Speaker 1: Hi, this is Dana Perkins and you're listening to Switch
Speaker 1: It on the b n F podcast. So nuclear power
Speaker 1: is not a new technology. Electricity generated from a nuclear
Speaker 1: reactor first took place in nineteen fifty one. The world
Speaker 1: went from just one gigawatt of installed capacity in nineteen
Speaker 1: sixty to over three hundred by the late nineteen eighties.
Speaker 1: And just like nuclear got a bit more attention following
Speaker 1: the nineteen seventy three oil crisis, there are some parallels
Speaker 1: with how countries are talking about nuclear today in light
Speaker 1: of the volatility in the oil and natural gas markets.
Speaker 1: In the nineteen seventies, countries like France and Japan started
Speaker 1: to invest in nuclear, and today countries like Germany that
Speaker 1: have been much more focused on decommissioning nuclear as of late,
Speaker 1: are again discussing the potential that it has to produce
Speaker 1: their reliance on oil and natural gas. So what many
Speaker 1: of us are wondering is will baseload power make a comeback,
Speaker 1: will it displace some of this flexible capacity that we've
Speaker 1: been using as of late, and will there be a
Speaker 1: nuclear renaissance and if there is, how might it look different?
Speaker 1: This time? On today's show, we talk about a wide
Speaker 1: range of things happening in the nuclear industry, from potential
Speaker 1: technology breakthroughs with small nuclear power to geopolitical issues impacting
Speaker 1: the industry, and I wanted to know will there be
Speaker 1: enough uranium for an industry expansion should this happen? Well,
Speaker 1: we get to that, will the nuclear industry be able
Speaker 1: to ramp up quickly enough to alleviate the pressure caused
Speaker 1: by commodities volatility? Well that too, so joining us today
Speaker 1: is Chris Gadomski, who is the lead nuclear analyst at
Speaker 1: b an e F. Those who want to read more
Speaker 1: of our analysis on nuclear and access our data, you
Speaker 1: can find it at the b NF research report Nuclear
Speaker 1: one h Market Outlook Unprecedented Opportunity, which is available for
Speaker 1: subscribers to download at b NF go on the Bloomberg
Speaker 1: terminal at b NF dot com, or on our mobile app.
Speaker 1: As a reminder, b ANF does not provide investment or
Speaker 1: strategy advice, and we have a full disclaimer that's played
Speaker 1: at the very end of the show. Additionally, if you
Speaker 1: want to know when new switched on podcasts about the
Speaker 1: future of energy, transport and sustainability come out, well, make
Speaker 1: sure to subscribe to this show on whatever podcast player
Speaker 1: you're listening to us on now and now let's speak
Speaker 1: with Chris about nuclear power. Chris, thank you for joining
Speaker 1: the show today. My pleasure. So we're here to talk
Speaker 1: about nuclear You're a resident nuclear expert at B andF,
Speaker 1: and things have been shifting more lately, I think in
Speaker 1: terms of sentiment and discussion, it's coming up all over
Speaker 1: again many times over. This is an established technology in
Speaker 1: the net zero carbon space that is discussed in spurts
Speaker 1: and starts. So why, in your opinion do you think
Speaker 1: that nuclear is very much back at the center of
Speaker 1: the conversation. Well, there's a variety of reasons. We'll start
Speaker 1: with a whole net zero initiative that's going on around
Speaker 1: the world where people are looking for some options to
Speaker 1: complement the eppointment of renewable energy. And so my take
Speaker 1: is that net zero without fission or fusion is just
Speaker 1: the conversation that involves a lot of hot air. So
Speaker 1: it is a very complementary technology to renewables, and I
Speaker 1: think that very important pathway to achieving that zero is
Speaker 1: to have nucular power in a variety of different technologies
Speaker 1: replacing the fossil fuels that are now a big part
Speaker 1: of the generation portfolio. Secondly, we were having an energy
Speaker 1: crisis in Europe and natural gas supplies are questionable for
Speaker 1: the foreseeable months, and people are looking at what types
Speaker 1: of options that they can can look at. Germany has
Speaker 1: been contemplating more coal, if not relying more on coal,
Speaker 1: building more natural gas, and people are sort of asking,
Speaker 1: why are you going ahead and sort of tapping some
Speaker 1: very very high carbon sources of electricity when you still
Speaker 1: have several ginger lots of capacity online in Germany that
Speaker 1: can go head and be deployed beyond the scheduled closure
Speaker 1: in the second half of this year. And Thirdly, there's
Speaker 1: been a increase in the price of natural gas and
Speaker 1: so now nuclear power is viewed to be competitive. And
Speaker 1: the perfect example of that is the recent legislation that's
Speaker 1: been passed in the United States in the Senate. Remains
Speaker 1: to be passed in the House, but we expect it
Speaker 1: to be passed in the House. Is that they're offering
Speaker 1: tax credits for nuclear provided that there is going to
Speaker 1: be a need for those nuclear power plants to rely
Speaker 1: in those tax credits to go ahead and realize or
Speaker 1: become profitable. But I don't think that's going to be
Speaker 1: the case because the price of natural gas has gone
Speaker 1: so I in the in many markets in the US
Speaker 1: that those nuclear power plants will not need to have
Speaker 1: those production credit text credits to go ahead hand become profitable. Unlestie,
Speaker 1: there is a tremendous amount of innovation that has gone
Speaker 1: on in the energy sector. We've seen tremendous innovation and
Speaker 1: we rule bowls. A less decade or so, we've seen
Speaker 1: the whole fracking revolution, and there's been very very little
Speaker 1: nuclear innovation. Now, however, we're starting to see nuclear innovation
Speaker 1: in the form of smaller reactors and advanced reactors that
Speaker 1: are changing in the discussion regarding the economics and safety
Speaker 1: and acceptability, social acceptability of this technology, as well as
Speaker 1: some new nuclear potentially coming online, not in the near
Speaker 1: term but at least being discussed. Is something we can
Speaker 1: build in order to reduce dependency on natural gas. And
Speaker 1: you had some examples in the research note that actually
Speaker 1: you know, looked at it before getting on today that
Speaker 1: really highlighted that when nuclear power stations are shut down,
Speaker 1: oftentimes it's natural gas that actually fills that capacity in
Speaker 1: the background. At least immediately, maybe not necessarily in the
Speaker 1: long term. So do you see new things being built
Speaker 1: given that you know some of the forecasts that we're
Speaker 1: looking at or showing that gas per this could remain
Speaker 1: high for a few years into the future. And is
Speaker 1: that enough time for new nuclear in Europe specifically or
Speaker 1: this is a real pain point. Do you think that
Speaker 1: there's enough I guess political will and even just time
Speaker 1: given how big these projects are for things to come
Speaker 1: online order to meet that demand. Right, So, there's two
Speaker 1: categories of nuclear technology that we can broadly define, one
Speaker 1: being large giga watts size reactors. A perfect example would
Speaker 1: be the Hinkley Point see reactors. There one point six
Speaker 1: giga wats a piece that are being built presently and
Speaker 1: a decision has just been made by the UK to
Speaker 1: go ahead and move forward with the size well see
Speaker 1: reactor and we'll see if that actually transpires and goes forward.
