WEBVTT - This Is How China Builds So Much Nuclear Power 0:00:03.080 --> 0:00:15.680 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:20.000 --> 0:00:23.680 Hello and welcome to another episode of the Odd Lots podcast. 0:00:23.720 --> 0:00:26.079 I'm Jolle Wisenthal and I'm Tracy Alloway. 0:00:26.239 --> 0:00:28.160 Tracy, you know, we've been talking a lot about the 0:00:28.280 --> 0:00:31.639 US energy system for obvious reasons, at least when it 0:00:31.680 --> 0:00:33.800 comes to electricity. I don't know about you. I kind 0:00:33.800 --> 0:00:35.240 of feel like the more we talk about it, the 0:00:35.320 --> 0:00:36.159 less I understand it. 0:00:36.479 --> 0:00:40.640 Yes, yes, absolutely, I think there are a couple problems here. So, like, 0:00:40.720 --> 0:00:45.400 even beyond the actual different technologies for generating power, there's 0:00:45.440 --> 0:00:49.839 the patchwork of like how different grids work in different states. 0:00:49.880 --> 0:00:55.080 There's the different regulations, the different like interoperability and all 0:00:55.120 --> 0:00:57.800 of that. And then even if we look like beyond 0:00:58.000 --> 0:01:00.600 the US, it gets I guess even more different. 0:01:01.040 --> 0:01:03.600 Yes, well, I sort of wonder maybe we can learn 0:01:03.640 --> 0:01:06.640 something about the US by a little compared and contrast. Right, 0:01:06.959 --> 0:01:08.920 So if we look at the US and we still 0:01:08.920 --> 0:01:12.399 don't totally get how it works, maybe, I don't know, 0:01:12.680 --> 0:01:15.520 just to thought, maybe we'll learn something about the US 0:01:15.560 --> 0:01:18.600 by looking at some different system and then we have 0:01:18.680 --> 0:01:21.600 something to compare it to. It might be a weigh 0:01:21.600 --> 0:01:23.480 in by looking at the outside world. 0:01:23.319 --> 0:01:25.400 I'm a big fan of doing this, by the way, 0:01:25.520 --> 0:01:28.680 just to identify like different choke points in a particular 0:01:28.800 --> 0:01:32.160 domestic process. If you think that the US can't do 0:01:32.240 --> 0:01:37.000 something for whatever unidentifiable reason or I don't know, cultural 0:01:37.120 --> 0:01:39.800 like hold back, but if you look at a different 0:01:40.080 --> 0:01:44.160 country and they're doing it at scale, very very quickly, 0:01:44.560 --> 0:01:46.920 then I think you can learn a lot about yourself. 0:01:47.200 --> 0:01:49.520 Well, that's exactly right. And so one of the things 0:01:49.520 --> 0:01:52.200 again that comes up from time to time here in 0:01:52.240 --> 0:01:55.640 our conversations is nuclear and this is just one example 0:01:55.800 --> 0:01:58.040 of a source of power that may or may not 0:01:58.160 --> 0:02:01.160 be important in our future. But according to and I'm 0:02:01.200 --> 0:02:04.640 looking at a story from the Economist, over the past decade, 0:02:04.880 --> 0:02:08.600 China has added thirty seven nuclear reactors according to the 0:02:08.639 --> 0:02:12.519 International Atomic Energy Agency. I don't know, maybe we've added 0:02:12.560 --> 0:02:14.640 like two. I forget how many there are at that 0:02:14.760 --> 0:02:18.960 Georgia plant. A couple more maybe restarted. But you know, 0:02:19.200 --> 0:02:21.320 we talk all the time about nuclear and how hard 0:02:21.360 --> 0:02:23.400 it is and how hard the financing is and the 0:02:23.480 --> 0:02:26.160 labor force and the learning laws, and we forgot to 0:02:26.560 --> 0:02:29.440 you know, we forgot how to build them for various reasons. 