Speaker 1: This is Tom Rowland's Reese, and you're listening to Switched
Speaker 1: on the podcast brought to you by B and EF.
Speaker 1: After the Fukushima incident of twenty eleven, attitudes towards nuclear
Speaker 1: power as a secure energy source shifted, with some nations
Speaker 1: such as Germany, accelerating the phase out of its nuclear fleet,
Speaker 1: while the US increased regulations Once in nuclear energy heavyweight,
Speaker 1: the US has seen construction of nuclear plants slow to
Speaker 1: a crawl. The country has fallen far behind Russia and
Speaker 1: China in terms of its technology and equipment being used
Speaker 1: for nuclear power builds around the world. The Trump administration
Speaker 1: has made no secret of its desire to change this,
Speaker 1: and last month issued four executive orders that seek to
Speaker 1: reinvigorate the US's domestic nuclear power fleet. But is this
Speaker 1: policy push enough to stimulate a risk averse private sector
Speaker 1: and what forms of nuclear technology are North American companies
Speaker 1: looking at today? I am joined by B and EF's
Speaker 1: lead nuclear analyst, Kris Kodoonsky, and we discussed findings from
Speaker 1: his note, Trump pushes nuclear, but market pull is uncertain.
Speaker 1: Which B and EF plants can find at BNEF go
Speaker 1: on the Bloomberg terminal or on BNF dot com. All right,
Speaker 1: let's get to talk about the future of US nuclear
Speaker 1: energy with Chris.
Speaker 2: Chris, welcome to the show.
Speaker 3: Thank you, Tom, it's a pleasure to be back. Yeah.
Speaker 1: I was just going to say, it doesn't feel like
Speaker 1: it was that long ago that we had you on
Speaker 1: the podcast.
Speaker 2: So why are we speaking today.
Speaker 3: Well, there's a lot of excitement about nuclear power in
Speaker 3: the media, among governments and larger organizations institutions, and that
Speaker 3: has been triggered most recently by the May twenty third
Speaker 3: signing by President Trump of four Executive Orders. And the
Speaker 3: four executive Orders are taking aim at some of the
Speaker 3: fundamental issues and problems that has led to the US
Speaker 3: becoming a laggard in nuclear energy construction around the world.
Speaker 3: And so I'll be very very curious to see what
Speaker 3: transpires and how the executive orders will be able to
Speaker 3: work and coexist with Everetts by DOGE to sort of
Speaker 3: cut the government workforce and create an environment where the
Speaker 3: private sector will rally behind what is left of government
Speaker 3: funding to support this to go ahead and build out
Speaker 3: nuclear power in the country.
Speaker 1: So you recently published a report on this, and the
Speaker 1: title of the report Trump pushes nuclear but market poll
Speaker 1: is uncertain, which kind of tells maybe, I mean gives
Speaker 1: in a nutshell where you stand on this. I think
Speaker 1: it was interesting, and you know, when it comes to Chris,
Speaker 1: I'm not just a fan who has come lately. I'm
Speaker 1: familiar with your entire back catalog, so I know that
Speaker 1: in December twenty twenty four you also published a piece
Speaker 1: called US Nuclear Goals in the Cards or just an Illusion,
Speaker 1: which was in reference to some targets put in place
Speaker 1: by the Biden administration. And I also remember that in
Speaker 1: May twenty twenty you published a piece I've got all
Speaker 1: the receipts here called Trump Administration Aims to make Nuclear
Speaker 1: Greats Again, which, unlike those other two titles, doesn't at
Speaker 1: a slight skepticism on your part on the gap between
Speaker 1: ambitions and reality. But I'm just going to read from
Speaker 1: the executive's summary, and this is again from May twenty twenty.
Speaker 1: The US nuclear industry has ceded global leadership to Russia
Speaker 1: and China, as evidenced by the underwhelming presence of US
Speaker 1: vendors participating in global markets. Be in the f questions
Speaker 1: whether the appropriate strategic elements in place in the nfwg's plan. NFWG,
Speaker 1: by the way, Sorry's Nuclear Fuel Working Group will materialize
Speaker 1: to US re establish the US as a contender without
Speaker 1: bipartisan support and appropriate funding. The nfwg's policy goals represent
Speaker 1: wishful thinking rather than an executable objectives to restore global leadership.
Speaker 1: So again, although it was in the title definitely have
Speaker 1: your and I say this, you're someone who is I
Speaker 1: think it's fair to say pro nuclear.
Speaker 2: I don't think that you are.
Speaker 1: Just saying this because you are not in favor of nuclear,
Speaker 1: but you, I think appreciate the challenges and how far
Speaker 1: behind the US is. So I suppose over the years
Speaker 1: we've seen that sort of skepticism on your part. The
Speaker 1: thing that's interesting though, is now when we look at
Speaker 1: this sort of the pattern is Trump administration Mark one
Speaker 1: was pro nuclear. The Biden administration for the most part
Speaker 1: was kind of most of its time, I would say,
Speaker 1: slightly neutral. It had those tax credits in the IRA
Speaker 1: to support nuclear if the economics weren't working out. But
Speaker 1: then right at the end there was this ambitious set
Speaker 1: of goals set out for nuclear and then of Trump
Speaker 1: has come back in and he has come out as
Speaker 1: being very pro nuclear with these executive orders. So we're
Speaker 1: starting to see actually a little bit of bipartisanship emerging
Speaker 1: around nuclear. And yet you're still a bit skeptical maybe
Speaker 1: about how challenging this is and whether that challenge is
Speaker 1: fully appreciated.