Speaker 1: And there are discussions elsewhere in Europe, for example Poland.
Speaker 1: Poland has a huge coal problem. They need to go
Speaker 1: ahead and decarbonize if they are going to remain a
Speaker 1: member of the EU and good standing, and they're looking
Speaker 1: at six to nine giggle watts of large reactors, and
Speaker 1: they're also looking at some advanced smaller reactors that are
Speaker 1: available on the order of three hundred megawatts or less,
Speaker 1: and so they're examining two sides of the equation. If
Speaker 1: they go ahead and pursue the large reactors, we should
Speaker 1: see them perhaps come online sometime I would imagine in
Speaker 1: the middle of the thirties. If they decide to go
Speaker 1: ahead with the smaller reactors, I think that there is
Speaker 1: enough momentum building for certain technologies that are available in
Speaker 1: the three hundred megawatt range that could allow them to
Speaker 1: deliver solutions closer to But one has to remember that
Speaker 1: nuclear power is unique, and that it's burdened with incredible
Speaker 1: regulatory oversight and safety concerns and social worries and political opposition.
Speaker 1: So the pathway to commercial operation of a nuclear power plan,
Speaker 1: especially in a new market, is very, very poonged, and
Speaker 1: it's running a gauntlet to go ahead and get those
Speaker 1: reactors up and running. So there is promise long term,
Speaker 1: but I would iagine that I would be a little
Speaker 1: bit optimistic if I said that these technologies are going
Speaker 1: to be ready as to address the mediate concerns of
Speaker 1: the energy issues in the next two or three years,
Speaker 1: and recently nuclear was included in the EU Green taxonomy.
Speaker 1: Do you think that that is a sign that people
Speaker 1: are warming to it or do you think it will
Speaker 1: give any bolster to the industry or is it maybe
Speaker 1: that's relevant. Of course, we're very pleased to see nuclear
Speaker 1: recognized for its carbon free attributes, and I think it's
Speaker 1: a very positive development. It would certainly be much worse
Speaker 1: if it did not receive that categorization. But when you
Speaker 1: think about building a nuclear power plant, there's there's two
Speaker 1: separate components. There is a policy initiative which allout calls
Speaker 1: pushing of the technology through policy so that it sets
Speaker 1: the stage for for acceptance. Then the other side of
Speaker 1: the equation is of the market pull the market drive
Speaker 1: to go ahead and actually build nuclear power plants. And
Speaker 1: you need both. You need a market setting the stage
Speaker 1: through policy, and you also need recognition by utilities large
Speaker 1: industrials to say we need this type of carbon free
Speaker 1: technology to execute appropriately. Are net zero strategies or carbon
Speaker 1: free strategies, And so it's a push and a pull.
Speaker 1: You can push a string, but it's much more effective
Speaker 1: if you pull a string. And therefore we're looking at
Speaker 1: market demand, market pull from the nations and utilities in
Speaker 1: Europe and around the world. I recognize how important it
Speaker 1: is to sort of balance their deployment of renewables complementary
Speaker 1: with advanced nuclear technologies. Now you mentioned new projects and
Speaker 1: namely and let's let's start with Poland, which does have
Speaker 1: a lot of coal fired power stations and this could
Speaker 1: really help them decarbonize their grit But of those projects,
Speaker 1: there are a number of contracts in place with the
Speaker 1: company Rosatum, which is Russian based, and with current sanctions
Speaker 1: are there many other companies and I guess which companies
Speaker 1: are those that are kind of pullis to potentially take
Speaker 1: over those sorts of contracts if they can't go ahead
Speaker 1: with their existing manufacturer. So ross Atom is the leading
Speaker 1: export of nuclear technology in the world. They have somewhat
Speaker 1: like thirty five projects reactors underdevelopment in their pipeline right now,
Speaker 1: in excess of approximately a hundred thirty billion dollars worth
Speaker 1: of orders. We've seen the first defection as a result
Speaker 1: of the war in the Ukraine and that has been Finland.