0:02:29.880 --> 0:02:32.000 But that's not and it's so expensive. There's all these 0:02:32.000 --> 0:02:34.840 cost overruns every time. But apparently that is not the 0:02:34.880 --> 0:02:37.080 case everywhere, and that there are other parts of the world, 0:02:37.120 --> 0:02:41.200 particularly China, where they just keep building its scale, and 0:02:41.240 --> 0:02:43.639 maybe we could learn a little bit of how they 0:02:43.639 --> 0:02:45.400 do that, and how they finance it, and how they 0:02:45.600 --> 0:02:47.119 avoid forgetting how to build them. 0:02:47.320 --> 0:02:49.959 I think this is so interesting, this particular approach that 0:02:50.040 --> 0:02:52.919 compare and contrast, and it is absolutely true. I think 0:02:52.919 --> 0:02:56.760 the US has the most nuclear reactors out there, like 0:02:56.840 --> 0:02:58.959 almost one hundred or something like that, but it took 0:02:59.000 --> 0:03:01.400 us decades and now to build them, and as you 0:03:01.480 --> 0:03:05.960 rightly point out, we haven't built many new ones that recently. Meanwhile, 0:03:06.040 --> 0:03:09.200 China is adding more and more, and they make it 0:03:09.240 --> 0:03:11.480 look easy. I mean, I guess they are just like 0:03:11.639 --> 0:03:14.359 giant things to boil water. But you know, China really 0:03:14.360 --> 0:03:16.679 makes it look easy. So what can we learn from China? 0:03:16.720 --> 0:03:18.239 We really do have the perfect guests. By the way, 0:03:18.240 --> 0:03:21.040 we've had this guest on in the past. We talked 0:03:21.080 --> 0:03:23.160 to him about something completely different. 0:03:23.440 --> 0:03:27.120 Yes, this was during the depths of the COVID crisis, Yes, 0:03:27.639 --> 0:03:30.160 and we were talking to this person. He was based 0:03:30.200 --> 0:03:32.280 out in Shanghai, and we were talking basically about how 0:03:32.280 --> 0:03:35.520 they were getting food into apartment buildings and staying alive 0:03:36.120 --> 0:03:36.960 during that time. 0:03:37.240 --> 0:03:40.600 Yeah, so that was an interesting sort of logistical story 0:03:40.600 --> 0:03:43.080 and its own right. If you're under complete lockdown in 0:03:43.120 --> 0:03:45.440 a Shanghai apartment building, how do you actually get food? 0:03:45.520 --> 0:03:50.080 And anyway, I'm thrilled because now we're recording this December seventeenth, 0:03:50.120 --> 0:03:53.560 twenty twenty four, we are talking to him in completely 0:03:53.920 --> 0:03:54.560 different times. 0:03:54.640 --> 0:03:56.080 He's been freed from lockdown. 0:03:56.160 --> 0:03:58.600 He is now here in studio with us, So we 0:03:58.680 --> 0:04:02.120 are going to be speaking with David Fishman, senior manager 0:04:02.160 --> 0:04:05.520 at the Lantau Group. He's based in China typically where 0:04:05.560 --> 0:04:09.960 he mostly focuses on the Chinese energy system. So literally 0:04:10.360 --> 0:04:13.080 the perfect guest and a repeat guest. So, David, thank 0:04:13.120 --> 0:04:15.480 you for coming on. Odd lads, welcome to New York City, 0:04:15.480 --> 0:04:16.280 welcome back. 0:04:16.480 --> 0:04:17.279 Thank you for having me. 0:04:17.520 --> 0:04:19.840 What do you do the only other time we talked 0:04:19.839 --> 0:04:21.800 to you, The only thing we knew about you is 0:04:21.839 --> 0:04:24.080 that you were figuring out how to get food into 0:04:24.080 --> 0:04:26.760 your apartment. What do you do now when that's no 0:04:26.839 --> 0:04:28.000 longer the pressing issue? 0:04:28.160 --> 0:04:30.440 Yeah? Sure, So I work at a company called the 0:04:30.520 --> 0:04:35.360 Landau Group. We are an economic consultancy. We're doing power 0:04:35.360 --> 0:04:39.359 and gas consulting across APAC and so I'm focused on China. 0:04:39.360 --> 0:04:42.600 I'm in the China office. We're doing the business of electricity. 0:04:43.080 --> 0:04:45.640 So for me, that means either somebody who wants to 0:04:45.720 --> 0:04:50.040 build an electricity generation asset, wants to sell one, wants 0:04:50.080 --> 0:04:53.479 to sell a portfolio of assets, wants to invest in one, 0:04:53.560 --> 0:04:55.479 maybe through a fund or as some other type of 0:04:55.480 --> 0:04:58.920 investment product. And then on the what we'd call our downstream, 0:04:59.040 --> 0:05:02.440 who uses the electric city, right, your major multinationals, your factories, 0:05:02.440 --> 0:05:06.159 anybody who uses electricity as an input to produce things. 0:05:06.480 --> 0:05:09.520 So we're working in the business of electricity, trying to 0:05:09.520 --> 0:05:13.920 make buying and selling electricity more economic for everybody involved. 