservice data.

694
00:34:57,160 --> 00:34:58,960
Speaker 4: We'll do exactly what you tell us to do, and

695
00:34:59,040 --> 00:35:00,920
Speaker 4: it works, it doesn't work. So then a lot of

696
00:35:00,920 --> 00:35:04,640
Speaker 4: this low cost so and win money is saying that

697
00:35:04,719 --> 00:35:07,800
Speaker 4: seems strange. You're saying, I could like have a cost

698
00:35:07,840 --> 00:35:11,280
Speaker 4: overrun because you don't fail per se and enhance U thermal,

699
00:35:11,640 --> 00:35:13,880
Speaker 4: it might just be able to build another hot pocket,

700
00:35:13,960 --> 00:35:16,200
Speaker 4: like instead of five, you build six or seven, right,

701
00:35:16,239 --> 00:35:18,120
Speaker 4: and so then costs a little bit more. I don't

702
00:35:18,120 --> 00:35:19,960
Speaker 4: want to take that risk. I think someone else should

703
00:35:19,960 --> 00:35:24,480
Speaker 4: take that risk. And after you've certified with inspector that

704
00:35:24,560 --> 00:35:27,880
Speaker 4: you've done everything correctly, then will buy the project because

705
00:35:27,880 --> 00:35:29,520
Speaker 4: we don't want to take that risk, right, And so

706
00:35:30,200 --> 00:35:33,800
Speaker 4: they're going through this pathway where they need to find

707
00:35:34,120 --> 00:35:36,480
Speaker 4: money from people who actually like taking that risk. And

708
00:35:36,520 --> 00:35:39,120
Speaker 4: so that's why it was important to see that Fervo

709
00:35:39,239 --> 00:35:42,400
Speaker 4: raise money from Devon Energy, which is clearly an expert

710
00:35:42,440 --> 00:35:45,239
Speaker 4: at managing this kind of risk for fracking, and so

711
00:35:45,320 --> 00:35:47,879
Speaker 4: they are not afraid of this risk at all. Right,

712
00:35:47,920 --> 00:35:50,960
Speaker 4: but their cost of capital is clearly higher than super

713
00:35:50,960 --> 00:35:53,880
Speaker 4: low costs, so or and win money. But they're willing

714
00:35:53,880 --> 00:35:56,920
Speaker 4: to go faster because they are very comfortable with these risks.

715
00:35:56,960 --> 00:36:01,080
Speaker 4: And so this whole thought process, how we're thinking this

716
00:36:01,200 --> 00:36:04,040
Speaker 4: through is something that I had to do when I

717
00:36:04,080 --> 00:36:06,080
Speaker 4: started son Edison back in two thousand and three and

718
00:36:06,120 --> 00:36:09,200
Speaker 4: got all the big financial firms who thought solar was

719
00:36:09,239 --> 00:36:11,560
Speaker 4: too risky to come in to the market. And so

720
00:36:11,640 --> 00:36:14,040
Speaker 4: now we have to promote this exact kind of thinking

721
00:36:14,440 --> 00:36:19,640
Speaker 4: across geothermal, long duration energy storage, nuclear hydro, like all

722
00:36:19,640 --> 00:36:23,000
Speaker 4: these technologies that we've been researching for twenty or thirty years,

723
00:36:23,000 --> 00:36:24,640
Speaker 4: and like it's ready for primetime.

724
00:36:24,920 --> 00:36:26,000
Speaker 5: People are like, wait a.

725
00:36:25,920 --> 00:36:28,040
Speaker 4: Second, that looks a little different than what I did yesterday.

726
00:36:28,120 --> 00:36:31,280
Speaker 3: Right, Yeah, it feels like the proof of concept is there.

727
00:36:31,440 --> 00:36:34,520
Speaker 3: For instance, I really like geothermal just on a sort

728
00:36:34,520 --> 00:36:38,680
Speaker 3: of individual housing basis, and it would work for my

729
00:36:38,800 --> 00:36:43,120
Speaker 3: property in Connecticut. But the constraint for putting in geothermal

730
00:36:43,160 --> 00:36:45,439
Speaker 3: in an old house in Connecticut is that you would

731
00:36:45,480 --> 00:36:48,040
Speaker 3: have to tear everything up and put in the duct

732
00:36:48,080 --> 00:36:51,760
Speaker 3: work to actually make it work. So on that note,

733
00:36:51,840 --> 00:36:55,359
Speaker 3: are there other restraining factors on a lot of this

734
00:36:55,440 --> 00:36:58,359
Speaker 3: new technology? I mean, that's kind of what we've been discussing.

