WEBVTT - Odd Lots: This is how China builds so much nuclear power 0:00:00.560 --> 0:00:04.200 Hi, it's suckh Bloomberg's Odd Lots podcast recently did a 0:00:04.240 --> 0:00:07.160 great episode about the rise of nuclear power in China 0:00:07.880 --> 0:00:11.440 is the only country deploying nuclear at a large scale 0:00:11.520 --> 0:00:14.000 right now, and I thought you would enjoy listening to it. 0:00:15.360 --> 0:00:17.759 So here's the extra episode. We'll be back with a 0:00:17.760 --> 0:00:19.560 new episode of Zero on Thursday. 0:00:23.040 --> 0:00:38.000 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:39.960 --> 0:00:43.640 Hello and welcome to another episode of the Odd Lots podcast. 0:00:43.680 --> 0:00:46.000 I'm Joe Wisenthal and I'm Tracy all the way. 0:00:46.200 --> 0:00:48.120 Tracy, you know, we've been talking a lot about the 0:00:48.240 --> 0:00:51.600 US energy system for obvious reasons, at least when it 0:00:51.640 --> 0:00:53.760 comes to electricity. I don't know about you. I kind 0:00:53.800 --> 0:00:55.200 of feel like the more we talk about it, the 0:00:55.280 --> 0:00:56.160 less I understanding. 0:00:56.440 --> 0:01:00.640 Yes, yes, absolutely, I think there are a couple problems. So, like, 0:01:00.680 --> 0:01:05.360 even beyond the actual different technologies for generating power, there's 0:01:05.400 --> 0:01:09.800 the patchwork of like how different grids work in different states. 0:01:09.840 --> 0:01:15.039 There's the different regulations, the different like interoperability and all 0:01:15.080 --> 0:01:17.760 of that. And then even if we look like beyond 0:01:18.000 --> 0:01:20.560 the US, it gets I guess even more different. 0:01:21.000 --> 0:01:23.560 Yes, well, I sort of wonder maybe we can learn 0:01:23.600 --> 0:01:26.600 something about the US by a little compared and contrast. Right, 0:01:26.920 --> 0:01:28.880 So if we look at the US and we still 0:01:28.880 --> 0:01:32.360 don't totally get how it works, maybe, I don't know, 0:01:32.640 --> 0:01:35.480 just to thought, maybe we'll learn something about the US 0:01:35.520 --> 0:01:38.560 by looking at some different system and then we have 0:01:38.680 --> 0:01:41.520 something to compare it to. It might be a waigh 0:01:41.560 --> 0:01:43.160 in by looking at the outside world. 0:01:43.319 --> 0:01:45.360 I'm a big fan of doing this, by the way, 0:01:45.480 --> 0:01:48.640 just to identify like different choke points in a particular 0:01:48.760 --> 0:01:52.120 domestic process. If you think that the US can't do 0:01:52.200 --> 0:01:56.960 something for whatever unidentifiable reason or I don't know, cultural 0:01:57.080 --> 0:02:00.640 like holdback, but if you look at a different country 0:02:00.720 --> 0:02:04.680 and they're doing it at scale, very very quickly, then 0:02:04.680 --> 0:02:06.880 I think you can learn a lot about yourself. 0:02:07.160 --> 0:02:09.480 Well, that's exactly right. And so one of the things 0:02:09.480 --> 0:02:12.160 again that comes up from time to time here in 0:02:12.200 --> 0:02:15.600 our conversations is nuclear and this is just one example 0:02:15.760 --> 0:02:18.000 of a source of power that may or may not 0:02:18.120 --> 0:02:21.120 be important in our future. But according to and I'm 0:02:21.160 --> 0:02:24.600 looking at a story from the Economist, over the past decade, 0:02:24.840 --> 0:02:28.560 China has added thirty seven nuclear reactors according to the 0:02:28.600 --> 0:02:32.480 International Atomic Energy Agency. I don't know, maybe we've added 0:02:32.520 --> 0:02:34.640 like two. I forget how many there are at that 0:02:34.720 --> 0:02:38.919 Georgia plant. A couple more, maybe restarted. But you know, 0:02:39.160 --> 0:02:41.280 we talk all the time about nuclear and how hard 0:02:41.320 --> 0:02:43.359 it is and how hard the financing is and the 0:02:43.440 --> 0:02:46.160 labor force and the learning laws, and we forgot to 0:02:46.520 --> 0:02:49.399 you know, we forgot how to build them for various reasons. 