0:05:14.240 --> 0:05:16.760 Well, I'm just going to dive into the nuclear aspect 0:05:16.880 --> 0:05:17.200 of this. 0:05:17.279 --> 0:05:17.479 Then. 0:05:17.600 --> 0:05:20.400 You know, Joe gave us some contours around how much 0:05:20.520 --> 0:05:25.080 China is currently building. When did China decide that it 0:05:25.160 --> 0:05:27.920 was interested in nuclear and what was the sort of 0:05:27.960 --> 0:05:30.960 like thought process the strategy about how nuclear would fit 0:05:31.000 --> 0:05:34.400 into everything else, including the coal power that China is 0:05:34.480 --> 0:05:35.839 famous for using. 0:05:36.600 --> 0:05:39.760 Yeah, I mean the history of the Chinese civil nuclear 0:05:39.800 --> 0:05:42.440 power industry goes back to stems back to the eighties. 0:05:42.920 --> 0:05:46.160 So looking at you know, the mid to late eighties 0:05:46.440 --> 0:05:49.400 is when China was signing agreements to bring in its 0:05:49.480 --> 0:05:52.960 first nuclear reactor technology. At the time, it was there 0:05:52.960 --> 0:05:55.520 are two different paths that were pursuing. They signed an 0:05:55.520 --> 0:05:58.719 agreement with Framatome, a French company, to bring over one reactor, 0:05:59.120 --> 0:06:02.039 and they developed domestic reactor with at the time the 0:06:02.080 --> 0:06:05.720 Soviet Union to have a domestic technology tree as well. 0:06:05.800 --> 0:06:09.440 So in the eighties, China was actually experiencing some pretty 0:06:09.520 --> 0:06:13.039 rapid economic growth, especially in the late eighties, and looking 0:06:13.120 --> 0:06:16.760 to expand its power supply rapidly, and at the time 0:06:16.800 --> 0:06:19.240 it was quite tight, and so nuclear was seen as 0:06:19.240 --> 0:06:22.440 a potential way to expand the power supply and get 0:06:22.680 --> 0:06:25.360 into a power generation for what was at the time 0:06:25.440 --> 0:06:28.000 something very new for China. What did you so? 0:06:28.120 --> 0:06:31.039 I mentioned, literally from just reading the first paragraph of 0:06:31.040 --> 0:06:33.960 a paywalled economist story that number of about thirty seven 0:06:34.000 --> 0:06:37.160 new nuclears saw one just like I just google how 0:06:37.160 --> 0:06:39.680 many new clear reactors are big built in China? Scrolled 0:06:39.720 --> 0:06:42.640 down until I find something in the Google search. This 0:06:42.680 --> 0:06:45.480 is how the research is done, folks. Well, why don't you, 0:06:45.839 --> 0:06:48.640 in your words give us a sense of the size 0:06:48.640 --> 0:06:54.960 and scale of Chinese civil nuclear generation and where it's going, 0:06:55.160 --> 0:06:57.960 and then sort of like the role it generally plays 0:06:57.960 --> 0:07:00.960 in the overall portfolio there, sure describe. 0:07:00.600 --> 0:07:03.479 It, Yeah, sure so. So nuclear in China has the 0:07:03.520 --> 0:07:08.040 interesting status of being both relatively large and still somehow small. 0:07:08.440 --> 0:07:10.200 Large in the sense that it's one of the largest 0:07:10.200 --> 0:07:12.440 operating fleets in the world. Right, You've got you know, 0:07:12.480 --> 0:07:16.160 fifty almost sixty reactors operating. We're talking about nearly sixty 0:07:16.240 --> 0:07:20.160 gigawatts of generation capacity. But then in the context of 0:07:20.200 --> 0:07:23.520 China's entire generation fleet, right, they've got well over one 0:07:23.520 --> 0:07:27.000 thousand gigawatts of coal and then many more thousands of 0:07:27.040 --> 0:07:30.240 gigawatts of wind and solar. So it's both large in 0:07:30.280 --> 0:07:33.400 the context of the world, but also small. And that's 0:07:33.480 --> 0:07:35.200 the case for a lot of things in China. The 0:07:35.240 --> 0:07:37.320 thing that can be large in China can also And what's. 0:07:37.200 --> 0:07:39.880 The ambition for you know, looking out, you know, in 0:07:39.920 --> 0:07:41.840 a five year plant, I don't know how whether they 0:07:41.880 --> 0:07:45.760 do that for energy? Two, where is nuclear potentially? How 0:07:45.840 --> 0:07:49.240 much could nuclear be a thing? What's the size and scale. 0:07:48.920 --> 0:07:49.480 Of the ambition? 