Speaker 2: Is that fair?
Speaker 1: I am I being fair to your read on this
Speaker 1: whole space.
Speaker 3: I think it's absolutely correct, and maybe an anecdote can
Speaker 3: illustrate the reasons for my skepticism. Back in twenty ten
Speaker 3: or twenty eleven, before the fu Kushimi event, we had
Speaker 3: a conversation with an SMR developer in the US and
Speaker 3: with the Russians, and the conversation in twenty ten went
Speaker 3: like this. The Russians said, we're going to have a
Speaker 3: SMR operating north the Arctic Circle by twenty twenty, and
Speaker 3: the US SMR developer said, well, we will have a
Speaker 3: SMR operating in the US by twenty twenty. Come twenty twenty,
Speaker 3: what has happened is that the Russians are operating in
Speaker 3: SMR north of the Arctic Circle in a floating nuclear
Speaker 3: power plant, a tremendous innovation that has implications for global
Speaker 3: markets in South Asia and in Pacific region, and the
Speaker 3: US development looks like, well, we might be likely if
Speaker 3: we have something by twenty thirty. So I'm trying to
Speaker 3: look and say, well, what has happened to the US
Speaker 3: industry why we can't deliver where you look at the
Speaker 3: Russians and they are very very aggressive in delivering SMRs
Speaker 3: in remote places, and they're leading global construction, and so
Speaker 3: I sort of am and wondering what it is that
Speaker 3: has handicapped the US industry so we can't build, And
Speaker 3: there are a whole slew of reasons for doing so.
Speaker 3: But that's why I remain skeptical, because what's really really
Speaker 3: important is not so much policy push but market pull.
Speaker 3: Then I use the analogy of pushing a string as
Speaker 3: opposed to pulling a string, And so if we had
Speaker 3: a lot of market pull, if you until the executives
Speaker 3: stood up, raises hands says, I want a nuclear reactor
Speaker 3: that's a very very strong single and we're starting to
Speaker 3: see that from the hyperscalers because they are facing tremendous
Speaker 3: demands for electricity to power their data centers.
Speaker 1: I want us to explore this idea of market pull,
Speaker 1: and we'll get to it in de course. And also
Speaker 1: I think we just a moment, will we'll dive into
Speaker 1: some of the reasons or your assessment of the reasons
Speaker 1: why the US has sort of fallen behind in this race.
Speaker 1: One thing I meant to mention, for those of you
Speaker 1: who are not familiar with the term SMO that sounds
Speaker 1: for small modular reactor. It's a next generation nuclear reactor,
Speaker 1: and as the names just, it's significantly smaller than a
Speaker 1: conventional nuclear actor and therefore is less restricted by where
Speaker 1: it can be deployed. Before we dive into the reasons
Speaker 1: why we think that nuclear progress in the US has
Speaker 1: fallen so far behind, I think that you actually, and
Speaker 1: you laid it out really well in the note you
Speaker 1: recently published the number of reactors under construction worldwide by
Speaker 1: the country, not of where they're being constructed, but by
Speaker 1: where the technology comes from. It paints a very stark picture.
Speaker 1: Can you just really illustrate your point talk us through
Speaker 1: that very quickly.
Speaker 3: So, the country in which the greatest construction effort is
Speaker 3: going on as China, something like twenty eight twenty nine reactors.
Speaker 3: Of those twenty eight twenty nine reactors for those reactors
Speaker 3: are being built by the Russians. Russia is only building
Speaker 3: four reactors in its own country, but it's also building
Speaker 3: four reactors in Turkey, four reactors in Egypt, two reactors
Speaker 3: in Bangladesh, and four reactors in India. So that brings
Speaker 3: Russia to a total amount of twenty six reactors under
Speaker 3: construction that are Russian designs, and if you compare that
Speaker 3: to the US, there are no nuclear reactors under construction
Speaker 3: of US design. Now there's an issue here is that
Speaker 3: China is building several CAP one thousands. CAP one thousands
Speaker 3: are the Chinese version of the AP one thousand that
Speaker 3: is a Westinghouse or US design. Westinghouse will argue that
Speaker 3: is they're part of their design, but we look at
Speaker 3: the components are eighty percent manufactured in China. There are
Speaker 3: certain other modifications and changes that they've done, so we
Speaker 3: characterize that perhaps incorrectly, but I think realistically as as
Speaker 3: a reactor of Chinese design as opposed to US design,
Speaker 3: that will be a debatable point.
Speaker 1: It's a debatable point, but you know, whatever the actual answer,
Speaker 1: and I think there's not a right or wrong answer.