0:02:49.840 --> 0:02:51.960 But that's not and it's so expensive. There's all these 0:02:51.960 --> 0:02:54.840 cost overruns every time. But apparently that is not the 0:02:54.840 --> 0:02:57.040 case everywhere, and that there are other parts of the world, 0:02:57.080 --> 0:03:01.160 particularly China, where they just keep building at scale, and 0:03:01.240 --> 0:03:03.600 maybe we could learn a little bit of how they 0:03:03.600 --> 0:03:05.359 do that and how they finance it and how they 0:03:05.560 --> 0:03:07.079 avoid forgetting how to build them. 0:03:07.280 --> 0:03:09.960 I think this is so interesting, this particular approach that 0:03:10.000 --> 0:03:12.880 compare and contrast, and it is absolutely true. I think 0:03:12.880 --> 0:03:16.720 the US has the most nuclear reactors out there, like 0:03:16.800 --> 0:03:18.919 almost one hundred or something like that, but it took 0:03:18.960 --> 0:03:21.359 us decades and decades to build them, and as you 0:03:21.480 --> 0:03:25.919 rightly point out, we haven't built many new ones that recently. Meanwhile, 0:03:26.000 --> 0:03:29.160 China is adding more and more, and they make it 0:03:29.200 --> 0:03:31.480 look easy. I mean, I guess they are just like 0:03:31.600 --> 0:03:34.320 giant things to boil water, but you know, China really 0:03:34.320 --> 0:03:36.640 makes it look easy. So what can we learn from China. 0:03:36.680 --> 0:03:38.200 We really do have the perfect guests. By the way, 0:03:38.240 --> 0:03:41.000 we've had this guest on in the past. We talked 0:03:41.040 --> 0:03:43.640 to him about something completely different. Yes. 0:03:44.240 --> 0:03:47.080 This was during the depths of the COVID crisis, Yes, 0:03:47.600 --> 0:03:50.120 and we were talking to this person. He was based 0:03:50.160 --> 0:03:52.240 out in Shanghai and we were talking basically about how 0:03:52.240 --> 0:03:55.480 they were getting food into apartment buildings and staying alive 0:03:56.120 --> 0:03:56.920 during that time. 0:03:57.200 --> 0:04:00.560 Yeah, so that was an interesting sort of logis story 0:04:00.600 --> 0:04:03.000 and it's own right. If you're under complete lockdown and 0:04:03.080 --> 0:04:05.400 a Shanghai apartment building, how do you actually get food? 0:04:05.480 --> 0:04:10.040 And anyway, I'm thrilled because now we're recording this December seventeenth, 0:04:10.080 --> 0:04:13.520 twenty twenty four, we are talking to him in completely 0:04:13.920 --> 0:04:14.560 different times. 0:04:14.600 --> 0:04:16.040 He's been freed from lockdown. 0:04:16.120 --> 0:04:18.520 He is now here in studio with us. So we 0:04:18.640 --> 0:04:22.080 are going to be speaking with David Fishman, senior manager 0:04:22.120 --> 0:04:25.479 at the Lantau Group. He's based in China typically where 0:04:25.520 --> 0:04:29.920 he mostly focuses on the Chinese energy system. So literally 0:04:30.320 --> 0:04:33.040 the perfect guest and a repeat guest. So David, thank 0:04:33.080 --> 0:04:35.440 you for coming on. Ad lads, welcome to New York City, 0:04:35.440 --> 0:04:36.000 Welcome back. 0:04:36.440 --> 0:04:37.240 Thank you for having me. 0:04:37.480 --> 0:04:39.800 What do you do the only other time we talked 0:04:39.800 --> 0:04:41.760 to you, the only thing we knew about you is 0:04:41.800 --> 0:04:44.039 that you were figuring out how to get food into 0:04:44.040 --> 0:04:46.719 your apartment. What do you do now when that's no 0:04:46.800 --> 0:04:47.960 longer the pressing issue? 0:04:48.120 --> 0:04:50.440 Yeah? Sure. So I work at a company called the 0:04:50.480 --> 0:04:55.320 Lantau Group. We are an economic consultancy. We're doing power 0:04:55.320 --> 0:04:59.280 and gas consulting across apac and so I'm focused on China. 0:04:59.320 --> 0:05:02.560 I'm in the China. We're doing the business of electricity. 0:05:03.040 --> 0:05:05.640 So for me, that means either somebody who wants to 0:05:05.680 --> 0:05:10.039 build an electricity generation asset, wants to sell one, wants 0:05:10.040 --> 0:05:13.440 to sell a portfolio of assets, wants to invest in one, 0:05:13.520 --> 0:05:15.440 maybe through a fund or as some other type of 0:05:15.440 --> 0:05:18.880 investment product. And then on the what we'd call our downstream, 0:05:19.000 --> 0:05:22.400 who uses the electricity right, your major multinationals, your factories, 0:05:22.400 --> 0:05:26.119 anybody who uses electricity as an input to produce things. 