0:07:49.920 --> 0:07:50.120 Yeah? 0:07:50.160 --> 0:07:53.040 Sure so long term, I mean it depends on how 0:07:53.400 --> 0:07:56.760 your energy planners and your economic planners and vision the 0:07:56.920 --> 0:07:59.400 long term makeup of the grid. What type of power 0:07:59.440 --> 0:08:01.960 are we using in twenty fifty. Is it going to 0:08:02.000 --> 0:08:03.800 be a little bit or a medium amount or a 0:08:03.800 --> 0:08:06.360 lot of nuclear? So it's scenarios, right, and China has 0:08:06.400 --> 0:08:09.480 scenarios too for a high end a low end. So 0:08:09.960 --> 0:08:13.760 the recent scenarios that I've seen. Originally it was saying 0:08:14.120 --> 0:08:17.200 no less than three hundred gigawatts two hundred and fifty 0:08:17.200 --> 0:08:19.360 three hundred gigawats, so two hundred and fifty or three 0:08:19.480 --> 0:08:22.880 hundred reactors, right, two hundred and fifty units. So the 0:08:22.960 --> 0:08:25.120 United States has just about one hundred right now. So 0:08:25.400 --> 0:08:27.280 if they got to that scenario, it would be about 0:08:27.320 --> 0:08:29.600 two and a half times what the US has right now. 0:08:30.160 --> 0:08:33.800 So what's the process by which a new nuclear reactor 0:08:34.080 --> 0:08:36.680 gets built in China? And how much does it differ 0:08:36.960 --> 0:08:38.880 from what goes on in the US. 0:08:39.400 --> 0:08:42.920 Sure, well, the steps of the process are actually very similar. 0:08:43.000 --> 0:08:45.720 This is these are international best practices for how you 0:08:45.760 --> 0:08:48.920 build these types of infrastructure. So you have to choose 0:08:48.920 --> 0:08:51.640 a site, You're going through a sighting process, an environmental 0:08:51.679 --> 0:08:54.520 impact report. Maybe you've got to make sure the local 0:08:54.640 --> 0:08:57.520 sea life is not going to be affected by warm 0:08:57.559 --> 0:09:01.800 water being discharged, there's no endangered species nearby. All those 0:09:01.800 --> 0:09:04.120 different aspects. So you choose your site. That takes a 0:09:04.120 --> 0:09:07.600 few years. You have consultation period. There's a period for 0:09:07.640 --> 0:09:11.280 the public to maybe express their dissatisfaction. This happens in 0:09:11.360 --> 0:09:14.760 China too. And when the site is finally selected, then 0:09:14.800 --> 0:09:17.520 you start pre construction. You can level the site, you 0:09:17.520 --> 0:09:21.520 can connect communications utilities, you can do all your pre groundwork, 0:09:21.559 --> 0:09:24.960 and then we're waiting for a really key milestone called FCD. 0:09:25.160 --> 0:09:28.679 That's first concrete date, and that's when the first barrel 0:09:28.800 --> 0:09:32.480 of safety related concrete is poured at the site, and 0:09:32.520 --> 0:09:34.679 so that would be the beginning of your construction of 0:09:34.720 --> 0:09:38.600 your containment building. And so from FCD to your full 0:09:38.640 --> 0:09:42.120 construction period, you do civil construction, you do installation, you 0:09:42.160 --> 0:09:45.600 have commissioning. Maybe you encounter some issues during commissioning, you 0:09:45.640 --> 0:09:49.280 do troubleshooting right and eventually you fully connect, you connect it, 0:09:49.360 --> 0:09:51.959 you load your fuel, you have your first criticality the 0:09:52.000 --> 0:09:54.320 first time that you know fission starts in the reactor. 0:09:54.600 --> 0:09:56.880 Then you connect it to the grid and then you 0:09:56.880 --> 0:09:58.320 get up to one hundred percent power and you got 0:09:58.360 --> 0:10:00.679 a nuclear power plant. If you do it, we're you 0:10:00.720 --> 0:10:02.400 looking at ten to twelve years. See, if you do 0:10:02.440 --> 0:10:04.760 it not so quick, you're looking a lot more than that. 0:10:05.400 --> 0:10:07.559 So it takes a long time in China too. So 0:10:07.720 --> 0:10:09.959 you know, we look at you as construction builders like, 0:10:10.000 --> 0:10:13.400 oh can't we It's a log process anywhere you look. 0:10:13.880 --> 0:10:16.160 I want to ask about the financing. So if there's 0:10:16.200 --> 0:10:19.360 a new who's paying for this? And also how are 0:10:19.400 --> 0:10:21.440 they selling this energy? Because one thing I get the 0:10:21.480 --> 0:10:25.800 impression of is that setting aside the cost of building 0:10:25.840 --> 0:10:29.440 a new nuclear reactor, which is an expensive, time consuming process. 