WEBVTT - Jigar Shah on the Three Big Things Driving the Nuclear Energy Revival 0:00:03.120 --> 0:00:18.480 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:20.120 --> 0:00:23.599 Hello and welcome to another episode of the Odd Lots podcast. 0:00:23.680 --> 0:00:26.120 I'm Joe Wisnal and I'm Tracy Alloway. 0:00:26.360 --> 0:00:29.960 Tracy, how about that reopening of a three Mile Island 0:00:30.440 --> 0:00:31.600 nuclear facilit You. 0:00:31.480 --> 0:00:34.560 Know what, I saw that headline kind of float by 0:00:34.960 --> 0:00:36.720 and it seemed like a big deal. So I think 0:00:36.800 --> 0:00:42.440 Constellation signed a deal with Microsoft to reopen the three 0:00:42.479 --> 0:00:47.120 Mile Island nuclear plant, which everyone remembers from the disaster 0:00:47.240 --> 0:00:50.000 that happened there in the nineteen seventies. What I did 0:00:50.080 --> 0:00:55.600 see was Constellation's share price just exploded higher, like up 0:00:55.840 --> 0:00:58.520 thirty percent in a day. Maybe I shouldn't say exploded 0:00:58.720 --> 0:01:01.400 in a context of three Mile melted up. That's right, 0:01:01.520 --> 0:01:02.240 it melted up. 0:01:03.280 --> 0:01:06.959 You know a couple things about this, So one, I'm 0:01:07.040 --> 0:01:09.640 kind of not surprised because we all know that the 0:01:09.680 --> 0:01:13.640 big hyperscalar tech companies have all this demand for electricity, 0:01:14.319 --> 0:01:17.760 they have a desire to not use further fossil fuels, 0:01:17.760 --> 0:01:21.000 and nuclear is an obvious theoretical solution to how to 0:01:21.040 --> 0:01:24.360 get more clean energy. You know, I will say one 0:01:24.400 --> 0:01:27.440 thing about this deal, and it's very exciting, and I 0:01:27.480 --> 0:01:30.240 don't want to diminish it in any way. But there's 0:01:30.280 --> 0:01:32.399 one aspect of it. I didn't realize that one of 0:01:32.400 --> 0:01:35.560 the reactors at Three Mile Island had only closed down 0:01:35.560 --> 0:01:38.080 in twenty nineteen. So I only know there was like 0:01:38.120 --> 0:01:40.559 something bad happened in the nineteen seventies and the probably 0:01:40.560 --> 0:01:43.640 contributed to the US as general pulling back from nuclear. 0:01:43.959 --> 0:01:46.440 But I hadn't realized that actually, you know, there was 0:01:46.440 --> 0:01:48.960 still nuclear being produced at Three Mile Island up until 0:01:48.960 --> 0:01:51.760 twenty nineteen. Does it make it a little less exciting, 0:01:52.200 --> 0:01:55.400 But it's not like we're fully turning back the calendar 0:01:55.520 --> 0:01:56.800 to nineteen seventies. 0:01:56.960 --> 0:02:01.480 Well, I think there's a nice narrative, full circle aspect 0:02:01.560 --> 0:02:04.640 to this, right, which you just touched on. After the 0:02:04.880 --> 0:02:08.800 Three Mile incident. I mean that really kicked off the 0:02:08.960 --> 0:02:12.120 death of nuclear in some respects in the US, Like 0:02:12.160 --> 0:02:15.600 there is a lot of hesitancy and fear really about 0:02:15.600 --> 0:02:19.680 building new plants, and so in some ways, we're restarting 0:02:19.800 --> 0:02:22.639 at least one of the reactors. Yeah, it's a nice story, 0:02:23.360 --> 0:02:24.200 let's put it that way. 0:02:24.440 --> 0:02:27.160 So, okay, so this operation is going to get restarted, 0:02:27.240 --> 0:02:29.120 And you mentioned the death of nuclear and how we 0:02:29.240 --> 0:02:33.160 basically went forever without building new There was that Georgia plant. 0:02:33.280 --> 0:02:36.160 I think it came online sometime last year, the Votal plant. 