735
00:36:58,560 --> 00:37:01,759
Speaker 3: But setting aside the fine nancaying we have proof of

736
00:37:01,800 --> 00:37:06,240
Speaker 3: concept for a lot of these what's holding back the growth?

737
00:37:06,480 --> 00:37:10,400
Speaker 3: Are there physical realities perhaps or you know, shortages for

738
00:37:10,520 --> 00:37:13,880
Speaker 3: instance of HVAC workers going back to the housing analogy

739
00:37:14,120 --> 00:37:15,520
Speaker 3: that maybe are restraining growth.

740
00:37:16,640 --> 00:37:20,600
Speaker 4: Well, we definitely have a huge problem with trained craftsmen, right,

741
00:37:20,719 --> 00:37:23,520
Speaker 4: and so you know, I think that we're probably between

742
00:37:23,520 --> 00:37:25,960
Speaker 4: five hundred thousand and a million people short, depending on

743
00:37:26,440 --> 00:37:29,200
Speaker 4: your assumptions for how fast folks are going to retire

744
00:37:29,600 --> 00:37:32,640
Speaker 4: from the craft And so it's an extraordinary thing, right,

745
00:37:32,640 --> 00:37:35,200
Speaker 4: I mean, you could start at sixteen years old, become

746
00:37:35,440 --> 00:37:38,520
Speaker 4: a union craftsman, be making six figures by the time

747
00:37:38,520 --> 00:37:41,880
Speaker 4: you're thirty, and you know, have a family sustaining job. So, like,

748
00:37:41,960 --> 00:37:44,920
Speaker 4: I think there's a lot of people who thought for

749
00:37:44,960 --> 00:37:47,040
Speaker 4: a long time that their kids going into the trades

750
00:37:47,160 --> 00:37:49,479
Speaker 4: was probably like not what they wanted to brag about

751
00:37:49,480 --> 00:37:52,040
Speaker 4: at cocktail parties. But it's great to see that. Like

752
00:37:52,080 --> 00:37:54,279
Speaker 4: in the last year, I've seen people start to brag

753
00:37:54,320 --> 00:37:56,680
Speaker 4: about their kids going and becoming an electrician or a plumber,

754
00:37:56,680 --> 00:37:58,880
Speaker 4: and so some of that stigma's going away, which is

755
00:37:58,920 --> 00:38:01,560
Speaker 4: great because a lot of people need to go into

756
00:38:01,600 --> 00:38:03,319
Speaker 4: the trades, and frankly, a lot of people don't want

757
00:38:03,320 --> 00:38:05,439
Speaker 4: to take on the college debt, et cetera. I think

758
00:38:05,520 --> 00:38:08,640
Speaker 4: the other constraints though, are really around the grid, which

759
00:38:08,640 --> 00:38:11,520
Speaker 4: we talked about before, which is that no matter how

760
00:38:11,600 --> 00:38:14,440
Speaker 4: much stuff we do to build new HVDC you know,

761
00:38:14,520 --> 00:38:19,440
Speaker 4: high voltage DC lines or like grid enhancing technologies reconductoring

762
00:38:19,800 --> 00:38:22,160
Speaker 4: existing lines to put new materials in there that can

763
00:38:22,239 --> 00:38:25,080
Speaker 4: carry twice as much power, like, we're still going to

764
00:38:25,080 --> 00:38:28,200
Speaker 4: be grid constrained. Right, So then the question becomes how

765
00:38:28,239 --> 00:38:31,640
Speaker 4: efficiently are we using the grid. Geothermal and nuclear operate

766
00:38:31,680 --> 00:38:34,360
Speaker 4: at like between seventy five and ninety two percent of

767
00:38:34,400 --> 00:38:37,320
Speaker 4: the time, and so it's pumping electrons into the grid

768
00:38:37,400 --> 00:38:40,000
Speaker 4: at that rate. Solar, you know, if you add two

769
00:38:40,000 --> 00:38:42,360
Speaker 4: hours four hours of battery storage might get from twenty

770
00:38:42,360 --> 00:38:44,840
Speaker 4: five percent to maybe thirty five percent, right, But so

771
00:38:44,920 --> 00:38:47,480
Speaker 4: you're inefficiently using the grid. So now you might have

772
00:38:47,560 --> 00:38:50,560
Speaker 4: to put a lot more storage on the front end

773
00:38:50,560 --> 00:38:53,920
Speaker 4: of the transmission line to use the grid more efficiently