Speaker 1: Finland was on schedule to go ahead and start construction
Speaker 1: of a Russian reactor in Hai Kibi and it has
Speaker 1: decided not to go forward. We've also seen some turmoil
Speaker 1: and one of Russia's big markets, which is Turkey. Turkey's
Speaker 1: building four reactors over there, and there's been some maneuvering
Speaker 1: going for where there where. Russia has changed one of
Speaker 1: its contractors from a Turkish subsidiary to a holy On
Speaker 1: Russian subsidiary, and that raises a lot of questions regarding
Speaker 1: the progress of that construction built. They are supposed to
Speaker 1: have the first reactor operating next year, in three in
Speaker 1: recognition of the hundredth anniversary of the turkiship I'll look there.
Speaker 1: And finally, there is some activity going on in Egypt.
Speaker 1: Egypt just announced in the last two or three weeks
Speaker 1: that they have started construction on their reactor. That reactor
Speaker 1: has been under construction, under development, or rather underdevelopment for
Speaker 1: several years, so now finally, allegedly first nuclear concrete has
Speaker 1: been poured, which signifies the start of the technology. But
Speaker 1: the question then remains who could fill some of the
Speaker 1: gaps if there are further questions about some of the
Speaker 1: other markets. Among the thirty five reactors that may or
Speaker 1: may not go forward, Russia has a good hold on
Speaker 1: the nuclear market, international market. In India, they have built
Speaker 1: two reactors and they're building two more and planning two
Speaker 1: more after that, and so the a p R are
Speaker 1: also being considered by the Indian government to go ahead
Speaker 1: and build those. But one has to ask the question
Speaker 1: is that the EPR reactors, along with the Westinghouse AP
Speaker 1: one thousand reactors, are the most expensive reactors in the world,
Speaker 1: and why would a country like Poland or a country
Speaker 1: like India decide to go ahead and build these most
Speaker 1: expensive nuclear technologies when there are other options that are
Speaker 1: perhaps less expensive, less risky that they may want to consider.
Speaker 1: The Koreans offer a success story and that they built
Speaker 1: four nuclear power plants in the United Arab Emirates very successfully.
Speaker 1: They're operating several of them, and their success story and
Speaker 1: perhaps they have demonstrated the ability of Korean companies who
Speaker 1: operate in a hostile environmentally hostile environments, very hot that desert,
Speaker 1: very very strenuous working conditions, but to deliver and build
Speaker 1: on time and more or less on budget. That has
Speaker 1: not been the case with some of the Western vendors
Speaker 1: in France, Finland and the United States and now apparently
Speaker 1: also in the UK. Where that project to Hinkley See
Speaker 1: is running to some cost overruns. Part of it is
Speaker 1: to blame for COVID, but it's also that we've lost
Speaker 1: the large components of the workforce, many of whom have retired,
Speaker 1: and so we don't have the workforce that can go
Speaker 1: ahead and build out some of these technologies now for
Speaker 1: a very short break stay with us. So you mentioned
Speaker 1: different countries, and I guess they would be then state
Speaker 1: owned companies that are involved in this, or they largely
Speaker 1: private companies that are filling I guess the other seventy
Speaker 1: percent of new build. Well, you have China, India, and
Speaker 1: Korea leading the charge to new nuclear construction the world
Speaker 1: right now, with perhaps just close to or more than
Speaker 1: of the new reactors being built in the world. So
Speaker 1: there's a large participation of the state ownership in all
Speaker 1: those markets over there, and so I think it's probably
Speaker 1: a very very necessary component for building these large react
Speaker 1: there's around the world. That's not the case necessarily with
Speaker 1: the small reactors that are being developed and being commercialized
Speaker 1: by General Electric, Tachi, by Rose Royce, by Whole Tech,
Speaker 1: by New Scale, by terror Power, which is owned by
Speaker 1: Bill Gates. So there's a lot of other private sector
Speaker 1: ventures that are offering smaller technology, less expensive technology in
Speaker 1: that the cost couple of billion as opposed to tens
Speaker 1: of billions, and perhaps provides an easier pathway to commercialization
Speaker 1: than some of the large reactors. Well, so let's talk
Speaker 1: about that. So you mentioned that small is potentially less expensive.
Speaker 1: I mean, obviously the project for a small project in
Speaker 1: theory would be less expensive than for a big project,
Speaker 1: but the price per gig wad hour is it also lower?
Speaker 1: And is it competitive with other technologies like coal or
Speaker 1: dare I say, wind and solar? You know, what are
Speaker 1: some of the economic benefits and how much cheaper is
Speaker 1: small nuclear compared to some of these larger infrastructure projects.
Speaker 1: We have tried to do some analysis on this, and
Speaker 1: we always run onto the same problem is that we
Speaker 1: don't have a hard case of a small module reactor
Speaker 1: or an advanced you can react to having the built
Speaker 1: and having very very good costs data on the construction
Speaker 1: of those things. So a lot of what the industry
Speaker 1: relies on is estimates from the manufacturers and vendors saying
Speaker 1: this is what the technology is going to cost. So
Speaker 1: we are a little bit wary of using them and
Speaker 1: projecting how expensive they're going to be. But the general
Speaker 1: electric Tachi reactors are going to be competitive, we believe
Speaker 1: with the existing technologies, and it remains to be seen
Speaker 1: how effective they'll will be in actually building and constructing
Speaker 1: and delivering these technologies, which are very promising. Development for
Speaker 1: that technology is that you have several utilities in Canada
Speaker 1: opting for that technology, and you have Poland interested in
Speaker 1: that technology, and other countries in Eastern Europe interested in
Speaker 1: that technology. And that suggests that you're building up a
Speaker 1: supply chain and the demand for that technology where that
Speaker 1: you will be able to reach enter a kind costs
Speaker 1: as opposed to first of a kind cost sooner than later.