0:02:36.760 --> 0:02:39.640 But it does raise the question of, like, how much 0:02:39.919 --> 0:02:41.680 was the fact that we more or less stop building 0:02:41.760 --> 0:02:44.360 nuclear a function of the fact that we got scared 0:02:44.360 --> 0:02:48.840 of nuclear regulations, it became too cautious, et cetera, versus 0:02:48.880 --> 0:02:51.480 the fact that we just had as multiple guests we 0:02:51.639 --> 0:02:55.080 now have pointed out this sort of flatlining of load growth, 0:02:55.320 --> 0:02:58.840 this sort of flat lining of overall demand, which is 0:02:58.880 --> 0:03:01.600 something that's now changed in the last few years with 0:03:01.680 --> 0:03:05.400 the reacceleration of demand for data centers. And to how 0:03:05.480 --> 0:03:07.720 much is this a story of we got scared of 0:03:07.800 --> 0:03:11.160 nuclear and we overregulated it versus how much did the 0:03:11.200 --> 0:03:14.799 economics just not make sense when there was not growing 0:03:14.800 --> 0:03:15.560 demand for lectures. 0:03:15.680 --> 0:03:17.560 Yeah, I think that's a good point. I mean, there's 0:03:17.639 --> 0:03:22.639 another tailwind that's sort of behind the potential nuclear resurgence now, 0:03:22.720 --> 0:03:26.000 which is there's a lot of government fundings floating around 0:03:26.240 --> 0:03:29.320 the IRA and programs like that, and so that's another 0:03:29.360 --> 0:03:32.280 thing that maybe is making maybe this time is different. 0:03:32.280 --> 0:03:35.880 There have been a lot of predictions about a nuclear 0:03:36.120 --> 0:03:39.160 renaissance over the years, but maybe maybe this is it. 0:03:39.800 --> 0:03:44.280 Let's learn why the stars have aligned the constellation, if 0:03:44.320 --> 0:03:47.120 you will, why the stars have aligned you for this 0:03:47.280 --> 0:03:51.840 seeming revival of nuclear in America with the restarting of 0:03:51.960 --> 0:03:55.080 the Three Mile Island Reactor. We really do have the 0:03:55.080 --> 0:03:57.920 perfect guest. We've had them on the podcast multiple times. 0:03:57.960 --> 0:04:00.840 Truly one of our favorites in the fan. We're going 0:04:00.920 --> 0:04:03.120 to be speaking with Jiggershaw. He is the director of 0:04:03.160 --> 0:04:06.240 the Loan Program's Office at the Department of Energy, a 0:04:06.360 --> 0:04:10.440 key player in all of the Inflation Reduction Act's efforts 0:04:10.480 --> 0:04:13.560 to stimulate clean energy growth in the US. With the 0:04:13.600 --> 0:04:17.360 Inflation Reduction Act, his office went from a lending authority 0:04:17.400 --> 0:04:20.640 above forty billion to over two hundred billion. A big 0:04:21.120 --> 0:04:24.000 advocate of nuclear and other sources. Jigger, thank you so 0:04:24.080 --> 0:04:25.599 much for coming on at Lots and great to have 0:04:25.640 --> 0:04:27.200 you in the studio. It's the first time we've talked 0:04:27.200 --> 0:04:28.000 to you here in studio. 0:04:28.240 --> 0:04:30.320 It's so great to be in the studio. Thanks for 0:04:30.320 --> 0:04:30.760 having me. 0:04:30.920 --> 0:04:33.000 Thank you so much. So I'm going to start off 0:04:33.040 --> 0:04:35.080 with this question, which is, Okay, we went for a 0:04:35.080 --> 0:04:39.120 long time basically without building new nuclear power plants. It's 0:04:39.120 --> 0:04:41.720 starting to pick up again. How much is it because 0:04:41.760 --> 0:04:45.920 something has changed policy wise with you know, subsidies and 0:04:45.960 --> 0:04:51.000 tax credits, et cetera versus demand is back. Therefore the 0:04:51.040 --> 0:04:53.560 economics of nuclear makes sense or would you say it's 0:04:53.600 --> 0:04:54.200 not binary? 0:04:54.600 --> 0:04:56.880 Well, look, I think that when you think about what 0:04:57.520 --> 0:05:02.760 happened through historical contacts teen seventies, we had high inflation, right, 0:05:02.839 --> 0:05:06.760 and nuclear power was subject to high inflation, and so 0:05:07.160 --> 0:05:10.720 you know, part of this is people were already worried 0:05:10.760 --> 0:05:14.920 about building new nuclear plants before the incident occurred because 0:05:15.680 --> 0:05:17.719 things were just getting more expensive, right. And when you 0:05:17.720 --> 0:05:21.440 think about the utility bankruptcies that occurred right way back when, 0:05:21.480 --> 0:05:24.240 it was because it had cost overruns on nuclear power, right. 