774
00:38:54,239 --> 00:38:55,920
Speaker 4: and then put more storage in the back end of

775
00:38:55,960 --> 00:38:58,200
Speaker 4: the line, which we call electric vehicles, to use that

776
00:38:58,239 --> 00:39:01,560
Speaker 4: more efficiently, right, And so so we can get so

777
00:39:01,760 --> 00:39:04,239
Speaker 4: much more out of the grid that we've already paid for,

778
00:39:04,640 --> 00:39:07,480
Speaker 4: but we have to be intentional about the mix. So

779
00:39:07,760 --> 00:39:09,319
Speaker 4: we love so and win and we should build as

780
00:39:09,400 --> 00:39:11,359
Speaker 4: much of that as we can. But we also need

781
00:39:11,400 --> 00:39:15,200
Speaker 4: a lot of this clean firm power generation to match

782
00:39:15,239 --> 00:39:18,160
Speaker 4: it as we retire so many coal plants, not because

783
00:39:18,600 --> 00:39:21,560
Speaker 4: of environmental regulations, but largely because they're at the end

784
00:39:21,600 --> 00:39:23,359
Speaker 4: of life. I mean, many of these coal plants are

785
00:39:23,840 --> 00:39:26,760
Speaker 4: requiring billions of dollars of additional investment to stay open,

786
00:39:27,040 --> 00:39:28,919
Speaker 4: and people don't want to put that money into them.

787
00:39:29,320 --> 00:39:32,440
Speaker 4: And so I think there's a lot of constraints around

788
00:39:33,200 --> 00:39:36,919
Speaker 4: us basically deciding what we're going to get good at,

789
00:39:37,520 --> 00:39:40,719
Speaker 4: right and where are we going to start the flywheel?

790
00:39:41,040 --> 00:39:42,839
Speaker 4: I would suggest to you the flywheel has to get

791
00:39:42,840 --> 00:39:46,280
Speaker 4: started across all these technologies. The IRA and the bill

792
00:39:46,800 --> 00:39:50,160
Speaker 4: you know, legislation have been the single largest investment in

793
00:39:50,239 --> 00:39:53,000
Speaker 4: starting this flywheel in the world, and so.

794
00:39:53,080 --> 00:39:54,080
Speaker 5: We're super excited about it.

795
00:39:54,080 --> 00:39:56,480
Speaker 4: But the other piece of it, I remember, is that

796
00:39:56,800 --> 00:39:59,480
Speaker 4: everybody else in the world wants our solutions. So if

797
00:39:59,520 --> 00:40:02,359
Speaker 4: we do it here, I mean Poland, Eastern Europe, all

798
00:40:02,360 --> 00:40:05,120
Speaker 4: these other places want to use American nuclear designs, they

799
00:40:05,120 --> 00:40:07,319
Speaker 4: want to use American technology, they don't want to be

800
00:40:07,360 --> 00:40:10,200
Speaker 4: tied to Russia or China. And so part of this

801
00:40:10,360 --> 00:40:13,759
Speaker 4: also is recognizing that like the world is looking to

802
00:40:13,840 --> 00:40:16,560
Speaker 4: us to show this leadership. The President has passed all

803
00:40:16,560 --> 00:40:19,239
Speaker 4: these laws, and now we need the private sector to

804
00:40:19,320 --> 00:40:21,439
Speaker 4: be a little less worried about whether the stock price

805
00:40:21,520 --> 00:40:23,120
Speaker 4: is going to go up and down. By showing leadership

806
00:40:23,360 --> 00:40:25,880
Speaker 4: and recognize the last five people that were nervous about it,

807
00:40:26,080 --> 00:40:29,080
Speaker 4: their stock price went up. It's like it's time to believe.

808
00:40:30,120 --> 00:40:33,160
Speaker 2: Jiggershaw, thank you so much for coming back on odd lots,

809
00:40:33,280 --> 00:40:35,800
Speaker 2: kind of perfect timing all of this news to announce,

810
00:40:36,000 --> 00:40:39,080
Speaker 2: and for your point. So far the stock market seems

811
00:40:39,120 --> 00:40:41,600
Speaker 2: to be helping your efforts. So thank you so much.

812
00:40:42,160 --> 00:40:56,360
Speaker 5: Oh thanks for having me me, Tracy.

813
00:40:56,400 --> 00:40:59,040
Speaker 2: I always really like talking to Jigger. You know, this

814
00:40:59,120 --> 00:41:01,440
Speaker 2: sort of reminded me not even related to this conversation.