Speaker 1: And so that can's promised that maybe not the first
Speaker 1: one will be competitive, but certainly once they're after should
Speaker 1: be certainly competitor, but closely competitive to some of the
Speaker 1: existing technologies. Otherwise it's not a market for them to pursue.
Speaker 1: Do we have an idea for how long that they
Speaker 1: will take to come online. So there's a lot of
Speaker 1: talk about first reactors coming in a line on before
Speaker 1: the turn of the decade. Those are very very optimistic
Speaker 1: in my personal opinion, but that's the goals have been
Speaker 1: set by the US government and the Canadian government to
Speaker 1: go ahead and reach that eight time frame to go
Speaker 1: ahead and deliver the first commercial reactors. I think that's optimistic,
Speaker 1: but I think shortly thereafter we should be able to
Speaker 1: have those reactors. Now. Resumably, all the safety concerns and
Speaker 1: the policy you know, hoops that you mentioned that one
Speaker 1: must jump through in order to make sure to get
Speaker 1: these on the grid probably are not going to be
Speaker 1: reduced for the small to large. Is that a fair assumption,
Speaker 1: because you're still going to have these extended timelines for
Speaker 1: the policy arm of things to move through in order
Speaker 1: to be comfortable with all the safety checks on a project,
Speaker 1: regardless of size. You know, we were operating in a
Speaker 1: post Fukushima environment for the last ten eleven years, and
Speaker 1: the regulatory bodies, the industry society has been very, very
Speaker 1: wary of new nuclear construction, existing operation of new nuclear construction,
Speaker 1: and we've seen several reactors closed, not necessarily for economic reasons,
Speaker 1: but also for political reasons and also perhaps for social
Speaker 1: concerns and economics as well. So the nuclear industry needs
Speaker 1: to be on to the challenge that they need to
Speaker 1: go build advanced reactors that society is comfortable with with
Speaker 1: their safety and economic performance, and that they are an
Speaker 1: appropriate complement to replace the natural gas and fosil other
Speaker 1: fossil fuel technologies that society wants to depart in the
Speaker 1: context of a net zero aspirations and goals. So tell
Speaker 1: me a bit. You mentioned reactors in North America, they're
Speaker 1: back being discussed and potentially brought online before and then
Speaker 1: recently there's been some big movement in the US, in
Speaker 1: particular the Inflation Reduction Act. Can you just quickly outline
Speaker 1: where nuclear falls in there, and you know what that
Speaker 1: might mean for this industry. The Inflation Reduction Act offers
Speaker 1: a production tax credit for the nuclear power plants that
Speaker 1: kicks in if the market rates for electricity are very
Speaker 1: very low. We are seeing as a result of very
Speaker 1: high natural gas prices that the market rates should be
Speaker 1: significantly higher than when the ark a text of that bill,
Speaker 1: you know, figured out that this is the level where
Speaker 1: support will kick in. So I think that those a
Speaker 1: lot of the nuclear reactors will now operate in the
Speaker 1: black because of the higher naturally as prices which they're competing.
Speaker 1: And so there's some hypothesis that there's going to be
Speaker 1: very very little production tax credit available to the nuclear
Speaker 1: power industry because they're now operating against competition which has
Speaker 1: much higher rates than they have historically in the past.
Speaker 1: In the longer term, and and you know, you're welcome
Speaker 1: to pick whatever year you think he's appropriate, but in
Speaker 1: the medium to longer term, you know what percentage of
Speaker 1: overall energy do you think nuclear really will end up occupying,
Speaker 1: because we still do when thinking about decarbonizing the grid,
Speaker 1: thinking about even at low prices for solar and wind capacity,
Speaker 1: you still have to create backup options, be that gas,
Speaker 1: be that battery storage, and then maybe nuclear, maybe be
Speaker 1: slow energy in there could provide some buffer for other
Speaker 1: clean technologies. Do you see kind of higher or low
Speaker 1: in terms of where you think nuclear might go? I
Speaker 1: think I get into the International Atomic Energy Agency provides
Speaker 1: low points high points, and there's a huge spread over
Speaker 1: there between the low point and high point of the
Speaker 1: future of nuclear, which I don't think is is very
Speaker 1: very helpful for utility planners to go ahead and understand
Speaker 1: how nuclear may fit into their particular generation portfolio. There
Speaker 1: is a question I asked one time the chairman of
Speaker 1: the board of a major US utility which was a
Speaker 1: big coal burner, and I asked them what premium does.
Speaker 1: Is the utility willing to pay to diversify their generation portfolio.
Speaker 1: At the time, natural gas build out was all the rage,
Speaker 1: and you continue to build out natural gas, but then
Speaker 1: at one point you need to sort of say we're
Speaker 1: overweighted with natural gas and we need to consider another
Speaker 1: type of technology just to bounce it. And in fact,
Speaker 1: if you continue to hold out all the natural gas
Speaker 1: because it was the cheapest option ten years ago or
Speaker 1: eight years ago, now you're in a troublesome situation because
Speaker 1: the price of natural gas has has dramatically increased. So
Speaker 1: there is going to be a place for lots of renewables,
Speaker 1: some fossil fuel, and some nuclear technology, whether it's fishing
Speaker 1: or fusion, to go ahead and bounce out of utilities portfolio.