0:05:24.279 --> 0:05:28.080 And so so I think that in general, it goes 0:05:28.200 --> 0:05:33.120 to when America stopped believing in itself and its ability 0:05:33.160 --> 0:05:36.160 to do big things in infrastructure. And I think this 0:05:36.320 --> 0:05:40.400 moment with load growth and with the President saying we 0:05:40.440 --> 0:05:42.800 are going to build big things here like has gotten 0:05:42.839 --> 0:05:46.719 people thinking again, Hey, what would it take to actually 0:05:46.800 --> 0:05:48.880 figure this out this time around? 0:05:49.200 --> 0:05:51.240 This is actually exactly what I wanted to ask you 0:05:51.240 --> 0:05:54.400 about because I was reading that the initial construction cost 0:05:54.880 --> 0:05:59.560 for Unit one of three mile was about four hundred 0:05:59.680 --> 0:06:04.440 million dollars, and I guess like today the cost of 0:06:04.440 --> 0:06:08.800 building a nuclear plant would be like five billion, ten billion. 0:06:08.920 --> 0:06:11.760 Obviously the four hundred million isn't, you know, adjusted for 0:06:12.000 --> 0:06:15.800 nineteen sixties prices. But it does seem in general like 0:06:15.839 --> 0:06:19.719 it's more expensive to build nuclear plants certainly since the 0:06:19.760 --> 0:06:24.240 nineteen sixties. Where did that additional cost increase actually come from? 0:06:24.680 --> 0:06:27.080 So when you think about building things, like if you 0:06:27.080 --> 0:06:30.119 were to build multi family housing, and you would build 0:06:30.279 --> 0:06:34.719 one multi family housing building versus building twelve right throughout 0:06:34.760 --> 0:06:37.719 the city, you can imagine if you're using the same design, 0:06:37.839 --> 0:06:40.640 it would be cheaper, the workers would get better, you know, 0:06:40.720 --> 0:06:43.039 the first one would cost more, the second would cost less, 0:06:43.040 --> 0:06:44.159 the third would be even less. 0:06:44.279 --> 0:06:44.960 You get faster. 0:06:45.120 --> 0:06:46.599 I mean you see that when you go into like 0:06:46.600 --> 0:06:50.080 a new home construction place. The first home takes it 0:06:50.080 --> 0:06:52.120 seems a lot longer, and then suddenly, like the homes 0:06:52.240 --> 0:06:54.679 start popping up every week. Right, this is the same 0:06:54.720 --> 0:07:00.000 with nuclear power. We trained thirteen thousand people to build 0:07:00.080 --> 0:07:04.400 the Vocal nuclear plant in Georgia, right, and then we 0:07:04.400 --> 0:07:06.520 were done, And where did all those workers go? 0:07:06.680 --> 0:07:06.760 To? 0:07:06.839 --> 0:07:09.400 Other jobs? So, now if we wanted to build units 0:07:09.440 --> 0:07:12.360 five and six. We wanted to rebuild you know, VC 0:07:12.400 --> 0:07:15.840 Summer in South Carolina, which is like one hundred miles away, Right, 0:07:16.080 --> 0:07:19.200 we'd have to go and find other thirteen thousand workers, right. 0:07:19.240 --> 0:07:21.080 And so one of the things that we have to 0:07:21.080 --> 0:07:23.520 figure out how to do is to figure out how 0:07:23.560 --> 0:07:26.800 to build ten right and have those same workers that 0:07:26.920 --> 0:07:30.280 we trained, all those same EPC contractors, all of those 0:07:30.280 --> 0:07:34.560 same suppliers not have to stop and start, but we 0:07:34.720 --> 0:07:36.880 you know, continue to like to do these one off things. 0:07:37.280 --> 0:07:40.720 This is why I recommend everyone should go read. Your 0:07:40.800 --> 0:07:43.320 office puts out a series of reports called Pathways to 0:07:43.320 --> 0:07:47.360 Commercial Liftoff, reports about what it takes to really commercialize 0:07:47.480 --> 0:07:49.640 various types of energy, not just nuclear. And you always 0:07:49.640 --> 0:07:52.480 talk about the importance of the order book going forward 0:07:52.560 --> 0:07:54.200 so that people know that there's a second and a 0:07:54.240 --> 0:07:56.760 third project and a fourth project out there. So I 0:07:56.760 --> 0:07:58.480 want to get into that and also