Speaker 1: You know, the picture that emerges is very clear. China
Speaker 1: is the biggest market for nuclear power and a significant
Speaker 1: proportion of that is being served by Chinese supply chain,
Speaker 1: Chinese developers, and so this puts, like with so many
Speaker 1: other markets, China in a good position in the future
Speaker 1: to be an exporter of that expertise and know how.
Speaker 1: Russia is currently the world's leading exporter of that expertise
Speaker 1: and know how. And the US neither has a thriving
Speaker 1: domestic market like China which would be a platform to
Speaker 1: become an exporter, and it is certainly not an exporter today.
Speaker 1: So this is a pretty clear picture and it's hard
Speaker 1: to argue with it. So before we talk about how
Speaker 1: these executive orders might try and address some of this,
Speaker 1: before we talk about the demand pool, what in your
Speaker 1: view has gone wrong here, Like if we go back
Speaker 1: to when you were having that conversation in twenty ten,
Speaker 1: where there was ambitions around small modular reactors, for example,
Speaker 1: at that point in time, maybe already the US was
Speaker 1: being to lag, but at least people to be making
Speaker 1: the claims that have a smaller modul reactor. By twenty twenty,
Speaker 1: there must have been stakeholders in the US who felt
Speaker 1: the US was in the race, you know, And since
Speaker 1: then the US are so comprehensively lost.
Speaker 2: So what has gone wrong?
Speaker 3: Well, let me clarify a few things. I'm there the nuances.
Speaker 3: Nuance is a very good word to use with regards
Speaker 3: to the discussion of the nuclear power industry as far
Speaker 3: as development of advanced reactors, by far in the way,
Speaker 3: the US is in first place. We have a whole
Speaker 3: slew of advanced reactive technologies that are being developed by
Speaker 3: a wide variety of companies. However, we haven't gotten to
Speaker 3: the point where we are licensing them or building them,
Speaker 3: and that are two necessary steps. And licensing is a
Speaker 3: very challenging process to undergo in the US, and it's
Speaker 3: one of the executive orders that Trump signed on May
Speaker 3: twenty third was to address NRC reform and but doing
Speaker 3: so it will help speed up the process and reduce
Speaker 3: the risk of these nuclear technologies. We're all new innovative technologies,
Speaker 3: most of them coming across the finish line getting licensed
Speaker 3: and then get it constructed and built. So I don't
Speaker 3: want to paint a picture that there's no nuclear leadership
Speaker 3: in the US. There's nuclear leadership as far as developing
Speaker 3: new technologies, but we are certainly laggards in actually building
Speaker 3: UCAR power plants. We have no nuclear reactors under construction
Speaker 3: in North America, never mind in the US all lot.
Speaker 1: So I suppose maybe a more nuanced picture that we
Speaker 1: could paint is, when it comes to what is happening
Speaker 1: right now, the US has fallen behind in terms of
Speaker 1: the deployment of nuclear technologies, and a lot of what
Speaker 1: we've spoken about in terms of those figures refers to
Speaker 1: conventional nuclear technologies where Russia is the global exporter of
Speaker 1: China is the biggest market, and so the US's hopes
Speaker 1: of establishing leadership globally in this space do not hinge
Speaker 1: on I guess what you'd call say, catching up in
Speaker 1: that area. It is making sure that this other great
Speaker 1: hope of these next generation of technologies is that the
Speaker 1: US doesn't get in its own way of winning that race,
Speaker 1: which it is well positioned to win.
Speaker 2: Is that maybe the.
Speaker 1: Nuanced take of what the picture currently looks like, and
Speaker 1: maybe what these executive orders are aiming to address is,
Speaker 1: let's ensure that the US can capitalize on this sort
Speaker 1: of new generation of technologies that it has led the
Speaker 1: way in developing.
Speaker 3: A fundamental first step is building advanced reactors in the US,
Speaker 3: whether or not on military basis, on federal land or
Speaker 3: by utilities or with hyperscalar demand pull to go ahead
Speaker 3: and do that. That's the first step. Once we start
Speaker 3: building nuclear reactors in the US, we can expect interest
Speaker 3: from other markets overseas to follow, and that makes a
Speaker 3: lot of sense. There are a couple of proposals right
Speaker 3: now to build reactors in Eastern Europe that have not
Speaker 3: been built in the US, and to me, that strikes
Speaker 3: me as a very risky proposition for the new host
Speaker 3: country to consider a technology that has yet to be
Speaker 3: built in the US. And I think that.
Speaker 2: And these are American technologies.
Speaker 3: American technologies or so, and we're starting to see some progress.
Speaker 3: The most exciting development is the General Electric Kitachi nuclear
Speaker 3: power plant that's going to be built in Ontario, Canada
Speaker 3: by Ontario Power Generation. They're going to be four units.