0:05:26.440 --> 0:05:29.480 So we're working in the business of electricity, trying to 0:05:29.480 --> 0:05:33.880 make buying and selling electricity more economic for everybody involved. 0:05:34.200 --> 0:05:36.719 Well, I'm just going to dive into the nuclear aspect 0:05:36.839 --> 0:05:39.520 of this. Then, you know, Joe gave us some contours 0:05:39.600 --> 0:05:43.520 around how much China is currently building. When did China 0:05:43.920 --> 0:05:47.359 decide that it was interested in nuclear and what was 0:05:47.400 --> 0:05:50.040 the sort of like thought process the strategy about how 0:05:50.120 --> 0:05:53.720 nuclear would fit into everything else, including the coal power 0:05:53.720 --> 0:05:55.799 that China is famous for using. 0:05:56.560 --> 0:05:59.679 Yeah, I mean the history of the Chinese civil nuclear 0:05:59.720 --> 0:06:02.400 power industry goes back to stems back to the eighties. 0:06:02.880 --> 0:06:06.120 So looking at you know, the mid to late eighties 0:06:06.400 --> 0:06:09.400 is when China was signing agreements to bring in its 0:06:09.440 --> 0:06:12.920 first nuclear reactor technology. At the time, it was there 0:06:12.920 --> 0:06:15.480 are two different paths that were pursuing. They signed an 0:06:15.520 --> 0:06:18.680 agreement with Framatome, a French company, to bring over one reactor, 0:06:19.080 --> 0:06:21.680 and they developed a domestic reactor with at the time 0:06:21.920 --> 0:06:25.680 the Soviet Union to have a domestic technology tree as well. 0:06:25.760 --> 0:06:29.400 So in the eighties, China was actually experiencing some pretty 0:06:29.480 --> 0:06:33.000 rapid economic growth, especially in the late eighties, and looking 0:06:33.080 --> 0:06:36.719 to expand its power supply rapidly and at the time 0:06:36.760 --> 0:06:39.200 it was quite tight, and so nuclear was seen as 0:06:39.200 --> 0:06:42.360 a potential way to expand the power supply and get 0:06:42.680 --> 0:06:45.320 into a power generation for what was at the time 0:06:45.400 --> 0:06:47.000 something very new for China. 0:06:47.240 --> 0:06:49.880 What did you so I mentioned literally from just reading 0:06:49.920 --> 0:06:53.040 the first paragraph of a paywalled economist story that number 0:06:53.080 --> 0:06:55.160 of about thirty seven new nuclears. I saw that one too, 0:06:55.920 --> 0:06:58.360 just like I just google how many new clear reactors 0:06:58.360 --> 0:07:00.520 are big built in China? Scrolled down where I find 0:07:00.560 --> 0:07:03.440 something in the Google search. This is how the research 0:07:03.600 --> 0:07:06.479 is done, folks. Well, why don't you, in your words, 0:07:07.000 --> 0:07:10.200 give us a sense of the size and scale of 0:07:10.480 --> 0:07:15.520 Chinese civil nuclear generation and where it's going, and then 0:07:15.560 --> 0:07:18.080 sort of like the role it generally plays in. 0:07:18.040 --> 0:07:22.040 The overall portfolio there, yeah, surescribe it. Yeah, sure so. 0:07:22.040 --> 0:07:25.400 So nuclear in China has the interesting status of being 0:07:25.440 --> 0:07:28.840 both relatively large and still somehow small. Large in the 0:07:28.880 --> 0:07:31.040 sense that it's one of the largest operating fleets in 0:07:31.080 --> 0:07:33.400 the world. Right, You've got you know, fifty almost sixty 0:07:33.440 --> 0:07:38.800 reactors operating, We're talking about nearly sixty gigawatts of generation capacity. 0:07:39.040 --> 0:07:42.120 But then in the context of China's entire generation fleet, right, 0:07:42.120 --> 0:07:45.800 they've got well over a thousand gigawatts of coal and 0:07:45.840 --> 0:07:48.400 then many more thousands of gigawatts of wind and solar. 