talk some more 0:07:58.520 --> 0:08:02.320 about the workplace development, but just on this project a 0:08:02.320 --> 0:08:05.280 little bit more. Tell us what happened. How did the 0:08:05.320 --> 0:08:09.720 stars align such that Constellation thought it's worth taking on 0:08:09.760 --> 0:08:13.680 the operational risk to get this going Again, Microsoft neat 0:08:13.840 --> 0:08:16.560 thinking that yes, this is the best solution for their 0:08:16.640 --> 0:08:19.640 clean energy needs, and what is the role of supply 0:08:19.680 --> 0:08:22.720 and demand, and then the role of various tax credits 0:08:22.760 --> 0:08:25.520 and such within the IRA that made this all happen. 0:08:26.000 --> 0:08:28.760 Yeah, I mean it's a juicy tail, right. I Mean, 0:08:28.800 --> 0:08:33.080 when you think about the nuclear energy industry, there aren't 0:08:33.160 --> 0:08:38.080 really any entrepreneurs, right. Constellation is a company that bought 0:08:38.120 --> 0:08:41.000 up a lot of other people's nuclear plants. They are 0:08:41.040 --> 0:08:44.880 the best operator of nuclear plants in the world, right, 0:08:45.160 --> 0:08:47.960 and then they got spun out of Exelon right into 0:08:48.040 --> 0:08:51.400 their own stockticker. But you know, I think we all 0:08:51.400 --> 0:08:53.640 have to acknowledge that if it wasn't for the Palisades 0:08:53.720 --> 0:08:56.880 Nuclear plant in Michigan that we announced a conditional commitment 0:08:56.920 --> 0:08:59.920 for and that we're you know, closing the lon On here, 0:09:00.400 --> 0:09:02.600 there's no way that the rest of these projects happen. 0:09:02.720 --> 0:09:05.680 Right in Palisades is owned by hole Tech, which is 0:09:05.880 --> 0:09:09.959 a genuine entrepreneur, Chris Singh right, private company, right, one 0:09:09.960 --> 0:09:12.880 of the most successful entrepreneurs in the nuclear industry, right 0:09:12.960 --> 0:09:15.560 and in the whole world. And it's one of those 0:09:15.559 --> 0:09:18.120 weird things where he woke up one morning and said, well, 0:09:18.200 --> 0:09:22.480 I've just got a contract to dismantle the Palisades Nuclear plant, 0:09:22.880 --> 0:09:25.240 and you know, we went to him and said, would 0:09:25.240 --> 0:09:27.240 you think about restarting and he said, do. 0:09:27.360 --> 0:09:29.920 You think about doing the complete opposite? Perhaps? 0:09:30.160 --> 0:09:33.160 Yeah, And he said, well sell me. And I was like, well, 0:09:33.240 --> 0:09:35.400 here are the incentives out of the Inflation Reduction Act 0:09:35.679 --> 0:09:38.120 you can get, you know, the forty eight E and 0:09:38.160 --> 0:09:39.240 some of these other at tax credits. 0:09:39.280 --> 0:09:41.600 Walk us through the specific what are the what do 0:09:41.679 --> 0:09:42.880 you get in there? 0:09:43.160 --> 0:09:46.199 So when you restart a nuclear plant, right, the nuclear 0:09:46.240 --> 0:09:49.920 plant is viewed as new additional capacity, right because it 0:09:50.000 --> 0:09:52.760 was shut down. And so as a result, this technology 0:09:52.800 --> 0:09:57.040 agnostic credit that was created by you know, Senator Widen right, 0:09:57.080 --> 0:09:59.679 because remember we always had the solar tax credit and 0:09:59.679 --> 0:10:01.760 the wind tax credit and all these other things. So 0:10:02.040 --> 0:10:05.920 over time, like the IRA moves us to a technology 0:10:06.000 --> 0:10:09.600 neutral tax credit, so that everything that is clean gets 0:10:09.679 --> 0:10:13.400 this technology neutral tax credit. It's you know, it's a 0:10:13.440 --> 0:10:16.160 pretty lucrative tax credit, depends on the technology. But let's 0:10:16.160 --> 0:10:18.800 say three cents a killo what hour? And so now 0:10:18.840 --> 0:10:23.079 you're in this place where you actually have a bonus 0:10:23.200 --> 0:10:26.440 production credit. Now you separately can choose to get an 0:10:26.480 --> 0:10:29.240 investment tax credit. Right. But it happens to be that 0:10:29.240 --> 0:10:32.199 the production tax cred is more lucrative for these restarts 0:10:32.240 --> 0:10:34.400 of nuclear plants. But if you decide to do the 0:10:34.400 --> 0:10:36.760 investment tax credit, then you get the thirty percent tax credit. 