0:10:29.679 --> 0:10:33.840 The electricity market structure also seems to matter a lot, 0:10:33.920 --> 0:10:36.319 because you need a certain amount of guaranteed off take, 0:10:36.679 --> 0:10:39.520 you need a certain amount of price stability if the 0:10:39.559 --> 0:10:42.480 price drops to zero for a long time, because there's 0:10:42.640 --> 0:10:46.320 it's very sunny and windy in that area and suddenly 0:10:46.400 --> 0:10:49.360 you're that's screwing with the economics of it. And so 0:10:49.480 --> 0:10:52.800 market structure and financing are both important. Talk to us 0:10:52.800 --> 0:10:55.160 about how that works in China versus here. 0:10:55.760 --> 0:10:58.480 Right? Sure, so the builders, right, the companies that are 0:10:58.520 --> 0:11:02.360 constructing and eventually owning the assets are all state owned enterprises. Okay, 0:11:02.440 --> 0:11:04.800 so you've got these great big sos. Their job is 0:11:04.840 --> 0:11:07.360 to own and operate nuclear power plants, and so when 0:11:07.360 --> 0:11:09.880 they go out to secure financing, of course they're securing 0:11:09.960 --> 0:11:12.640 financing from state owned banks as well. They're going to 0:11:12.640 --> 0:11:16.200 be getting very preferential loan treatment, right, very low percentage 0:11:16.240 --> 0:11:18.520 rates maybe two percent, one and a half percent, things 0:11:18.600 --> 0:11:21.160 like that. For a huge infrastructure like that, we're talking 0:11:21.320 --> 0:11:22.920 billions of rate. 0:11:22.880 --> 0:11:23.480 Not the spread. 0:11:24.160 --> 0:11:28.120 Okay, keep going, so very very low rates because again 0:11:28.400 --> 0:11:30.560 they have a mandate to build. This is state banks, 0:11:30.600 --> 0:11:33.760 state infrastructure, and state builders. They need to build these things. 0:11:34.160 --> 0:11:37.559 And then when they're going out to sell power right now, 0:11:37.559 --> 0:11:41.280 they're given a guaranteed on grid rate. So the grid 0:11:41.320 --> 0:11:44.400 company and the power regulators say, when you complete your 0:11:44.440 --> 0:11:46.640 plant and you start selling power, we will make sure 0:11:46.679 --> 0:11:49.120 you receive this much for every kilo what hour of 0:11:49.120 --> 0:11:51.920 power that you send into the grid. Long term, they 0:11:51.960 --> 0:11:54.239 want to marketize it. They want to have that exposed 0:11:54.320 --> 0:11:57.120 to the vagaries of the markets the same way that 0:11:57.120 --> 0:12:00.080 you would see maybe in the United States or Western Europe. 0:12:00.200 --> 0:12:02.960 And that will be an adjustment for China's nuclear industry. 0:12:03.320 --> 0:12:06.079 Historically they have only operated on this kind of fixed 0:12:06.080 --> 0:12:06.959 feed and rate. 0:12:07.640 --> 0:12:10.600 So, I mean, that's a pretty big comparative advantage if 0:12:10.640 --> 0:12:15.000 you're getting subsidized financing from a state owned enterprise or 0:12:15.040 --> 0:12:18.360 something like that. Plus at the moment you have that 0:12:18.400 --> 0:12:21.040 guaranteed off take, even though they might want to move 0:12:21.080 --> 0:12:24.000 to a market based system before. It also strikes me 0:12:24.080 --> 0:12:27.040 that there are a few other potential comparative advantages, like 0:12:27.400 --> 0:12:32.240 lots of ready labor, lots of manufacturing capacity presumably that's 0:12:32.280 --> 0:12:34.520 able to make the stuff you need for these things. 0:12:34.880 --> 0:12:38.600 Walk us through, like all the different advantages that China 0:12:38.720 --> 0:12:40.040 has in this process. 