Speaker 3: Four days before the executive orders were signed by President Trump,
Speaker 3: the Tennessee Value Authority, with large government utility has also
Speaker 3: decided to submit a construction permit for several of the
Speaker 3: same reactors. And that's a very very important key is
Speaker 3: that the key too mass deployment of these nuclear reactors
Speaker 3: is having a significant project pipeline. It's very hard for
Speaker 3: a developer or a vendor of a nuclear power plan
Speaker 3: to say, give me a couple of billion dollars and
Speaker 3: I'll build your reactor. It's a much easier line, and
Speaker 3: the financial community is much more receptive. It says, give
Speaker 3: me a couple of billion dollars to build a factory
Speaker 3: with which I can manufacture ten to twenty reactors, and
Speaker 3: here's the project pipeline I have. So General Electric Hitachi,
Speaker 3: for example, has four projects now underway, at least in Canada,
Speaker 3: more in Alberta and Saskatchewan. For in the US at
Speaker 3: the Tennessee Value Authority, some perhaps in Estonia too. The
Speaker 3: General Electric Attachi maybe was a contender for the Great
Speaker 3: British Nuclear Program, although Rolls Royce has seemed to have
Speaker 3: succeeded in taking being nominated first. But that doesn't preclude
Speaker 3: General Electric Katachi for participating in that market. And if
Speaker 3: I was the UK policy makers, I've sort of divide
Speaker 3: allocate eighty twenty percent, give eighty percent to the SMR
Speaker 3: of Rolls Royce Company and twenty percent to General Electric
Speaker 3: Tiktaci to create some tension in the marketplace so that
Speaker 3: there'll be some cost considerations and that if Rolls Royce
Speaker 3: is too expensive, we have another operation. And finally, in Poland,
Speaker 3: they have talked about building twenty four of these general
Speaker 3: electric katachis. That's a pretty long project pipeline, and they
Speaker 3: can make the long term investment necessary to get from
Speaker 3: a first of a kind cost to end of a
Speaker 3: kind cost as quickly as possible. That's the secret to
Speaker 3: getting a widespread deployment of nuclear power.
Speaker 2: So, I mean, that's really interesting.
Speaker 1: So Poland is potentially a key market for next generation
Speaker 1: technologies because they've they've put in place dot ambition, not
Speaker 1: just in terms of a gig target, but specifically actual
Speaker 1: projects under development for these technologies.
Speaker 3: My cousins of Poland present a very complicated picture. They've
Speaker 3: articulated that they have no nuclear power. And Poland is
Speaker 3: the only country that built nuclear power plants and decommissioned
Speaker 3: them without ever operating them in the wake of the
Speaker 3: Chernobyl disaster. Now Poland has said we need six to
Speaker 3: nine gigawatts of nuclear power to reduce our carbon footprint
Speaker 3: because it's largely generating electricity through coal plants. That's very
Speaker 3: very ambitious. There's three potential pathways that have surfaced right
Speaker 3: now for them to do that. One, they've signed contracts
Speaker 3: with the Westinghouse eight p one thousand for three reactors
Speaker 3: or went to three reactors at a very very high cost.
Speaker 3: They've also looked at the General Electric Katachi and looked
Speaker 3: to build They've announced twenty four projects and finally the
Speaker 3: Koreans wanted to get into the act as well, and
Speaker 3: they're making proposals for a smaller one gigawatt version of
Speaker 3: their reactor at another site. So you have three potential
Speaker 3: solutions to Poland's nuclear ambitions. Perhaps two or three will
Speaker 3: go through. But it's important to recognize that for Poland,
Speaker 3: building large reactors that are manufactured in the US or
Speaker 3: Korea does not necessarily solve all of their social and
Speaker 3: political problems. You have a large percentage of the population
Speaker 3: who is reliant on coal and a coal industry that
Speaker 3: you're introducing technologies to reduce their participation in the Polish economy.
Speaker 3: So the idea for Poland to sort of develop a
Speaker 3: technology that they can build locally and create a knowledge
Speaker 3: industry and industry where there is a lot of participation
Speaker 3: from society to support the developing commercialation of lear power
Speaker 3: is very very important. And if they can build a
Speaker 3: lot of the components in Poland for the long term perspective,
Speaker 3: that would be much healthier.
Speaker 1: So with thinking about US technologies, this is maybe partly
Speaker 1: the reason, one of the reasons why the plan is
Speaker 1: so much more robust if it'll relies on the US
Speaker 1: market first. So let's bring it back to the US.
Speaker 1: You know, we're going to get to these executive orders
Speaker 1: in a moment, so we painted this picture. US is
Speaker 1: very well poised in terms of next generation technologies. Maybe,
Speaker 1: and I say this because I read a lot of
Speaker 1: your research. They're not going to be commercial as soon
Speaker 1: as some might hope, but they are still you know,
Speaker 1: one day, these next generation nuclear technology is going to
Speaker 1: be very relevant, and the US is in the lead
Speaker 1: on those, but has fallen behind when it comes to
Speaker 1: conventional nuclear technology. And so this is the narrative I'm
Speaker 1: going with is that, you know, maybe these executive orders
Speaker 1: will help ensure the success of these new technologies by
Speaker 1: removing roadblocks. And so I think it is still important
Speaker 1: to understand why the US fell behind in conventional nuclear
Speaker 1: technology because I'm presuming that some of the challenges faced
Speaker 1: there could impact the next generation of nuclear technologies and
Speaker 1: therefore why some of these challenges need to be addressed
Speaker 1: by these executive orders. So why has the US fallen
Speaker 1: behind in conventional nuclear technology if you.