0:10:37.040 --> 0:10:38.880 Then there's bonus tax cred So if it's part of 0:10:38.920 --> 0:10:41.120 an energy community, you get an extra ten percent, right. 0:10:41.559 --> 0:10:43.600 If you have a lot of domestic content, you get 0:10:43.600 --> 0:10:44.360 another ten percent. 0:10:44.440 --> 0:10:44.600 Right. 0:10:44.640 --> 0:10:47.120 So you could imagine that some of the folks you're 0:10:47.120 --> 0:10:51.040 building brand new nuclear plants might go that direction. But 0:10:51.400 --> 0:10:55.600 as a result of these incentives, nuclear power is now 0:10:55.760 --> 0:10:59.720 very cost effective. Then the question becomes like who actually 0:10:59.760 --> 0:11:02.720 wants to buy this power? Right, because wholesale market prices 0:11:02.760 --> 0:11:05.440 have been low, and so then the question becomes who 0:11:05.520 --> 0:11:06.959 was to buy it? And it happened to be that 0:11:07.400 --> 0:11:12.800 two different utility groups in Michigan competed over wanting to 0:11:13.080 --> 0:11:15.679 buy all the output out of the Palisades restart, and 0:11:15.760 --> 0:11:18.200 so he you know, picked one of the groups to 0:11:18.240 --> 0:11:21.760 buy that power, and then that led to you know, 0:11:21.800 --> 0:11:25.840 the project becoming financiable, right, and so once that succeeded, 0:11:26.480 --> 0:11:29.800 then you know, Constellation was like, hell, maybe we could 0:11:29.840 --> 0:11:30.120 do this. 0:11:30.800 --> 0:11:33.760 So when you say with the tax credits and those 0:11:33.800 --> 0:11:37.760 other changes. It suddenly becomes cost effective or it becomes financiable. 0:11:37.920 --> 0:11:41.640 Walk us through the actual math, like what is changing here? 0:11:41.880 --> 0:11:46.199 Is it the discount rate or the future projection of revenue? 0:11:46.240 --> 0:11:49.160 Like what is it exactly that changes in the equation. 0:11:50.320 --> 0:11:54.439 So for a restart, you generally choose a production tax credit, 0:11:54.480 --> 0:11:57.280 not the investment tax credit. And that's because the cost 0:11:57.360 --> 0:12:00.440 of restarting a reactor is a lot lower than the 0:12:00.480 --> 0:12:03.360 cost of building a brand new reactor. Right, so you 0:12:03.440 --> 0:12:06.480 make more money by getting that extra three cents of 0:12:06.520 --> 0:12:08.839 kill what hour for the next you know, twenty years. 0:12:09.240 --> 0:12:13.079 So the math there is you put up, it depends 0:12:13.120 --> 0:12:15.360 on you know, where the final costs runs outpu let's 0:12:15.400 --> 0:12:18.360 call it one to two billion dollars to do the restart, 0:12:18.679 --> 0:12:20.720 And then you get this three cents kill what hour 0:12:20.800 --> 0:12:23.560 multiplied by the number of kill what hours that that 0:12:23.720 --> 0:12:27.000 plant creates. And remember a nuclear power plant runs on 0:12:27.120 --> 0:12:29.640 average in the state's ninety two percent of the time, 0:12:30.040 --> 0:12:32.360 So that's a lot of killo what hours that comes 0:12:32.360 --> 0:12:35.000 out of that plant, whereas with a solar farm you 0:12:35.080 --> 0:12:38.320 might get twenty five percent of the time production right 0:12:38.360 --> 0:12:41.280 with a tracking system. And so so the math means 0:12:41.320 --> 0:12:44.720 that you could get almost all of your money back 0:12:44.760 --> 0:12:49.320 on the one to two billion dollars from the tax credits, right, 0:12:49.360 --> 0:12:52.319 and then you've got the sale of the power right 0:12:52.360 --> 0:12:55.080 that you're signing a long term contract for, and you 0:12:55.080 --> 0:12:57.880 know that's where you make your return, right, Which is 0:12:57.920 --> 0:13:02.040 why I think Constellations stock price jumped so much because 0:13:02.040 --> 0:13:06.960 they have so many existing sites where a lot of 0:13:07.000 --> 0:13:11.400 those nuclear sites have one reactor and they were made 0:13:11.440 --> 0:13:14.760 for four reactors or five reactors, but we never built 0:13:14.760 --> 0:13:17.880 the rest and so while this one was the easiest 0:13:17.920 --> 0:13:19.920 way to get in right because it was a restart, 0:13:20.720 --> 0:13:23.720 there's all these other sites where you could build new reactors. 