0:07:48.840 --> 0:07:51.320 So it's both large in the context of the world, 0:07:51.360 --> 0:07:54.320 but also small. And that's the case for a lot 0:07:54.320 --> 0:07:55.960 of things in China. The thing that can be large 0:07:56.000 --> 0:07:57.280 in China canoso And what's. 0:07:57.160 --> 0:07:59.800 The ambition for you know, looking out you know, in 0:07:59.840 --> 0:08:01.800 a five year plan. I don't know how whether they 0:08:01.840 --> 0:08:05.720 do that for energy? Two? Where is nuclear potentially? How 0:08:05.800 --> 0:08:08.520 much could nuclear be a thing? What's the size and 0:08:08.560 --> 0:08:09.440 scale of the ambition? 0:08:09.880 --> 0:08:12.520 Yeah, sure so long term? I mean it depends on 0:08:12.640 --> 0:08:16.480 how your energy planners and your economic planners and vision 0:08:16.680 --> 0:08:19.080 the long term makeup of the grid. What type of 0:08:19.080 --> 0:08:21.840 power are we using in twenty fifty Is it going 0:08:21.880 --> 0:08:23.680 to be a little bit or a medium amount or 0:08:23.680 --> 0:08:26.160 a lot of nuclear? So it's scenarios, right, and China 0:08:26.160 --> 0:08:29.160 has scenarios too, for a high end a low end. 0:08:29.280 --> 0:08:33.360 So the recent scenarios that I've seen, Originally it was 0:08:33.440 --> 0:08:36.959 saying no less than three hundred gigawatts two hundred and 0:08:36.960 --> 0:08:39.199 fifty three hundred gigawats, so two hundred and fifty or 0:08:39.200 --> 0:08:42.600 three hundred reactors, right, two hundred and fifty units. So 0:08:42.800 --> 0:08:44.920 the United States has just about one hundred right now. 0:08:45.000 --> 0:08:46.920 So if they got to that scenario, it would be 0:08:46.960 --> 0:08:49.080 about two and a half times what the US has 0:08:49.200 --> 0:08:49.600 right now. 0:08:50.120 --> 0:08:53.760 So what's the process by which a new nuclear reactor 0:08:54.040 --> 0:08:56.640 gets built in China, and how much does it differ 0:08:56.920 --> 0:08:58.840 from what goes on in the US. 0:08:59.360 --> 0:09:02.880 Sure, well, the steps of the process are actually very similar. 0:09:03.440 --> 0:09:06.280 These are international best practices for how you build these 0:09:06.360 --> 0:09:09.200 types of infrastructure. So you have to choose a site. 0:09:09.280 --> 0:09:12.480 You're going through a siting process and environmental impact report. 0:09:12.559 --> 0:09:15.200 Maybe you've got to make sure the local sea life 0:09:15.240 --> 0:09:18.760 is not going to be affected by warm water being discharged, 0:09:18.800 --> 0:09:22.840 there's no endangered species nearby, all those different aspects. So 0:09:22.880 --> 0:09:25.160 you choose your site. That takes a few years. You 0:09:25.240 --> 0:09:28.240 have consultation period, there's a period for the public to 0:09:28.400 --> 0:09:32.440 maybe express their dissatisfaction. This happens in China too. And 0:09:32.600 --> 0:09:35.960 when the site is finally selected, then you start pre construction. 0:09:36.320 --> 0:09:39.679 You can level the site, you can connect communications utilities, 0:09:39.760 --> 0:09:41.959 you can do all your pre groundwork, and then we're 0:09:42.000 --> 0:09:45.679 waiting for a really key milestone called FCD. That's first 0:09:45.760 --> 0:09:49.360 concrete need and that's when the first barrel of safety 0:09:49.400 --> 0:09:52.680 related concrete is poured at the site. And so that 0:09:52.720 --> 0:09:55.680 would be the beginning of your construction of your containment building. 0:09:56.000 --> 0:09:59.640 And so from FCD to your full construction period, you 0:09:59.640 --> 0:10:03.560 do construction, you do installation, you have commissioning. Maybe you 0:10:03.760 --> 0:10:06.679 encounter some issues during commissioning, you do trouble shooting right, 0:10:06.720 --> 0:10:09.680 and eventually you fully connect. You connect it, you load 0:10:09.760 --> 0:10:12.440 your fuel, you have your first criticality the first time 0:10:12.480 --> 0:10:14.800 that you know, fission starts in the reactor. Then you 0:10:14.840 --> 0:10:17.120 connect it to the grid and then you get up 0:10:17.120 --> 0:10:18.720 to one hundred percent power and you got a nuclear 0:10:18.760 --> 0:10:20.880 power plant. If you do it quick, we'll you're looking 0:10:20.920 --> 0:10:22.839 at ten to twelve years. If you do it not 0:10:22.880 --> 0:10:24.760 so