Speaker 3: Look over the last fifteen years. The Fukushima event in
Speaker 3: twenty eleven in March of twenty eleven cast a poll
Speaker 3: over the global nuclear power industries and infected countries in
Speaker 3: different ways. Japan ended up reducing their fleet significantly, Germany
Speaker 3: closed their entire fleet and closed them I get the
Speaker 3: end of twenty twenty three or so, and in the
Speaker 3: US we closed thirteen reactors for a variety of different purposes.
Speaker 3: So you had this poll hanging over the industry globally.
Speaker 3: In some countries were China and Russia paused but realized
Speaker 3: that nuclear has a very big role to play in
Speaker 3: their societies, and so they went forward and recovered more quickly.
Speaker 3: In the US, we have a preference for renewables, and
Speaker 3: we had some support for renewables, and so that has
Speaker 3: been a priority in many many ways. And we also
Speaker 3: had very cheap natural gas, and we also have very
Speaker 3: high labor costs that made the prospect of building and
Speaker 3: operating large new your power plants more problematic than it
Speaker 3: was in other parts of the country. Remember this, Our
Speaker 3: analysis suggests that to build a nuclear power plant in China,
Speaker 3: they can do it for approximately one fifth cost that
Speaker 3: it costs us to build the last two ap one
Speaker 3: thousands in Georgia. That's a huge delta. So one can understand, well,
Speaker 3: I can build reactors for one fifth of costs in China,
Speaker 3: continued doing so, and so in this country where where
Speaker 3: we have this high cost label attached to the nuclear
Speaker 3: power and I don't think we'll go forward unless we
Speaker 3: can somehow address that. And some of the executive orders
Speaker 3: that Trump has signed may address some of those issues.
Speaker 2: Well, let's let's get onto the main event. Then.
Speaker 1: I think we've done a lot of contextualizing so far.
Speaker 1: But we came here to talk about these executive orders.
Speaker 1: So talk us through these executive orders and what they're
Speaker 1: intended to accomplish, and you know your view on whether
Speaker 1: they can accomplish those things.
Speaker 3: We sign four nuclear executive orders and their aim is
Speaker 3: to revitalize the nuclear energy industry. And some of the
Speaker 3: issues that we have or the arguments that the Nuclear
Speaker 3: Regulatory Commission, which is the gold standard of regulation of
Speaker 3: nuclear power, has been too constraining to the society, and
Speaker 3: so we're talking about perhaps let's think of a way
Speaker 3: to make the process less expensive, less daunting to the
Speaker 3: companies that are trying to run down that path and
Speaker 3: accomplish that in say twenty four months, as opposed to
Speaker 3: forty four months that has taken the less licensed application
Speaker 3: to get approved. So that's a very very important thing.
Speaker 3: And we're also talking about leveraging US Department of Energy
Speaker 3: research laboratories to help speed speed that forward. And that
Speaker 3: is something that we could also have. You have a
Speaker 3: lot of resources available to sponsor and spur research and development.
Speaker 3: We'll try to adjuss that. And we want to reinvigorate
Speaker 3: the nuclear industrial base, and so Trump has said, let's
Speaker 3: try to have ten new reactors under construction by twenty
Speaker 3: third and he has set a target for four hundred
Speaker 3: giga wats of capacity, adding an additional three hundred capacity
Speaker 3: to the existing fleet by twenty to fifty. Those are
Speaker 3: very very ambition plans, more ambitious than the preceding plan.
Speaker 3: It's also important that we try to develop and supply
Speaker 3: some of these nuclear power plants to support our military
Speaker 3: basis and also to support the anticipated demand from hyperscalers
Speaker 3: to power the data centers, which is in many ways
Speaker 3: a national security issue. We've seen some progress already. There
Speaker 3: was a discussion about Oklahm, one of the companies that
Speaker 3: is developing an innovative advanced react to technology, was recently
Speaker 3: given the go ahead to move forward for supplying electricity
Speaker 3: very nuclear their five banguwatt reactor to a site Alsaid
Speaker 3: Air Force Base in Alaska, and that has created a
Speaker 3: tremendous amount of enthusiasm for the fact that perhaps the
Speaker 3: environment created by releasing these executive orthors may speed up
Speaker 3: the process for the commercialization of a lot of different
Speaker 3: advanced reactors.