0:13:24.120 --> 0:13:26.960 And now that Microsoft has come in and said we 0:13:27.000 --> 0:13:30.560 want to buy all that output because we are taking 0:13:30.600 --> 0:13:33.480 seriously the commitments we made to twenty four x seven 0:13:33.559 --> 0:13:37.320 clean power by twenty thirty, then you now have the 0:13:37.360 --> 0:13:39.679 makings of an equation. And if you heard but like 0:13:40.000 --> 0:13:42.080 Meta came out right after that and said, we are 0:13:42.160 --> 0:13:45.320 also all in on nuclear power and meeting that twenty 0:13:45.320 --> 0:13:46.400 four x seven requirement. 0:13:46.760 --> 0:13:50.200 So we have a lot of physical capacity or just 0:13:50.240 --> 0:13:53.160 space capacity right now to add more reactors. And so 0:13:53.200 --> 0:13:55.880 that's sort of the exciting aspect walks through a little 0:13:55.920 --> 0:13:59.520 bit more of the math with the three mile Island deal. Specifically, 0:14:00.480 --> 0:14:04.360 for consolation, it's going to cost them one point six billion, 0:14:04.720 --> 0:14:07.600 I think, is what I've seen reported to get this 0:14:07.880 --> 0:14:11.800 reactor back up and running. And then Microsoft makes some 0:14:11.840 --> 0:14:13.560 sort of commitment where they're going to be a buyer 0:14:13.600 --> 0:14:15.439 over I don't know, X many years, like talk to 0:14:15.520 --> 0:14:18.960 us a little bit about more about this particular deal. 0:14:19.280 --> 0:14:21.280 Yeah, So I don't know what the final cost of 0:14:21.360 --> 0:14:24.040 the Constellation restart will be, just because I think they 0:14:24.040 --> 0:14:26.080 still need to do more engineering work to figure out 0:14:26.080 --> 0:14:28.840 exactly what needs to be fixed. But there's some massmates 0:14:28.840 --> 0:14:32.200 floating around. The way that Microsoft and others sign these 0:14:32.200 --> 0:14:35.680 contracts is they don't actually buy the power. What they 0:14:35.720 --> 0:14:38.400 do is this thing called the contract for differences, okay, 0:14:38.560 --> 0:14:42.120 and so power generally gets sold into the open market 0:14:42.480 --> 0:14:46.320 to look into the PGM, and Microsoft says, depending on 0:14:46.360 --> 0:14:49.680 what happens with this power, we will make you hole 0:14:49.800 --> 0:14:52.160 on the payment. Right. So if we said that we're 0:14:52.200 --> 0:14:54.720 going to pay you know, nine cents coed hour, and 0:14:54.760 --> 0:14:56.560 you end up getting seven cents of code hour, we'll 0:14:56.560 --> 0:14:59.760 pay that two cent difference. And that includes not just 0:14:59.840 --> 0:15:02.560 the kill a what our price, but also includes the 0:15:02.600 --> 0:15:03.600 capacity payment. 0:15:03.680 --> 0:15:04.960 Right, So you may have. 0:15:04.920 --> 0:15:08.760 Heard that the PGAM had a very large increase in 0:15:08.920 --> 0:15:12.440 the price that the capacity payment cleared. And the capacity 0:15:12.480 --> 0:15:16.160 payment is essential because it convinces the coal plants or 0:15:16.160 --> 0:15:18.120 the natural gas plants or others who are sort of 0:15:18.120 --> 0:15:20.800 at the end of life to make investments to last 0:15:20.880 --> 0:15:23.720 a little longer because they got paid a capacity payment 0:15:23.720 --> 0:15:27.320 to stay open. So the pieces that come here are 0:15:27.360 --> 0:15:30.120 both the capacity payment and the energy payment. And Microsoft 0:15:30.200 --> 0:15:32.360 is saying that we get all the attributes, so we 0:15:32.400 --> 0:15:36.320 get to call our usage green, but separately like, if 0:15:36.360 --> 0:15:39.320 for whatever reason, the wholesale market value for what the 0:15:39.400 --> 0:15:43.000 nuclear power plant is creating is less than the strike 0:15:43.040 --> 0:15:45.280 price that we agreed to, then we will. 0:15:45.120 --> 0:15:45.640 Make you hold. 0:16:02.160 --> 0:16:04.880 So you mentioned the idea that there are some nuclear 0:16:04.960 --> 0:16:08.800 sites out there already that have spare capacity that could 0:16:08.800 --> 0:16:13.400 either be restarted or with new reactors or units built. 