815
00:41:01,520 --> 00:41:03,880
Speaker 2: I have one of my friends who is more i

816
00:41:03,880 --> 00:41:07,799
Speaker 2: would say, on the right side of the ideological spectrum,

817
00:41:07,880 --> 00:41:10,200
Speaker 2: and he's always he's like, I think you mentioned to

818
00:41:10,239 --> 00:41:12,160
Speaker 2: me once He's like, I don't really care about climate

819
00:41:12,200 --> 00:41:14,400
Speaker 2: and all that stuff renewable energy, but when I hear

820
00:41:14,520 --> 00:41:17,320
Speaker 2: Jigger talk like, yeah, I'm totally on board, it's always

821
00:41:17,320 --> 00:41:18,720
Speaker 2: great talking, very compelling.

822
00:41:18,960 --> 00:41:21,240
Speaker 3: Yes, I mean, I do think one of the things

823
00:41:21,239 --> 00:41:25,000
Speaker 3: that has perhaps changed a lot of the equation is

824
00:41:25,040 --> 00:41:28,920
Speaker 3: also the experience of the pandemic, which did not necessarily

825
00:41:29,000 --> 00:41:34,359
Speaker 3: cause shortages in energy per se, but certainly kicked off

826
00:41:34,400 --> 00:41:38,400
Speaker 3: a general awareness of wider infrastructure and the idea that

827
00:41:38,440 --> 00:41:41,440
Speaker 3: you can get choke points in certain vital things for

828
00:41:41,480 --> 00:41:43,560
Speaker 3: the economy. So I think that is like kind of

829
00:41:43,600 --> 00:41:46,960
Speaker 3: always hovering in the background. And from that perspective, even

830
00:41:47,120 --> 00:41:50,400
Speaker 3: if you don't like cleaned energy for some reason, you

831
00:41:50,480 --> 00:41:53,960
Speaker 3: probably like cheap energy. Yeah, and so hearing about potential

832
00:41:54,040 --> 00:41:56,399
Speaker 3: expansion in capacity should be a good thing.

833
00:41:56,920 --> 00:41:59,440
Speaker 2: I really like how much this story is kind of

834
00:41:59,440 --> 00:42:01,400
Speaker 2: a stock market story, and I think it's one of

835
00:42:01,400 --> 00:42:03,879
Speaker 2: the things that makes it particularly exciting for us at

836
00:42:03,880 --> 00:42:07,760
Speaker 2: this podcast, where it's like truly at the intersection.

837
00:42:07,400 --> 00:42:09,080
Speaker 3: Capital markets plus clean energy.

838
00:42:09,200 --> 00:42:12,680
Speaker 2: Yeah, like engineering real world things. So, for example, I

839
00:42:12,800 --> 00:42:15,480
Speaker 2: liked his explanation of like why it's not trivial to

840
00:42:15,600 --> 00:42:18,160
Speaker 2: just add massive amounts of power because all of the

841
00:42:18,200 --> 00:42:21,520
Speaker 2: balancing that has to go on throughout the entire expanse

842
00:42:21,600 --> 00:42:24,520
Speaker 2: of the grid from Illinois to New York and everything.

843
00:42:24,719 --> 00:42:26,920
Speaker 2: But then also this role, like it really does make

844
00:42:26,960 --> 00:42:30,280
Speaker 2: a difference. Like if the stock market rewards your deal,

845
00:42:30,840 --> 00:42:32,160
Speaker 2: then you want to do more of them, and all

846
00:42:32,400 --> 00:42:35,200
Speaker 2: your competitors will want to do more of them, and

847
00:42:35,239 --> 00:42:36,959
Speaker 2: so sort of like this signal from.

848
00:42:36,920 --> 00:42:40,040
Speaker 3: This signaling effect. I was about to say exactly that.

849
00:42:40,120 --> 00:42:41,880
Speaker 3: So you can scratch your head and be like, well,

850
00:42:41,920 --> 00:42:43,920
Speaker 3: why are the banks putting out with statement saying they

851
00:42:44,000 --> 00:42:47,080
Speaker 3: like nuclear energy now? But like the value is the

852
00:42:47,120 --> 00:42:50,440
Speaker 3: signaling effect, right, And it is kind of crazy. So

853
00:42:50,640 --> 00:42:53,840
Speaker 3: again we're recording this on September twenty fourth, but just

854
00:42:53,880 --> 00:42:57,320
Speaker 3: in the past few days there have been like five

855
00:42:57,440 --> 00:43:01,840
Speaker 3: or six positive like nuclear rel related things that have happened.