Speaker 1: And so I think that there is a place for
Speaker 1: nutritive play distinct role as a complement to renewables and
Speaker 1: efforts for utilities states countries to decarbonize their electric power sector.
Speaker 1: Just recently, we've had a very very promising development and
Speaker 1: that one of the u S advanced reactor companies has
Speaker 1: signed an agreement with Dow Chemical to go ahead and
Speaker 1: provide their technology to decarbonize some of the processes that
Speaker 1: that Dow Chemical has, for which Dow Chemical has a
Speaker 1: very high carbon footprint. So now we're besides the utilities,
Speaker 1: were also seeing industrial companies saying, hey, listen, we need
Speaker 1: to decarbonize it, and we would like to serve embrace
Speaker 1: nuclear technology, advanced nucle technology, and we see this as
Speaker 1: a pathway to help us reduce our carbon footmen going forward.
Speaker 1: So it's not only utilities where there's a market, but
Speaker 1: these smaller, safer nuclear power plants offer another opportunity for
Speaker 1: industrial scale decarbonization as well, which is a very very
Speaker 1: positive and interesting development that's just happened in the last
Speaker 1: few days. Okay, so you're saying, whether it be nuclear
Speaker 1: fission infusion, what do you mean by that? All the
Speaker 1: nuclear power plants that operate today are fission reactors where
Speaker 1: they're splitting heavy metals. Okay, And there is in recent
Speaker 1: years increased interest in developing fusion technology, which is joining
Speaker 1: fusing together very light elements and reneleases four times as
Speaker 1: much energy as the fission process, and it has a
Speaker 1: lot of other advantages. You don't have the legacy spect
Speaker 1: fuel that you don't have meltdown, and so there's a
Speaker 1: lot of interest in that technology. And we've seen investment
Speaker 1: in private fusion companies in twenty nineteen and twenty hover
Speaker 1: around three million dollars each year. In twenty one we
Speaker 1: saw that jump to two and a half billion dollars.
Speaker 1: And so we have philanthropists, sovereign wealth funds, oil companies,
Speaker 1: of rody industrial companies looking at placing a bet on
Speaker 1: fusion technology because they think that it will have a
Speaker 1: role in power generation portfolios in the future as well.
Speaker 1: Just in the last two weeks or so, we've had
Speaker 1: about seven hundred fifty million dollars committed to two different
Speaker 1: fusion companies, private fusing companies in the UK and in
Speaker 1: the US, and we anticipate this year at least a
Speaker 1: billion dollars of investment oft of the high of last year.
Speaker 1: But I may be very very conservative because there's a
Speaker 1: lot of momentum in fusion technology which could be a
Speaker 1: complement as well to the deployment of renewables around the world. So, Chris,
Speaker 1: how long have you been covering nuclear. I've covered nuclear
Speaker 1: longer than I like to admit probably twenty years have
Speaker 1: been revolved in producing reports and research in nuclear markets.
Speaker 1: So in all that time, have you seen this level
Speaker 1: of interest in the fusion space. No. I think fusion
Speaker 1: the last few years has seen the tremendous uptick in
Speaker 1: in in fusion space. And one of the advantages of
Speaker 1: fusion spaces that you can go onto and to visit
Speaker 1: several different fusion companies and see the reactors, see the prototypes,
Speaker 1: climb on them. And we have a tremendous amount of
Speaker 1: support from high net worth individuals. Companies that Goldman Sachs, Google,
Speaker 1: the Sovereign Well from Singapore, several other companies are all
Speaker 1: developing or pursuing an interest in fusion for for the future.
Speaker 1: And it's promising because there are several different technological approaches
Speaker 1: to fusion. It's just not one type of tocomac energy.
Speaker 1: There's a lot of variety of approaches, different approaches, different
Speaker 1: technologies that can go ahead and deliver that, which is
Speaker 1: the sign of a very very healthy industry that there's
Speaker 1: lots of approaches and lots of capital starting to flow
Speaker 1: in and we anticipate that we'll see a steady stream
Speaker 1: and fusion coming forward. Fusion is something that also is
Speaker 1: in a timeframe of some companies suggesting that they'll have
Speaker 1: something to show in the second half of this decade.
Speaker 1: But as far as my thinking is, it's probably before
Speaker 1: we'll see a viable commercial fusion reactor. I hope I'm wrong.
Speaker 1: I'm hoping it's easier. But it's a complex technology and
Speaker 1: there's a lot of mildstones yet to be accomplished and realized.
Speaker 1: But momentum is there, the messer interests there, and it's
Speaker 1: something that represents some different advantages than fishing, for example,
Speaker 1: So it's something that's worthwhile pursuing and also has a
Speaker 1: role to play in the future. And with all of
Speaker 1: this financing behind it, is it ultimately a race towards
Speaker 1: a breakthrough technology that will end up being the dominant
Speaker 1: technology or do you think it will continue to be
Speaker 1: a varied space. In terms of how fusion is a
Speaker 1: French from a tex standpoint, there's three different major avenues
Speaker 1: for development of fusion technology. There's the Eater facility, which
Speaker 1: I visited last week in the south of France, which
Speaker 1: has thirty two or thirty three countries involved in in
Speaker 1: collaboration to develop this technology, and it's a big, massive
Speaker 1: industrial project in the thirty billion dollar range, but it's
Speaker 1: a research facility developing that. But this is a sort
Speaker 1: of international commitment to go ahead and develop this technology.