0:12:40.480 --> 0:12:42.800 Yeah, sure, So if you maybe you've seen before or not, 0:12:42.840 --> 0:12:45.080 if you look at one of those like stacked bar charts, 0:12:45.080 --> 0:12:47.959 that it compares all the cost components of you know, 0:12:48.040 --> 0:12:50.440 building one of these things in China versus Europe versus 0:12:50.480 --> 0:12:52.880 the United States. It's not like you'd point to any 0:12:52.920 --> 0:12:55.800 single component of the stacked bar and say, ah, that's it. 0:12:55.880 --> 0:12:58.520 That's the key. That's why they're so cheap. Every single 0:12:58.559 --> 0:13:01.439 component is cheaper, right, You've got your cost of capital 0:13:01.520 --> 0:13:05.880 is lower, You've got your construction timeline is so tightly managed. 0:13:05.520 --> 0:13:08.160 Right, so you're saving on interest costs exactly. 0:13:08.040 --> 0:13:09.720 And the sooner you can connect to the grid and 0:13:09.720 --> 0:13:13.000 start selling power. That's when you start making your money back. Right, 0:13:13.080 --> 0:13:16.040 So every day that you go over your construction schedule, 0:13:16.080 --> 0:13:18.000 it's a hunt. We say in the US about a 0:13:18.040 --> 0:13:21.520 million dollars of missed power sales and then also about 0:13:21.559 --> 0:13:23.960 a million dollars of interest payments. So here you got 0:13:24.000 --> 0:13:27.280 this two million dollars spread every day over your construction 0:13:27.400 --> 0:13:30.560 schedule that was originally planned. Like, that's just mind boggling. 0:13:30.880 --> 0:13:34.360 Then we look at the production capacity, right, China's incredible 0:13:34.400 --> 0:13:38.760 industrial production capacity. We're talking about these heavy forged components, 0:13:38.760 --> 0:13:40.760 and maybe only a couple of companies in the whole 0:13:40.760 --> 0:13:43.640 world can make things like the reactor pressure vessel, the 0:13:43.679 --> 0:13:48.360 steam generators, the pressure risers, the primary piping, the reactor 0:13:48.440 --> 0:13:50.480 cool and pump, all these things. And there's like three 0:13:50.520 --> 0:13:53.120 companies in the world that can make these and now 0:13:53.120 --> 0:13:55.400 at this point, several of them are in China. And 0:13:55.480 --> 0:13:57.640 when they need to prototype, when they need to iterate, 0:13:57.640 --> 0:13:59.800 when they need to troubleshoot something, it's all in one 0:13:59.840 --> 0:14:03.319 in industrial cluster. It's all a company and its subsidiaries 0:14:03.400 --> 0:14:06.120 or its sister partner companies, right, and so they can 0:14:06.200 --> 0:14:08.880 quickly trouble through things really quickly. So that's going to 0:14:08.880 --> 0:14:12.480 be your industrial production component very strong. You've got you know, 0:14:12.760 --> 0:14:16.800 people work longer hours, they'll work through weekends, they'll work 0:14:16.800 --> 0:14:20.680 through holidays. China is really really competent at building very 0:14:20.760 --> 0:14:24.480 large construction, very large infrastructure. Right it could be a dam, 0:14:24.600 --> 0:14:27.240 or a bridge, or a highway or a high speed railway, 0:14:27.400 --> 0:14:30.359 or a nuclear reactor. When it comes to the construction 0:14:30.680 --> 0:14:32.840 know how of being able to do it on time 0:14:33.000 --> 0:14:36.240 and like an oiled machine, they're winning there too. And 0:14:36.280 --> 0:14:38.760 then we talk about the actual way they're building the 0:14:38.840 --> 0:14:42.000 nuclear power plants. There's something really interesting here. This was 0:14:42.040 --> 0:14:45.360 actually pioneered by Westinghouse out of the United States, something 0:14:45.400 --> 0:14:50.080 called modularized construction, where on site or off site you're 0:14:50.240 --> 0:14:55.400 prefabricating large portions of the reactor, portions of the containment building, 0:14:55.600 --> 0:14:58.400 and so you can work on individual components at the 0:14:58.400 --> 0:15:00.880 same time, bring it to site, and then you get 0:15:00.920 --> 0:15:04.600 the largest crane in the world that lifts this massive, massive, 0:15:04.680 --> 0:15:07.760 pre assembled component into place. When you're able to work 0:15:07.800 --> 0:15:10.200 like that, you can cut down the construction schedule. Even 0:15:10.240 --> 0:15:14.200 more interestingly, Westinghouse pioneered that that they haven't been really 0:15:14.240 --> 0:15:17.720 successful in implementing it in their recent builds. China, on 0:15:17.760 --> 0:15:20.480 the other hand, learned from Westinghouse and has been very 0:15:20.520 --> 0:15:23.080 successful with this modulized construction approach. 