Speaker 1: So there's this government push on various fronts to unlock
Speaker 1: the potential of US nuclear And yet I know that
Speaker 1: you as someone who maybe appreciates how challenging this is,
Speaker 1: how long people have been trying, I still sense a
Speaker 1: certain amount of skepticism. I mean, just you know, as
Speaker 1: we said before, the title of your note was Trump
Speaker 1: pushes nuclear, but market pull is uncertain. So the market
Speaker 1: pull is a really important factor there. We can all
Speaker 1: about the market pull in a moment, but why is
Speaker 1: it that policy push is not enough? You use this
Speaker 1: analogy of trying to push a piece of string. Can
Speaker 1: we just explain a little bit more why why that
Speaker 1: wouldn't be enough? Because in some areas policy push is enough,
Speaker 1: but why not for nuclear.
Speaker 3: So if you are a utility executive, the CEO of utility,
Speaker 3: you're at the job for seven to eight years and
Speaker 3: your compensation is largely based upon the performance of the
Speaker 3: utility stock. And so you may a decision, an announcement
Speaker 3: to the world that you are going to build a
Speaker 3: large nuclear power plant. And because we don't have the
Speaker 3: experience and the workflows and the workforce that the Chinese
Speaker 3: have now in building that, Wall Street views this, Oh
Speaker 3: my god, they're going to go and build a nuclear
Speaker 3: power plant. Let's short the stock. Because the Wall Street's view,
Speaker 3: at least some of the bankers that I talked to
Speaker 3: on a regular basis, suggests that every project in the
Speaker 3: US will be first of a kind project, as opposed
Speaker 3: to down the pathway towards the end of a kind.
Speaker 3: And that's the case that all the workers who were
Speaker 3: assembled for the Westinghouse AP one thousand project in Georgia,
Speaker 3: there's no second project. They're all dispersed, and so recreating
Speaker 3: that workforce is going to be much more challenging. So
Speaker 3: you're starting at a new site with a large percentage
Speaker 3: of a new workforce, and it's not like a cooker
Speaker 3: cutting approach like the Chinese. The Chinese will build six
Speaker 3: reactors at the same site, so the workforce goes the
Speaker 3: one reactor to the next reactor, the next reactor, and
Speaker 3: each one becomes less and less expensive. And as a
Speaker 3: result of that, they can build reactors in a short
Speaker 3: period of time five years as opposed to ten years,
Speaker 3: and for a one fifth of cost that we can
Speaker 3: over there. So the utility executive is kind of saying, well,
Speaker 3: I don't want to be the next nuclear power plant
Speaker 3: builder because of the risks to the company by making
Speaker 3: a decision to go ahead and do that. I happen
Speaker 3: to have visited Saudi Arabia at a time when Saudi
Speaker 3: Arabia was considering building nuclear power plants, and the reason
Speaker 3: I visited Saudi Arabia was to understand which company in
Speaker 3: Saudi Arabia could be the host institution to do that,
Speaker 3: and the only company that I have discovered in my
Speaker 3: travels there was Saudi Aramco. Saudis are still discussing building
Speaker 3: nuclear power plants, but they always end up discussing them
Speaker 3: without any firm plants. I'm moving forward. So utilities are
Speaker 3: wary of the cost of building a nuclear power plant,
Speaker 3: and so they're standing back and saying I prefer not
Speaker 3: to be the next one to commit. Let's see if
Speaker 3: some some of the estimates from the US government suggests
Speaker 3: that maybe a thirty percent drop would be an appropriate
Speaker 3: estimate for a new nuclear power plant in the US.
Speaker 3: That takes it from thirty four billion dollars to twenty
Speaker 3: four billion dollars or so. That's a huge cost. The Koreans,
Speaker 3: on the other hand, are suggesting that they can build
Speaker 3: two large reactors in Czech Republic for eighteen nineteen billion dollars,
Speaker 3: so still significantly less. But in the nuclear industry, price
Speaker 3: because of high interest rates inflation tend to rise, and
Speaker 3: so very infrequently do you see a nuclear project in
Speaker 3: the US or in Western Europe coming less than it's
Speaker 3: forecast to the cost. It's always higher, and sometimes significantly higher.
Speaker 3: The West has a terrible track record of building large
Speaker 3: nuclear power plants. It's interesting the way you describe it.
Speaker 3: You know that utilities would rather someone else goes first.
Speaker 3: There's various idioms we could apply to that.
Speaker 1: One would be the US nuclear industry faces a bit
Speaker 1: of a chicken and egg problem. I would prefer to
Speaker 1: say that you need a critical of projects.
Speaker 3: There are ideas circulating around where there should be some
Speaker 3: sort of mechanism among US utilities to share risk and
Speaker 3: perhaps to form consortiums so that you have access to
Speaker 3: a project that's going through the construction phase, but you're
Speaker 3: not on the hook for the entire cost for doing so,
Speaker 3: and so by sharing that risk, you may have a
Speaker 3: fifteen to twenty percent risk for the cost overrun. But
Speaker 3: by doing so you start the process and perhaps the
Speaker 3: third or fourth project you'll be able to have a
Speaker 3: better higher confidence on what the cost will actually be.