Speaker 1: Had to share the expertise with everyone who's involved. The
Speaker 1: second avenue is there's a lot of national programs that
Speaker 1: are being developed. The Koreans, the Chinese, the Japanese, the UK,
Speaker 1: the US all have national programs that are developing their
Speaker 1: specifically funded to go ahead and prove out fusion technology
Speaker 1: and learn from the lessons that will be deployed taken
Speaker 1: away from the eater facility. And the third avenue and
Speaker 1: when that's probably most interesting is the private sector development
Speaker 1: and entrepreneurs, sovereign wealth funds, philanthropists, billionaires are all looking
Speaker 1: and spending money to commercialize these technologies, and the focus
Speaker 1: there is not so much on research, but the focus
Speaker 1: is on a commercial product with which to generate electricity.
Speaker 1: So the combination of the three different avenues to commercialization
Speaker 1: of fusion technologies, where I think, is very very exciting
Speaker 1: and hopefully we'll have some very pleasant results in the
Speaker 1: years ahead to report. Before I pivot to another topic,
Speaker 1: is there anything else you wanted to say on fusion,
Speaker 1: it's very, very challenging. But a lot of people describe
Speaker 1: it as the holy Grail of energy production, and I'm
Speaker 1: not saying that that's the case, but it is a
Speaker 1: very interesting technology, a very very challenging one, and I
Speaker 1: hope that all the companies and all the investors will
Speaker 1: be main focused so that they can deliver a commercially
Speaker 1: viable projects sooner than later. Now for a very short break,
Speaker 1: stay with us, So let's talk a little bit about uranium.
Speaker 1: Stay on some of the costs here. There's been a
Speaker 1: fair amount of volatility in uranium, and we as a
Speaker 1: business do look at commodity prices as they really underpinned
Speaker 1: a lot of the industries that we're talking about in
Speaker 1: other respects. So it's you know, intrinsically linked what has
Speaker 1: been going on with uranium recently. So if you go
Speaker 1: back to the two thousand five or so, uranium was
Speaker 1: trading close to a hundred fifty dollars a pound. That
Speaker 1: was following the passage of the Energy Policy Act of
Speaker 1: two thousan five in the US, which provided some incentives
Speaker 1: for nuclear power, and at the time there was a
Speaker 1: lot of financial speculation interest in the market and drove
Speaker 1: up the price significantly higher. And then came along came Fukushima,
Speaker 1: and Fukushima sort of tanked the market because everybody is
Speaker 1: now worried that nuclear power is going to be out
Speaker 1: as a result of this, this few terrible accident over there.
Speaker 1: In the meantime, though, before Fukushima happened and after the
Speaker 1: high price in two and five period, there was a
Speaker 1: tremendous amount of increase in uranium and many many companies
Speaker 1: started additional mining efforts, started new mines, increased production of mines.
Speaker 1: And so what happened in two thousand eleven when the
Speaker 1: demand for uranium slowed significantly in the prospect of new
Speaker 1: bill tempered somewhat, you had a lot of production that
Speaker 1: was coming online. So the rannium market was oversupplied. Since
Speaker 1: two thousand and eleven. Many of the Japanese utilities, for example,
Speaker 1: were on a taker pay contracts, so they had contracted
Speaker 1: from long term uranium purchases, but they weren't operating the
Speaker 1: nuclear power plants. You went from fifty four nuclear power
Speaker 1: plants operating in Japan on March one, two thousand and
Speaker 1: eleven two none of them operating a year later, and
Speaker 1: so they still had to buy and commit to the
Speaker 1: purchasing that uranium. So you had an oversupply campac in
Speaker 1: the marketplace which has been sort of now winded down,
Speaker 1: and it drove down the price of uranium to less
Speaker 1: than thirty dollars at the beginning of one. In the
Speaker 1: middle of one, we saw some financial speculation interest come
Speaker 1: into the marketplace and made some long term purchases of
Speaker 1: uranium for inspeculative basis, and that drove the price up
Speaker 1: to nearly fifty bucks in them in the middle of
Speaker 1: October of last year. It traded back and forth between
Speaker 1: fifty and forty bucks for the next several months, and
Speaker 1: then with the invasion of Ukraine by Russia, uranium spiked
Speaker 1: and went up to nearly over sixty dollars. And that
Speaker 1: was a recognition that perhaps because of all the energy
Speaker 1: sanctions that were being talked about, there was some anticipation
Speaker 1: among financial investors that, you know, uranium would be a
Speaker 1: good commodity to hold onto for the future because we
Speaker 1: anticipate that this war could drive a lot of interest
Speaker 1: in purchasing, deployment of more nuclear reactors and consumption of uranium.
Speaker 1: That fell fifth the middle of April till below fifty
Speaker 1: dollars and it's traded in arrange in the high fordis
Speaker 1: ever since then at I saw earlier today, And so
Speaker 1: there is a increase doubling of the price uranium over
Speaker 1: the last year, but it's not as high as it
Speaker 1: was a couple of months ago. New minds are coming online.
Speaker 1: There is going to be more demand for uranium coming forward.
Speaker 1: But it's a very interesting market to follow, and I'm
Speaker 1: sort of surprised that it's more or less had gone
Speaker 1: back and forth in the high forties for a while,
Speaker 1: but that makes sense because more uranium markets minds are
Speaker 1: coming online and production is increasing and inventories have been reduced.
Speaker 1: There was a significant amount of uncovered demand for uranium,
Speaker 1: meaning that utilities did not buy the uranium that they
Speaker 1: needed to buy prior to the war in Ukraine, and
Speaker 1: so that provided the impetus for for higher uranium prices
Speaker 1: and to miss them among uranium producers. That there's going
Speaker 1: to be some hope and improve conditions for the uranium
Speaker 1: producers and miners around the world. Quite possibly a basic question,
Speaker 1: but how difficult is it to extract this three uranium
Speaker 1: and essentially you know, with maintaining a supply and demand bonds.