quick, you're looking at a lot more than that. 0:10:25.360 --> 0:10:27.520 So it takes a long time in China too, So 0:10:27.679 --> 0:10:29.720 you know, we look at you as construction build. I 0:10:29.760 --> 0:10:33.040 was like, oh can't we It's a log process anywhere 0:10:33.040 --> 0:10:35.760 you look. I want to ask about the financing. So 0:10:35.800 --> 0:10:38.520 if there's a new who's paying for this? And also 0:10:39.040 --> 0:10:41.120 how are they selling this energy? Because one thing I 0:10:41.160 --> 0:10:45.160 get the impression of is that setting aside the cost 0:10:45.200 --> 0:10:48.160 of building a new nuclear reactor, which is an expensive, 0:10:48.200 --> 0:10:52.880 time consuming process. The electricity market structure also seems to 0:10:53.000 --> 0:10:55.280 matter a lot because you need a certain amount of 0:10:55.400 --> 0:10:58.280 guaranteed off take, You need a certain amount of price 0:10:58.320 --> 0:11:01.880 stability if the price robs to zero for a long time, 0:11:01.960 --> 0:11:04.920 because there's it's very sunny and windy in that area, 0:11:05.559 --> 0:11:08.760 and suddenly you're that's screwing with the economics of it. 0:11:09.080 --> 0:11:12.480 And so market structure and financing are both important. Talk 0:11:12.520 --> 0:11:15.000 to us about how that works in China versus two. 0:11:15.720 --> 0:11:18.480 Right. Sure, So the builders, right, the companies that are 0:11:18.480 --> 0:11:22.360 constructing and eventually owning the assets are all state owned enterprises. Okay, 0:11:22.400 --> 0:11:24.760 So you've got these great big sos. Their job is 0:11:24.800 --> 0:11:27.319 to own and operate nuclear power plants. And so when 0:11:27.320 --> 0:11:29.840 they go out to secure financing, of course they're securing 0:11:29.920 --> 0:11:32.600 financing from state owned banks as well. They're going to 0:11:32.600 --> 0:11:36.160 be getting very preferential loan treatment, right, very low percentage 0:11:36.200 --> 0:11:38.480 rates maybe two percent, one and a half percent, things 0:11:38.559 --> 0:11:42.240 like that. For a huge infrastructure like that, we're talking billions. 0:11:41.760 --> 0:11:43.440 Of cultural rate, not the spread. 0:11:44.120 --> 0:11:48.079 Okay, keep going, so very very low rates because again 0:11:48.360 --> 0:11:50.520 they have a mandate to build. This is state banks, 0:11:50.559 --> 0:11:53.840 state infrastructure, and state builders. They need to build these things. 0:11:54.120 --> 0:11:57.520 And then when they're going out to sell power right now, 0:11:57.520 --> 0:12:01.240 they're given a guaranteed on grid rate. So the grid 0:12:01.280 --> 0:12:04.400 company and the power regulators say, when you complete your 0:12:04.400 --> 0:12:06.600 plant and you start selling power, we will make sure 0:12:06.640 --> 0:12:09.080 you receive this much for every kilo lot hour of 0:12:09.080 --> 0:12:11.840 power that you send into the grid. Long term, they 0:12:11.920 --> 0:12:14.240 want to marketize it. They want to have that exposed 0:12:14.280 --> 0:12:17.079 to the vagaries of the markets the same way that 0:12:17.080 --> 0:12:19.760 you would see maybe in the United States or Western Europe, 0:12:20.160 --> 0:12:22.920 and that will be an adjustment for China's nuclear industry. 0:12:23.320 --> 0:12:26.040 Historically they have only operated on this kind of fixed 0:12:26.040 --> 0:12:26.720 feed and rate. 0:12:27.600 --> 0:12:30.560 So, I mean, that's a pretty big comparative advantage if 0:12:30.600 --> 0:12:34.960 you're getting subsidized financing from a state owned enterprise or 0:12:35.000 --> 0:12:38.280 something like that. Plus at the moment you have that 0:12:38.400 --> 0:12:41.000 guaranteed off take, even though they might want to move 0:12:41.040 --> 0:12:44.000 to a market based system before. It also strikes me 0:12:44.040 --> 0:12:47.000 that there are a few other potential comparative advantages, like 0:12:47.360 --> 0:12:52.200 lots of ready labor, lots of manufacturing capacity presumably that's 0:12:52.240 --> 0:12:54.480 able to make the stuff you need for these things. 