0:15:23.440 --> 0:15:26.200 Can you talk more about that, because it's very intuitive, right, 0:15:26.200 --> 0:15:28.280 the idea that the more you can build at the 0:15:28.400 --> 0:15:31.000 factory and the less you have to build on site 0:15:31.520 --> 0:15:34.080 makes it easy and a lot of the so far, 0:15:34.080 --> 0:15:37.360 it seems like mostly hype about small modular reactors in 0:15:37.400 --> 0:15:39.360 the US is sort of on this idea, like why 0:15:39.480 --> 0:15:43.400 don't start every project from scratch? Why is it apparently 0:15:43.640 --> 0:15:47.360 hard even though in theory that seems very obvious because 0:15:47.720 --> 0:15:50.360 I don't know if there actually are any modular reactors 0:15:50.520 --> 0:15:53.040 in the US despite the sort of intuitive appeal. 0:15:53.680 --> 0:15:57.280 So I think I gotta clarify here, there's modularized construction, 0:15:57.480 --> 0:16:01.360 and there's small modular reactors. Okay, So SMRs or small 0:16:01.400 --> 0:16:04.520 modular reactors, they refer to a situation where the entire 0:16:04.560 --> 0:16:06.440 reactor is encased in a single unit. 0:16:06.560 --> 0:16:08.600 Oh, okay, got it. Yeah, But it's still this idea 0:16:08.640 --> 0:16:11.840 that the lot of the fabrication process happens not at 0:16:11.880 --> 0:16:15.600 the site itself. Again, something that feels highly intuitive and 0:16:15.680 --> 0:16:17.680 apparently easier so than time. 0:16:17.880 --> 0:16:21.760 Well, so my understanding from the Westinghouse design approach when 0:16:21.760 --> 0:16:24.000 they used this for the first time in designing the 0:16:24.040 --> 0:16:26.840 AP one thousand technology that we're built here in Vocal 0:16:27.200 --> 0:16:30.600 in the United States. Is one of the major barriers. Well, 0:16:30.600 --> 0:16:33.080 there's terveral. There's always going to be regulatory barriers, right, 0:16:33.080 --> 0:16:35.400 it's a new way of doing things. Anytime it's a 0:16:35.440 --> 0:16:37.480 new way of doing things, the regulator is going to 0:16:37.560 --> 0:16:39.640 want you to jump through a million hoops to try 0:16:39.640 --> 0:16:42.720 to clarify and justify that what you're doing is defensible 0:16:43.040 --> 0:16:45.720 and safe. So you've got that one, of course, But 0:16:45.800 --> 0:16:50.240 then the actual logistics of lifting these massive, massive, we're 0:16:50.280 --> 0:16:55.080 talking thousands of tons of prefab components. They actually had 0:16:55.120 --> 0:16:58.720 to design and then especially contract the world's largest heavy 0:16:58.760 --> 0:17:02.000 lift crane. Westinghouse did just to be able to lift 0:17:02.040 --> 0:17:04.520 the first one. They worked with an American company to 0:17:04.520 --> 0:17:08.639 design to custom design this giant fixed base ring crane 0:17:08.680 --> 0:17:11.600 that requires other cranes to build it. Then you have 0:17:11.680 --> 0:17:14.760 this giant, giant crane that's in place and it swings around. 0:17:14.800 --> 0:17:17.520 It usually works for two different units to build two 0:17:17.560 --> 0:17:20.960 reactors at the same site. Interestingly, they weren't able to 0:17:21.080 --> 0:17:23.800 use this giant giant crane in China because of a 0:17:24.000 --> 0:17:28.400 design miscommunication. The first AP one thousands that Westinghouse tried 0:17:28.440 --> 0:17:31.360 to build in China, they didn't leave space on the 0:17:31.400 --> 0:17:34.439 site to put the giant crane, so in the end 0:17:34.520 --> 0:17:37.760 they had to use a very very large roller crane instead, 0:17:37.800 --> 0:17:39.919 which just about did the job, but it forced them 0:17:39.960 --> 0:17:42.080 to change the way they built it. China has learned 0:17:42.119 --> 0:17:44.160 from that though. So the newest you know, QUA long 0:17:44.160 --> 0:17:47.679 one reactors that China builds, they use a giant ring crane. 