0:16:14.160 --> 0:16:16.120 So I guess I have two questions based on that. 0:16:16.200 --> 0:16:20.720 But one, if you have space in your nuclear facility, 0:16:21.320 --> 0:16:26.080 is that space specifically designed for one type of reactor already? Like, 0:16:26.160 --> 0:16:29.120 are you wetted to a particular model that you have 0:16:29.160 --> 0:16:33.720 to follow? And then secondly, what's the actual process to 0:16:33.960 --> 0:16:37.560 build a new reactor? Like I can't imagine you open 0:16:37.640 --> 0:16:41.080 up the nuclear reactor catalog and you know, you go like, ah, 0:16:41.120 --> 0:16:43.240 I'll take this one. How does it work? 0:16:44.040 --> 0:16:44.280 Well? 0:16:44.360 --> 0:16:47.080 So, just to start with your last question, first, it 0:16:47.280 --> 0:16:49.480 used to be that you did have a nuclear power catalog. 0:16:49.600 --> 0:16:52.080 Oh and that's the problem, right, that's why we have 0:16:52.680 --> 0:16:55.760 ninety you know plus reactors and only four of them 0:16:55.800 --> 0:16:58.360 are exactly the same. And so it used to be 0:16:58.400 --> 0:17:00.960 that used to be able to customize your and that 0:17:01.080 --> 0:17:03.320 led to a lot of inefficiencies. And so I hope 0:17:03.360 --> 0:17:05.239 and pray that this time around, when people build new 0:17:05.320 --> 0:17:08.440 nuclear they build the exact same cookie cutter thing every 0:17:08.480 --> 0:17:10.800 single time and we get our costs down. But to 0:17:10.800 --> 0:17:13.520 answer your question, so the Department of Energy commissioned to 0:17:13.520 --> 0:17:16.160 study to look at all of the fifty four sites 0:17:16.200 --> 0:17:18.119 that we have with nuclear plants. Some of them have 0:17:18.119 --> 0:17:20.360 one reactor, some of them have to, a couple have three, 0:17:20.400 --> 0:17:23.399 and then only one. The Vogel Nuclear Plant has four. 0:17:23.840 --> 0:17:27.240 And we can build any type of reactor on those 0:17:27.359 --> 0:17:30.399 empty sites because really it's just land that's behind a 0:17:30.400 --> 0:17:32.480 security perimeter, right, and that's what you care about is 0:17:32.480 --> 0:17:36.800 a security perimeter. And so we have about sixty five 0:17:36.880 --> 0:17:41.000 thousand megawatts of capacity at the existing nuclear sites, which 0:17:41.040 --> 0:17:45.240 is massive. If we use small modular reactors, right, which 0:17:45.280 --> 0:17:46.760 are the ones that are sort of in that three 0:17:46.800 --> 0:17:50.120 to six billion dollar range, and if we use AP 0:17:50.200 --> 0:17:52.920 one thousands, which is what we built at the Vogel, 0:17:53.280 --> 0:17:57.000 then you could build almost ninety five thousand megawats at 0:17:57.000 --> 0:17:59.720 those same sites. But those are more like ten to 0:17:59.800 --> 0:18:02.600 four fourteen billion dollars each, right, And so you have 0:18:02.640 --> 0:18:04.600 to decide whether you want to spend that much money. 0:18:05.160 --> 0:18:08.240 Are you limited at all? Or does space maybe become 0:18:08.240 --> 0:18:11.720 a factor in the sense that the hyperscalers want to 0:18:11.760 --> 0:18:14.960 be co located close to the plants. 0:18:15.160 --> 0:18:17.159 So they're not going to be within the security perimeter. 0:18:17.240 --> 0:18:19.280 They be outside of the security member. And most of 0:18:19.280 --> 0:18:22.120 these nuclear plants are in fairly the middle of location. 