0:12:54.840 --> 0:12:59.040 Walk us through all the different advantages that China has 0:12:59.120 --> 0:12:59.960 in this process. 0:13:00.440 --> 0:13:02.760 Yeah, sure, so if you maybe you've seen before or not, 0:13:02.840 --> 0:13:05.040 if you look at one of those like stacked bar charts, 0:13:05.040 --> 0:13:07.920 that it compares all the cost components of you know, 0:13:08.000 --> 0:13:10.400 building one of these things in China versus Europe versus 0:13:10.440 --> 0:13:12.839 the United States. It's not like you'd point to any 0:13:12.880 --> 0:13:15.800 single component of the stacked bar and say, ah, that's it. 0:13:15.840 --> 0:13:18.480 That's the key. That's why they're so cheap. Every single 0:13:18.520 --> 0:13:21.400 component is cheaper. Right, You've got your cost of capital 0:13:21.480 --> 0:13:25.840 is lower, You've got your construction timeline is so tightly managed. 0:13:25.480 --> 0:13:27.719 Right, and so you're saving on interest costsactly. 0:13:28.040 --> 0:13:29.680 And the sooner you can connect to the grid and 0:13:29.679 --> 0:13:32.959 start selling power, that's when you start making your money back. Right. 0:13:33.040 --> 0:13:36.040 So every day that you go over your construction schedule 0:13:36.040 --> 0:13:37.960 as a hunt, we say in the US about a 0:13:38.000 --> 0:13:41.520 million dollars of missed power sales and then also about 0:13:41.520 --> 0:13:43.920 a million dollars of interest payments. So here you got 0:13:43.960 --> 0:13:47.240 this two million dollars spread every day over your construction 0:13:47.360 --> 0:13:50.520 schedule that was originally planned. Like that's just mind boggling. 0:13:50.840 --> 0:13:54.320 Then we look at the production capacity, right, China's incredible 0:13:54.360 --> 0:13:58.719 industrial production capacity. We're talking about these heavy forged components. 0:13:58.800 --> 0:14:01.000 Maybe only a couple of companies in the whole world 0:14:01.040 --> 0:14:04.760 can make things like the reactor pressure vessel, the steam generators, 0:14:05.160 --> 0:14:09.079 the pressure risers, the primary piping, the reactor cool and pump, 0:14:09.120 --> 0:14:11.160 all these things. And there's like three companies in the 0:14:11.160 --> 0:14:13.640 world that can make these, and now at this point, 0:14:13.679 --> 0:14:15.920 several of them are in China. And when they need 0:14:15.960 --> 0:14:18.040 to prototype, when they need to iterate, when they need 0:14:18.080 --> 0:14:21.280 to troubleshoot something, it's all in one industrial cluster. It's 0:14:21.280 --> 0:14:25.360 all a company and its subsidiaries or its sister partner companies, right, 0:14:25.560 --> 0:14:28.080 and so they can quickly trouble through things really quickly. 0:14:28.280 --> 0:14:31.160 So that's going to be your industrial production component very strong. 0:14:31.440 --> 0:14:35.680 You've got you know, people work longer hours, they'll work 0:14:35.720 --> 0:14:39.000 through weekends, they'll work through holidays. China is really really 0:14:39.320 --> 0:14:42.920 competent at building very large construction, very large infrastructure. 0:14:43.000 --> 0:14:43.160 Right. 0:14:43.440 --> 0:14:45.360 It could be a dam, or a bridge, or a 0:14:45.480 --> 0:14:48.480 highway or a high speed railway, or a nuclear reactor. 0:14:48.520 --> 0:14:51.640 When it comes to the construction know how of being 0:14:51.680 --> 0:14:54.440 able to do it on time and like an oiled machine, 0:14:54.680 --> 0:14:57.200 they're winning there too. And then we talk about the 0:14:57.240 --> 0:15:00.560 actual way they're building the nuclear power plant. Something really 0:15:00.600 --> 0:15:04.240 interesting here. This was actually pioneered by Westinghouse out of 0:15:04.280 --> 0:15:08.840 the United States, something called modularized construction, where on site 0:15:09.040 --> 0:15:13.480 or off site, you're prefabricating large portions of the reactor, 0:15:13.800 --> 0:15:16.400 portions of the containment building, and so you can work 0:15:16.440 --> 0:15:20.280 on individual components at the same time, bring it to site, 0:15:20.320 --> 0:15:22.600 and then you get the largest crane in the world 0:15:22.600 --> 0:15:26.520 that lifts this massive, massive, pre assembled component into place. 