856
00:43:02,400 --> 00:43:03,440
Speaker 3: Kind of crazy.

857
00:43:03,160 --> 00:43:06,640
Speaker 2: Totally, And to Jigger's point about like it's sort of

858
00:43:06,680 --> 00:43:09,680
Speaker 2: a tragedy if you build the Vogel plant in Georgia

859
00:43:10,040 --> 00:43:11,839
Speaker 2: and then you have all these people trained on how

860
00:43:11,880 --> 00:43:15,160
Speaker 2: to construct a nuclear reactor and then that to the

861
00:43:15,239 --> 00:43:17,160
Speaker 2: end of the line and then everyone goes to get

862
00:43:17,160 --> 00:43:20,000
Speaker 2: a job in some other field. We're not going to

863
00:43:20,080 --> 00:43:24,080
Speaker 2: have cheaper, more abundant energy unless what we've learned from

864
00:43:24,120 --> 00:43:27,560
Speaker 2: one project quickly gets deployed to the next project, which

865
00:43:27,600 --> 00:43:29,759
Speaker 2: is why all those lift off reports from the DEE.

866
00:43:29,800 --> 00:43:32,239
Speaker 2: Like Jiggers talked about this on past episodes, the order

867
00:43:32,280 --> 00:43:33,520
Speaker 2: book is just absolutely key.

868
00:43:33,840 --> 00:43:37,920
Speaker 3: I'm thinking about the nuclear reactor catalog now, maybe it'll

869
00:43:38,000 --> 00:43:40,520
Speaker 3: maybe it'll come back, but it'll only be like two

870
00:43:40,560 --> 00:43:43,759
Speaker 3: pages long, and it'll be like the model T where

871
00:43:43,760 --> 00:43:46,800
Speaker 3: you can have the nuclear reactor in black, gray, gray

872
00:43:46,880 --> 00:43:47,239
Speaker 3: or gray.

873
00:43:47,400 --> 00:43:48,640
Speaker 5: Yeah.

874
00:43:48,760 --> 00:43:51,440
Speaker 2: All right, yes, looking forward to that catalog arriving in

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00:43:51,440 --> 00:43:52,200
Speaker 2: my inbox.

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00:43:51,880 --> 00:43:52,759
Speaker 5: Shar on Christmas time.

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00:43:53,280 --> 00:43:54,080
Speaker 3: Shall we leave it there?

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00:43:54,160 --> 00:43:54,839
Speaker 2: Let's leave it there.

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00:43:55,000 --> 00:43:57,880
Speaker 3: This has been another episode of the All Thoughts Podcast.

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00:43:58,040 --> 00:44:01,240
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

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00:44:01,000 --> 00:44:03,680
Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart.

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00:44:03,920 --> 00:44:08,400
Speaker 2: Follow Jiggershaw. He's at Jiggershaw DC. Follow our producers Carmen

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00:44:08,480 --> 00:44:12,160
Speaker 2: Rodriguez at Kerman Arman dash Ol Bennett at Dashbock and

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00:44:12,239 --> 00:44:14,840
Speaker 2: kel Brooks at Keil Brooks. Thank you to our producer

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00:44:14,880 --> 00:44:18,000
Speaker 2: Moses ONEm For more Oddlocks content, go to Bloomberg dot

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00:44:18,000 --> 00:44:20,480
Speaker 2: com slash od Lots. We have transcripts, a blog, and

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00:44:20,520 --> 00:44:23,319
Speaker 2: a newsletter and you can chaut about all of these

888
00:44:23,360 --> 00:44:26,560
Speaker 2: topics lots of interest in there in our discord twenty

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00:44:26,560 --> 00:44:30,440
Speaker 2: four to seven with fellow listeners Discord dot gg slash odlocks.

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00:44:30,560 --> 00:44:32,560
Speaker 3: And if you enjoy odd Lots, if you like it

891
00:44:32,600 --> 00:44:35,920
Speaker 3: when we talk to Jiggershaw about a potential revival in

892
00:44:36,040 --> 00:44:39,600
Speaker 3: America's nuclear power, then please leave us a positive review

893
00:44:39,640 --> 00:44:43,080
Speaker 3: on your favorite podcast platform. And remember, if you are

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Speaker 3: a Bloomberg subscriber, you can listen to all of our

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Speaker 3: episodes absolutely ad free. All you need to do is

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Speaker 3: find the Bloomberg channel on Apple Podcasts and follow the

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Speaker 3: instructions there. Thanks for listening in