Speaker 3: And there's also mechanisms to isolate the cost of the
Speaker 3: nuclear components from the construction cost, so you can offer
Speaker 3: the utility a fixed cost contract for the reactor, pressure
Speaker 3: vessel and associated nuclear commitment, and then put it on
Speaker 3: the utility to manage the construction costs, so that you
Speaker 3: have partially a fixed price contract and a construction contract
Speaker 3: with the utility itself will manage and that will tend
Speaker 3: to sort of take some of the risk way from
Speaker 3: the large deployment risk that is slowing to US utilities
Speaker 3: from buying Nuco. No Nuco's under construction in this country.
Speaker 1: I mean, it's really interesting this idea of the sort
Speaker 1: of the high risks of project overruns, and so if
Speaker 1: it relates to the project scale, it seems almost you know,
Speaker 1: from what you're describing, that private sector will inherently struggle
Speaker 1: to make this market happen. And you know, in the
Speaker 1: US is it is the archetype of capitalism. It is
Speaker 1: an inherently a country that relies on the private sector
Speaker 1: for innovation and development, and maybe this technology, because of
Speaker 1: the scale of involved, is not well suited to.
Speaker 2: Thrive in that environment.
Speaker 1: Now, obviously, the next generation wave of technologies are not
Speaker 1: so big in scale, which might mean that it's less challenging.
Speaker 1: But there are private sector organizations that do have a
Speaker 1: certain amount of scale that goes, you know, way beyond utilities.
Speaker 1: We think of utilities as big, but tech companies they
Speaker 1: are another proposition entirely. And you mentioned and already the
Speaker 1: demand pull, and you mentioned hyperscalers. Do you think they
Speaker 1: can help untangle this challenging puzzle? And they certainly have
Speaker 1: incentives to do so with the need for power for
Speaker 1: AI and how do the executive orders from Trump sort
Speaker 1: of enable those organizations to play a more leading role
Speaker 1: in the development of nuclear in this country.
Speaker 3: So before the Trump executive authors, there was a note
Speaker 3: I wrote and I guess December and November of last
Speaker 3: year reflecting the fact that Amazon had participated in a
Speaker 3: Series A or B or C investment in x Energy.
Speaker 3: And there is also Google committed to purchase three hundred
Speaker 3: gig ors the capacity of chirostud reactors. So you do
Speaker 3: have hyperscalers, large data center companies coming in saying yes,
Speaker 3: we have an interest in this technology and we're supportive
Speaker 3: of that. But the question has to be is how
Speaker 3: much money are they investing in the company itself versus
Speaker 3: how much are they committing in a power purchase agreement
Speaker 3: for that and so, or how strong is that commitment
Speaker 3: and how quickly can the vendors mobilize the technology. Some
Speaker 3: of these companies have yet to go through the licensing process,
Speaker 3: so there's still licensing risk and construction risk for a
Speaker 3: first of a kind. So the large hyperscalers are circling
Speaker 3: the area looking where to place their bets, and we
Speaker 3: see companies like Amazon being a leader in that effort,
Speaker 3: and I would be curious to see how Meta, Microsoft
Speaker 3: and Google will sort of follow in placing bets on
Speaker 3: various nuclear companies.
Speaker 1: It's so interesting because it's almost for those large tech companies,
Speaker 1: it's the opposite challenge that say the utilities face. The
Speaker 1: utilities don't want to go first, they don't want to
Speaker 1: move too quickly. They want someone else to do the
Speaker 1: work to bring the costs down. The problem that the
Speaker 1: large tech companies face is they need power sooner rather
Speaker 1: than later. Is this technology ready enough? And maybe they
Speaker 1: are less averse to investing in first of a kind
Speaker 1: and being the first mover on some of these But
Speaker 1: actually there's some of these nuclear technology developers are not
Speaker 1: far enough along in the development process and the process
Speaker 1: of getting licensed to meet their needs. And so do
Speaker 1: you think the executive orders could help address some of
Speaker 1: that of that challenge?
Speaker 3: Well, the executive officers address the NRC reform, they're creating
Speaker 3: an environment that's uncertain with regards to the tax incentives
Speaker 3: that are going to be available to the advanced nuclear
Speaker 3: power industry. It's something that's in discussion right now even
Speaker 3: as we sit here talking about nuclear power right now.
Speaker 3: But I think the fundamental thing that the Executive Orders
Speaker 3: done is giving government support to the industry, or vocalizing
Speaker 3: government support. How that can be monetized is very very
Speaker 3: important issue. China and Russia are leading the commercialization of
Speaker 3: nuclear power because they have very strong support from the
Speaker 3: top The Russian government is very interested in nuclear, as
Speaker 3: is the Chinese government in very interested in nuclear We
Speaker 3: have not had a significant because of our nature, because
Speaker 3: of our capitalist system, we tend to not have such
Speaker 3: strong from the top down support. Perhaps this is an
Speaker 3: opportunity through the Executive Orders to demonstrate that yes, we
Speaker 3: have it, and we're starting to see some indication of that,
Speaker 3: specifically with the rapid announcement of the fact that Oklow,
Speaker 3: a project that has been languishing for two years, all
Speaker 3: of a sudden has been announced that now they had
Speaker 3: the go ahead there that one's selected. So the nukea
Speaker 3: industry moves forward like molasses. Hopefully the Executive Orders will
Speaker 3: create an environment where we move some of the uncertainty
Speaker 3: and gives a clear path we're going forward. What's also helping,
Speaker 3: quite frankly, is the fact that there's been such a
Speaker 3: Definius demanded interest in large combined cycle turpins, that the
Speaker 3: backlog for that is now extending to the point that
Speaker 3: perhaps you may not be able to get a guest
Speaker 3: turbine soon enough to meet your requirements. And so if
Speaker 3: you can have a very fast track for an advanced reactor,
Speaker 3: perhaps that might be an option that becomes increasingly more attractive,
Speaker 3: even though the technical readiness is perhaps not there, and
Speaker 3: the technical risk and the regulatory risk still.