0:17:47.720 --> 0:17:50.200 I believe they use a zoom lion. It's a Chinese 0:17:50.200 --> 0:17:52.520 brand has designed one of these, built one of these 0:17:52.720 --> 0:17:55.440 massive ultra heavy lift cranes as well, and so now 0:17:55.480 --> 0:18:08.960 that's you know, they're reaping those benefits. 0:18:13.040 --> 0:18:17.280 I have a slightly random question, which is building nuclear reactors. 0:18:17.320 --> 0:18:21.120 How customized do the components that go into these actually 0:18:21.400 --> 0:18:24.480 have to be? Like how much does the design actually 0:18:24.600 --> 0:18:26.040 vary site to site? 0:18:26.960 --> 0:18:30.600 Well, if they are the same series of reactors, right, 0:18:30.640 --> 0:18:33.080 you could say the AP one thousand, right, that's a 0:18:33.119 --> 0:18:35.359 base unit. Now the ones that are built in vocal 0:18:35.480 --> 0:18:38.000 and the ones that were being built at Summer in 0:18:38.040 --> 0:18:40.800 South Carolina before that was canceled. Those were probably a 0:18:40.840 --> 0:18:43.720 little bit different, right, but you know, largely part of 0:18:43.720 --> 0:18:45.720 the same series. The ones that were built in China 0:18:45.720 --> 0:18:47.560 were built on that same platform, but they would have 0:18:47.560 --> 0:18:50.000 been modified a little bit for the Chinese context. They 0:18:50.000 --> 0:18:53.480 called them Chinese AP one thousands CAP one thousands, but 0:18:53.760 --> 0:18:56.800 you could say they're substantially the same reactor with with 0:18:56.880 --> 0:19:00.480 small modifications. When we start talking about different series, though, 0:19:00.520 --> 0:19:03.240 if we say, like the French design versus the US 0:19:03.359 --> 0:19:06.960 design versus what's being sold now in Korea or something 0:19:07.080 --> 0:19:11.439 like that, you'll see more similarities to their predecessors that 0:19:11.480 --> 0:19:15.480 they came up through different generations of technology. So like Korea, 0:19:15.560 --> 0:19:18.840 you'd see similarities to the old ge Hatachi reactors because 0:19:18.880 --> 0:19:21.800 that's where they got their technology originally. Then you'd see 0:19:21.840 --> 0:19:24.560 to say a modern EIGHTP one thousand. These are different 0:19:24.560 --> 0:19:26.400 tech trees from different competitors. 0:19:27.119 --> 0:19:30.560 So if I'm a guy on Twitter listening to this, 0:19:30.680 --> 0:19:32.360 and I am a guy on Twitter, except I'm talking 0:19:32.440 --> 0:19:34.199 in this, but I'm just a guy on Twitter and 0:19:34.280 --> 0:19:38.000 I'm hearing you talk about, okay, they get preferential lending 0:19:38.000 --> 0:19:41.960 from the state owned bank. The company is state owned. 0:19:42.560 --> 0:19:45.440 Probably the crane company is state owned. There's probably a 0:19:45.440 --> 0:19:48.119 few other state owned businesses, and I think, yeah, okay, 0:19:48.280 --> 0:19:51.159 you know, they're really good at building reactors fast. But 0:19:51.240 --> 0:19:55.280 there must be some sort of accumulated debts and inefficiencies 0:19:55.320 --> 0:19:59.080 that come with all of these all of these entities 0:19:59.359 --> 0:20:02.399 that have something other than a profit motive. And you know, 0:20:02.520 --> 0:20:06.399 probably you know, I don't know that my intuition or 0:20:06.400 --> 0:20:08.760 my response to you, or my my dunk on you 0:20:08.920 --> 0:20:11.520 is that there's going to be all these accumulated losses 0:20:11.680 --> 0:20:15.000 that ripple through the systems on account of the fact 0:20:15.040 --> 0:20:18.520 that it's SOOE working with see after SOE. Do we 0:20:18.640 --> 0:20:24.160 have any sense of how economic these projects actually are 0:20:24.240 --> 0:20:26.320 Because if these were private companies, you say, oh, they're 0:20:26.359 --> 0:20:28.400 either making money, or if these were sort of strictly 0:20:28.640 --> 0:20:31.160 for profit listed companies, you say, well, they're making money, 0:20:31.200 --> 0:20:34.200 they're not making money. Whatever. How do we think about 0:20:34.200 --> 0:20:38.359