Speaker 1: Let's say small scale nuclear goes really well and actually
Speaker 1: these projects end up taking off at some point in
Speaker 1: the next couple of decades, Is it possible that we
Speaker 1: will have enough uranium or are there very limited supplies? Now?
Speaker 1: I don't think that there is concerned that there's not
Speaker 1: going to be enough uranium to supply the immediate needs
Speaker 1: of the nuclear power industry in the foreseeable future. Some
Speaker 1: of the advanced reactive technology is much more efficient in
Speaker 1: burning up the uranium and therefore will use uranium more efficiently,
Speaker 1: so they'll have more electrical generation for the same amount
Speaker 1: of uranium has started in the fuel. So I think
Speaker 1: in the near term there is perhaps rightfully so will
Speaker 1: be increased in the price of uranium. But electricity generated
Speaker 1: from natural gas is dependent from the price of the
Speaker 1: natural gas. The price of nuclear power electricity is dependent
Speaker 1: perhaps maybe a ten to fourteen on the price of uranium.
Speaker 1: So we can upstand una an increase in the price
Speaker 1: of uranium without having a dramastically negative effect on the
Speaker 1: price of We're not going to near term gonna be
Speaker 1: running out of uranium. And secondly, one has to recognize that,
Speaker 1: whereas the price of nuclear generated electricity so ending a
Speaker 1: bit like the way we began. But instead of focusing
Speaker 1: in on why everyone else is talking about nuclear what
Speaker 1: are some of the things that stand out to you.
Speaker 1: One of the most important things that I see right
Speaker 1: now happening the market is really very interesting, is the
Speaker 1: sea change in the public perception of nuclear power. You
Speaker 1: have three stalwarth states nations in Germany, California, and Japan,
Speaker 1: which were very much opposed to nuclear power, and we're
Speaker 1: seeing to see that opposition to the nuclear power of
Speaker 1: being sort of reduced or shell for the time being.
Speaker 1: Whether or not it's a permanent or temporary situation, it's
Speaker 1: hard to say. Germany, in the wake of Fukushima, was
Speaker 1: committed to closing all of its nuclear power plants by
Speaker 1: two In our analysis we suggested that he will continue
Speaker 1: to go ahead and close those reactors at the end
Speaker 1: of this year, but there's been a tremendous amount of
Speaker 1: opposition to doing so because they are safe and we
Speaker 1: can continue using them and they'll help reduce the burden
Speaker 1: of the higher electricity prices on the German people by
Speaker 1: keeping them operating for a while. If you have a
Speaker 1: situation where those reactors are in fact allowed to operate
Speaker 1: beyond the end of two it's a sea change in
Speaker 1: the thinking going on in in Germany and that all
Speaker 1: of a sudden, we need to have these reactors to
Speaker 1: hedge against the crisis of the higher energy prices. And
Speaker 1: a good energy policy involves not only delivering clean energy,
Speaker 1: but delivering clean energy at a recental price, and nuclear
Speaker 1: can play a very very effective role in doing so.
Speaker 1: Situation in California is very much the same, where there
Speaker 1: was a political decision and close the Diablo Canyon nuclear
Speaker 1: power plants, the last two nuclear power plants in the
Speaker 1: state of California, and it was done because the decision
Speaker 1: was made perhaps politically, I don't think so economically, but
Speaker 1: decision was made to close those nuclear power plants and
Speaker 1: to go all in on renewables and other technologies. And
Speaker 1: so now there's a lot of um question marks because
Speaker 1: there's been policy coming from the US government suggesting that
Speaker 1: will provide some funds for those utilities who operate nuclear
Speaker 1: power plants who are thinking about perhaps closing them. And
Speaker 1: that's a very significant anti nuclear state which perhaps has
Speaker 1: going to rethink the use of nuclear power, not only
Speaker 1: for power generation but also for desalination of water. That
Speaker 1: plans for that nuclear plant only two reactors. Their initial
Speaker 1: plans were for six reactors, one of which was entirely
Speaker 1: going to be dedicated for desalination. And in Japan you
Speaker 1: went from fifty four reactors to zero reactors to about
Speaker 1: ten operating reactors, nine or ten operating reactors now and
Speaker 1: they're being burdened tremendously by the high natural gas prices,
Speaker 1: and so there is an effort to go ahead and
Speaker 1: speed the return of several of those reactors to generating
Speaker 1: electricity to put less pressure on the pricing of electricity
Speaker 1: in the country in Japan. So those are three markets
Speaker 1: which are pretty much against nuclear power, which are now
Speaker 1: softening their their stance on that. If you go back
Speaker 1: a year, the Indian Point nuclear power plant north of
Speaker 1: New York was closed down, and I'll put from the
Speaker 1: nuclear our plant is larger, being replaced by natural gas.
Speaker 1: And we can see now that the price of natural
Speaker 1: gas has gone through the roof, making the price of
Speaker 1: electricity for people in the New York Metropolitanaria Horse who
Speaker 1: are customers of content has increased significantly. And that's not
Speaker 1: good energy policy to have such a large jump, Plus
Speaker 1: the emissions are gone up significantly as well. Just this morning,
Speaker 1: in the middle of a heat wave in New York,
Speaker 1: there were announcements that there's perhaps brownouts in parts of Brooklyn.