Speaker 1: I'm sort of reminded as we talk about this conversation
Speaker 1: of that famous American movie, The Field of Dreams, which
Speaker 1: originated the famous phrase, if you build it, they will come.
Speaker 2: Have you seen that movie? Yes, so you know what
Speaker 2: I'm referring to. It's a good movie. You should check
Speaker 2: it out if you don't know what I'm talking about.
Speaker 1: So it seems like this US nuclear renaissance is a
Speaker 1: bit of a dream right now.
Speaker 2: You know.
Speaker 1: You look at what is possible, and it could be
Speaker 1: so good for the power section in this country. It
Speaker 1: could create jobs in the country, and so the government
Speaker 1: is in this position of trying to build the right
Speaker 1: environment within this framework. As we've mentioned, of a company
Speaker 1: that is inherently driven by the private sector create the
Speaker 1: right environment so that these projects, these technologies will come.
Speaker 1: So I was saying, it reminds me of the field
Speaker 1: of dreams. I'm left with this thought, if you build it,
Speaker 1: they will come. Maybe that's what these executive orders are
Speaker 1: part of. And again, this is not a partisan issue.
Speaker 1: In quite the same way, the previous administration was also
Speaker 1: very pro nuclear. It seems like successive US governments are
Speaker 1: trying to figure out how to build the right environment
Speaker 1: to allow the US to capsulize on the progress that
Speaker 1: has already made in the next generation of nuclear That
Speaker 1: is my takeaway from all of this. Interesting to see
Speaker 1: if you think that's a bad way of thinking of
Speaker 1: it or does that make sense to you, Chris.
Speaker 3: I think it makes a tremendous amount of sense. But
Speaker 3: I'll introduce one final complicating factor. There are five pathways
Speaker 3: to putting nuclear electrons on the grid. There's large reactors,
Speaker 3: which is problematic in the US because of the big
Speaker 3: deployment risk. There are small reactors that we see moving
Speaker 3: forward in Canada and hopefully in the US. Then you
Speaker 3: have advanced reactors, the reactors that offer some innovation and
Speaker 3: a fast reactor, high temperature gas reactor a molten salt
Speaker 3: reactor that are technologically different and perhaps won't be more
Speaker 3: quest competitive and safer. And then you have the microreactors,
Speaker 3: which are very small reactors can be deployed in the
Speaker 3: back of a truck, and the lorry in an airplane yourself.
Speaker 3: And finally, the biggest confusing factor perhaps is the advent
Speaker 3: of fusion. Okay, so if you are looking to buy
Speaker 3: nuclear electrons, there's a big shopping list, five different pathways,
Speaker 3: different timelines, uncertain courts, different technical readiness lists, different types
Speaker 3: of risks. So it's a very confusing landscape for the
Speaker 3: utilities and hyperscalers to operate in right now. And it's
Speaker 3: going to be fascinating to see which one of those
Speaker 3: many many companies that are participating will cross the finish
Speaker 3: line generate reactors or respond to your field of dreams.
Speaker 2: If we build it, they will come.
Speaker 1: Well, you know, thinking of the field of dreams. You know,
Speaker 1: in that movie for those you haven't seen it, Kevin
Speaker 1: Costner builds a baseball field and a bunch of ghosts
Speaker 1: of famous baseball players show up and start playing baseball.
Speaker 1: I don't think the film ever addresses which of the
Speaker 1: Ghosts one at baseball. But this is a little bit
Speaker 1: like from Kevin Costner's point of view, it didn't matter
Speaker 1: which of the ghosts one, but for the ghosts, presumably
Speaker 1: as competitive baseball players, they wanted to have been the
Speaker 1: one to win. So maybe the government here is Kevin Costner.
Speaker 1: So long as somebody wins, that's a good outcome. And
Speaker 1: for the ghosts, well, they've got to turn up to
Speaker 1: the field of the dream and compete, but at least
Speaker 1: they have an opportunity to compete. Chris, this has been,
Speaker 1: as always a fascinating conversation. I hope that there's more
Speaker 1: development so we have an excuse to bring you on
Speaker 1: again because I always enjoy talking to you. But thank
Speaker 1: you very much for joining us today.
Speaker 2: Thank you, Tavi.
Speaker 3: It's always the pleasure.
Speaker 1: Today's episode of Switched On was produced by Cam Gray
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