0:18:22.840 --> 0:18:25.600 These are somewheres I grew up near a New time side, 0:18:27.320 --> 0:18:29.080 but you know, but they're going to be well, let's 0:18:29.080 --> 0:18:31.080 say five to seven miles away, and so you don't 0:18:31.080 --> 0:18:34.000 need to use a transmission infrastructure and tax it. You 0:18:34.000 --> 0:18:37.119 can create your own line directly from the nuclear plant 0:18:37.160 --> 0:18:40.440 to the data center. And so that saves a lot 0:18:40.440 --> 0:18:41.919 of cost because now you don't have to pay for 0:18:42.000 --> 0:18:44.520 the transmission. And so that's why a lot of this 0:18:44.560 --> 0:18:48.119 colocation makes us sense. It also disrupts the grid the least. 0:18:48.520 --> 0:18:51.119 And then the other thing that is so great about 0:18:51.280 --> 0:18:55.120 this colocation idea is that the people who live around 0:18:55.119 --> 0:18:58.600 a nuclear power plant love nuclear power plants. The public 0:18:58.680 --> 0:19:02.000 perception of nuclear is that ninety plus percent around a 0:19:02.080 --> 0:19:04.760 nuclear power plant. And so you know, instead of going 0:19:04.800 --> 0:19:06.920 to a brand new spot where you might have a 0:19:07.000 --> 0:19:10.959 mixed reviews, it's easier publicly to use existing sites. 0:19:11.119 --> 0:19:13.800 It's good to know. Yeah, here's a random question. I've 0:19:13.840 --> 0:19:16.440 been one of those things that wanted to ask someone. 0:19:16.480 --> 0:19:19.040 I probably could have just tweeted it years ago. Sometimes 0:19:19.040 --> 0:19:20.879 I see these things it's like, oh, there's like a 0:19:20.920 --> 0:19:24.280 three year wait to like plug some new production of 0:19:24.320 --> 0:19:26.840 any sorts of energy into the grid. And I'm always like, 0:19:27.160 --> 0:19:29.359 is this just like someone like like go out and 0:19:29.400 --> 0:19:31.960 plug a line into the wall or something. What's that 0:19:32.119 --> 0:19:33.960 all about? And like why does it have to be 0:19:34.000 --> 0:19:34.400 that long? 0:19:35.000 --> 0:19:38.320 It's it really is an extraordinary thing, right. I think 0:19:38.359 --> 0:19:42.920 that you know, most people view electricity like water, right, 0:19:43.000 --> 0:19:44.880 so you just put a bigger pump in, you put 0:19:44.920 --> 0:19:46.680 in more pipe, it gets to your house. 0:19:47.000 --> 0:19:47.720 You got hot water. 0:19:47.880 --> 0:19:50.480 That's great. It's not like that at all. There is 0:19:50.520 --> 0:19:54.159 this complex physics equation that you have to solve. 0:19:53.920 --> 0:19:56.520 For because the greatest to be in perfect balance all 0:19:56.520 --> 0:19:56.800 the time. 0:19:56.880 --> 0:19:57.080 Right. 0:19:57.080 --> 0:19:59.800 Well, so there's the there's the perfect balance between supply 0:20:00.080 --> 0:20:03.719 and demand, but then there's also figuring out, you know, 0:20:03.760 --> 0:20:07.240 what the constraints are of each individual segment on the 0:20:07.240 --> 0:20:08.040 transmission line. 0:20:08.080 --> 0:20:08.199 Right. 0:20:08.240 --> 0:20:10.720 So if you're using power in New York City and 0:20:10.760 --> 0:20:13.359 you're creating a lot of extra power in out of 0:20:13.400 --> 0:20:17.080 the nuclear plants in Illinois, right then that power has 0:20:17.119 --> 0:20:20.960 to go via Indiana and Ohio and then through Pennsylvania 0:20:21.040 --> 0:20:24.239 to New York City, and they may or may not 0:20:24.280 --> 0:20:26.520 be able to carry that much, right, And so they 0:20:26.560 --> 0:20:29.760 have to do these studies. So every time you try 0:20:29.760 --> 0:20:31.040 to add something to the grid, they have to do 0:20:31.080 --> 0:20:33.560 a study, and they have to figure out whether that 0:20:33.600 --> 0:20:36.399 capacity is there, how often it's there, whether it would 0:20:36.560 --> 0:20:39.600 continue to be balanced, or whether it be imbalanced. And 0:20:39.680 --> 0:20:43.240 so the big fight there is that. So in Texas, 0:20:43.280 --> 0:20:45.760