Speaker 1: They're going to exist today in the n plus heat
Speaker 1: that it's going through the area. I think people are
Speaker 1: starting to realize that nuclear has a role to play
Speaker 1: and electrical power generation in certain markets or in many markets,
Speaker 1: and we just see a lot of interest there. So
Speaker 1: this for a variety of reasons, net zero aspirations, COP
Speaker 1: twenty six war in Ukraine, high natural gas prices, mustering,
Speaker 1: the hot summer, All of these things are are combined
Speaker 1: timing to get people to consider that perhaps, you know,
Speaker 1: we should not throw new europe technologies out the window
Speaker 1: because they have a role to play. Of course, beyond
Speaker 1: the things that we've already addressed today, and what are
Speaker 1: some of the other things that are happening in the
Speaker 1: industry that you just want to make sure that everyone
Speaker 1: knows about. One of the things that the nuclear industry
Speaker 1: has to respond to this unprecedented opportunity that exists in
Speaker 1: front of it right now. The nuclear industry has fumbled
Speaker 1: the ball on a few occasions, and there are several
Speaker 1: examples in the US and in Europe that the construction
Speaker 1: time to build the nuclear power plants in the US
Speaker 1: approaching over ten years, and the actual start and stopping
Speaker 1: of a to eight one thousand projects in South Carolina
Speaker 1: a few years back. I mean, the perception of the
Speaker 1: nuclear power industry has is that they can't build and
Speaker 1: manage large projects effectively, and that the label that's a
Speaker 1: placed on nuclear powers that they're uneconomic. You know, in
Speaker 1: Europe you have projects that are under construction since two
Speaker 1: thousand five. In Finland that reactors just come online. Still
Speaker 1: some operating challenges there. In France, they started building that reactor,
Speaker 1: their e p R in two thousand and seven, there's
Speaker 1: still a year or two away from getting that operating.
Speaker 1: And so none of these reactors have um good solve
Speaker 1: economic performance associated with their construction. That is something that
Speaker 1: the nuclear power industry needs to change. The cost of
Speaker 1: generating of building nuclear power plants is much lower in
Speaker 1: a place like China because they built six and them
Speaker 1: at a time at one location, and they have a
Speaker 1: train workforce and they can very effectively deliver significantly less
Speaker 1: expensive nuclear power. That has to change in the Western
Speaker 1: Europe and in the United States. We need to proceed
Speaker 1: and build nuclear power plants and deliver them in generate
Speaker 1: electricity without the economic nightmare labor attached to them. And
Speaker 1: that's a very very important thing. And I think that
Speaker 1: the new technologies represents several safety advantages. They're smaller, some
Speaker 1: of them don't operate with pressure vessel because they're operating
Speaker 1: on one atmosphere, and so therefore that it makes a
Speaker 1: lot of sense for some of these reactors to to
Speaker 1: go ahead and deliver and and displace some of the
Speaker 1: coal technology that is that is still operating in this country.
Speaker 1: So it's a viable pathway going forward. The nuclear industry
Speaker 1: has to respond and rise to the occasion deliver, and
Speaker 1: until they do so, then they'll have this very negative
Speaker 1: connotation applied to them. And we have seen more coal
Speaker 1: flary power stations come on as a result of the
Speaker 1: really high natural gas prices at the moment. And do
Speaker 1: you think that that is ultimately the real displacement opportunity
Speaker 1: for nuclear in the space that it occupies. I think
Speaker 1: that in the compronization of the electrical power sector in
Speaker 1: the United States, and Europe is going to require replacing
Speaker 1: the baseload technology that is now currently supplied by coal
Speaker 1: plants and natural gas plan and I think that that's
Speaker 1: the opportunity, the sweet spot for the nuclear power industry
Speaker 1: to address in the power generation sector. Providing industrial process
Speaker 1: heat to industry is another sweet spot for the nuclear
Speaker 1: power industry to go ahead and address, and we're already
Speaker 1: seeing some developments with Dow Chemical partnering with x Energy
Speaker 1: to go ahead and deliver products to allow for nuclear
Speaker 1: industrial processing to in order to decarbonize. And there's also
Speaker 1: a lot of talk of using nuclear to produce hydrogen,
Speaker 1: and that's something that may make some sense in certain
Speaker 1: specific areas industrial complexes where the physical requirements of storing
Speaker 1: and transporting hydrogen do not become prohibitively expensive. So if
Speaker 1: you can have a nuclear power plant produce the hydrogen
Speaker 1: and deliver it quickly to the market without extensive storage
Speaker 1: and transport costs, it also makes a lot of opportunities
Speaker 1: for there. So nuclear technology is a very very technology.
Speaker 1: There's a lot of power in the atom and splitting
Speaker 1: the atom, fusing atoms, and so it's something that is
Speaker 1: it's a very technology and it has issues like many
Speaker 1: other technologies has issues, and the nuclear industry has to
Speaker 1: sort of rebrand itself to certain extent, saying that we
Speaker 1: not only have a carbon free technology, but we have
Speaker 1: a carbon free technology that employs a lot of people,
Speaker 1: that is safe and can compliment the increasing deployment of renewables. So, Chris,
Speaker 1: thank you so much for coming and getting us up
Speaker 1: to speed on so many different things that are happening
Speaker 1: all over the world in the nuclear space. And I
Speaker 1: know each one of these you could probably spend an
Speaker 1: hour show drilling down on. So thank you for taking
Speaker 1: us through this crash course and sharing with us today
Speaker 1: right well, happy to do so at any time. Today's
Speaker 1: episode of Switched On was edited by Rex Warner of
Speaker 1: gray Stoke Media. Bloomberg an F as a service provided
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