0:15:26.800 --> 0:15:28.560 When you're able to work like that, you can cut 0:15:28.600 --> 0:15:32.840 down the construction schedule even more Interestingly, Westinghouse pioneered that 0:15:33.160 --> 0:15:35.840 that they haven't been really successful in implementing it in 0:15:35.880 --> 0:15:39.080 their recent builds. China, on the other hand, learned from 0:15:39.080 --> 0:15:43.040 Westinghouse and has been very successful with this modulized construction approach. 0:15:43.400 --> 0:15:46.120 Can you talk more about that, because it's very intuitive, right, 0:15:46.200 --> 0:15:48.240 the idea that the more you can build at the 0:15:48.360 --> 0:15:51.000 factory and the less you have to build on site 0:15:51.480 --> 0:15:54.040 makes it easy and a lot of the so far, 0:15:54.080 --> 0:15:57.320 it seems like mostly hype about small modular reactors in 0:15:57.360 --> 0:15:59.360 the US is sort of on this idea, like why 0:15:59.440 --> 0:16:03.920 don't start a project from scratch? Why is it apparently hard? 0:16:04.160 --> 0:16:07.760 Even though in theory that seems very obvious, because I 0:16:07.760 --> 0:16:10.560 don't know if there actually are any modular reactors in 0:16:10.600 --> 0:16:13.000 the US despite the sort of intuitive appeal. 0:16:13.680 --> 0:16:17.240 So I think I gotta clarify here, there's modularized construction 0:16:17.440 --> 0:16:21.320 and there's small modular reactors. Okay, so SMRs are small 0:16:21.360 --> 0:16:24.480 modular reactors. They refer to a situation where the entire 0:16:24.520 --> 0:16:26.400 reactor is encased in a single unit. 0:16:26.520 --> 0:16:28.560 Oh okay, got it. Yeah, but it's still this idea 0:16:28.600 --> 0:16:31.840 that the lot of the fabrication process happens not at 0:16:31.840 --> 0:16:35.560 the site itself. Again, something that feels highly intuitive and 0:16:35.640 --> 0:16:37.640 apparently easier so than time. 0:16:37.840 --> 0:16:41.720 Well so my understanding from the Westinghouse design approach when 0:16:41.720 --> 0:16:43.960 they used this for the first time in designing the 0:16:44.000 --> 0:16:46.800 AP one thousand technology that we're built here in Vocal 0:16:47.160 --> 0:16:50.560 in the United States, is one of the major barriers. Well, 0:16:50.560 --> 0:16:53.040 there's terveral. There's always going to be regulatory barriers, right, 0:16:53.080 --> 0:16:55.360 it's a new way of doing things. Anytime it's a 0:16:55.400 --> 0:16:57.440 new way of doing things, the regulator is going to 0:16:57.520 --> 0:16:59.560 want you to jump through a million hoops to try 0:16:59.600 --> 0:17:02.680 to clarify and justify that what you're doing is defensible 0:17:03.000 --> 0:17:05.679 and safe. So you've got that one, of course, But 0:17:05.760 --> 0:17:10.200 then the actual logistics of lifting these massive, massive, we're 0:17:10.240 --> 0:17:15.040 talking thousands of tons of prefabed components. They actually had 0:17:15.080 --> 0:17:18.680 to design and then especially contract the world's largest heavy 0:17:18.720 --> 0:17:21.960 lift crane. Westinghouse did just to be able to lift 0:17:22.000 --> 0:17:24.480 the first one. They worked with an American company to 0:17:24.480 --> 0:17:28.600 design to custom design this giant fixed base ring crane 0:17:28.680 --> 0:17:31.560 that requires other cranes to build it. Then you have 0:17:31.640 --> 0:17:34.760 this giant giant crane that's in place and it swings around. 0:17:34.760 --> 0:17:37.480 It usually works for two different units to build two 0:17:37.520 --> 0:17:40.919 reactors at the same site. Interestingly, they weren't able to 0:17:41.040 --> 0:17:43.760 use this giant giant crane in China because of a 0:17:43.960 --> 0:17:48.360 design miscommunication. The first AP one thousands that Westinghouse tried 0:17:48.400 --> 0:17:51.320 to build in China, they didn't leave space on the 0:17:51.359 --> 0:17:54.399 site to put the giant crane, so in the end 0:17:54.480 --> 0:17:57.720 they had to use a very very large roller crane instead, 0:17:57.760 --> 0:17:59.800 which just about did the job, but it forced them 0:17:59.800 --> 0:18:02.040 to change the way they built it. China has learned 0:18:02.080 --> 0:18:04.120 from that though, So the newest you know, QUA long 0:18:04.119 --> 0:18:07.639 one reactors that China builds, they use a giant ring crane. 0:18:07.680 --> 0:18:10.119 I believe they use a zoom lion to the Chinese 0:18:10.160 --> 0:18:12.480 brand has designed one of these, built one of these 0:18:12.680 --> 0:18:15.400 massive ultra heavy lift cranes as well, and so now 0:18:15.440 --> 0:18:28.920 that's you know, they're reaping those benefits. 0:18:33.000 --> 0:18:36.640 I have a slightly random question, which is building nuclear 0:18:36.680 --> 0:18:40.480 reactors how customized. Do the components that go into these 0:18:40.640 --> 0:18:43.879 actually have to be like how much does the design 0:18:44.040 --> 0:18:46.000 actually vary site to site? 0:18:46.920 --> 0:18:50.520 Well, if they are the same series of reactors, right, 0:18:50.640 --> 0:18:53.040 you could say the AP one thousand, right, that's a 0:18:53.080 --> 0:18:55.320 base unit. Now the ones that are built in vocal 0:18:55.440 --> 0:18:57.960 and the ones that were being built at Summer in 0:18:58.000 --> 0:19:00.760 South Carolina before that was canceled, those are probably a 0:19:00.800 --> 0:19:03.679 little bit different, right, but you know, largely part of 0:19:03.680 --> 0:19:05.680 the same series. The ones that were built in China 0:19:05.680 --> 0:19:07.520 were built on that same platform, but they would have 0:19:07.520 --> 0:19:09.959 been modified a little bit for the Chinese context. They 0:19:10.000 --> 0:19:13.439 called them Chinese AP one thousand CAP one thousands, But 0:19:13.720 --> 0:19:16.760 you could say they're substantially the same reactor with with 0:19:16.840 --> 0:19:20.399 small modifications. When we start talking about different series, though, 0:19:20.480 --> 0:19:23.200 if we say like the French design versus the US 0:19:23.320 --> 0:19:26.959 design versus what's being sold now in Korea or something 0:19:27.040 --> 0:19:31.399 like that, you'll see more similarities to their predecessors that 0:19:31.440 --> 0:19:35.440 they came up through different generations of technology. So like Korea, 0:19:35.520 --> 0:19:38.800 you'd see similarities to the old g Hatachi reactors because 0:19:38.840 --> 0:19:41.800 that's where they got their technology originally. Then you'd see 0:19:41.800 --> 0:19:44.520 to say a modern EP one thousand, these are different 0:19:44.520 --> 0:19:46.560 tech trees from different competitors. 0:19:47.080 --> 0:19:50.520 So if I'm a guy on Twitter listening to this, 0:19:50.640 --> 0:19:52.320 and I am a guy on Twitter, except I'm talking 0:19:52.400 --> 0:19:54.199 in this, but I'm just a guy on Twitter, and 0:19:54.240 --> 0:19:57.960 I'm hearing you talk about Okay, they get preferential lending 0:19:58.000 --> 0:20:01.919 from the state owned bank. The company me is state owned. 0:20:02.520 --> 0:20:05.399 Probably the crane company is state owned. There's probably a 0:20:05.440 --> 0:20:08.080 few other state owned businesses. And I think, yeah, okay, 0:20:08.240 --> 0:20:11.119 you know, they're really good at building reactors fast, but 0:20:11.200 --> 0:20:15.240 there must be some sort of accumulated debts and inefficiencies 0:20:15.280 --> 0:20:19.040 that come with all of these all of these entities 0:20:19.320 --> 0:20:22.359 that have something other than a profit motive. And you know, 0:20:22.480 --> 0:20:26.359 probably you know, I don't know that my intuition or 0:20:26.359 --> 0:20:28.720 my response to you, or my my dunk on you 0:20:28.880 --> 0:20:31.480 is that there's going to be all these accumulated losses 0:20:31.640 --> 0:20:34.960 that ripple through the systems on account of the fact 0:20:35.000 --> 0:20:38.479 that it's SOOE working with see after SOE, do we 0:20:38.600 --> 0:20:44.040 have any sense of how economic these projects actually are? 0:20:44.200 --> 0:20:46.280