Catalyst with Shayle Kann - The cost of nuclear

Episode Date: August 15, 2024

Editor’s note: There’s new interest in nuclear power from electric utilities, the White House, and the public. While NuScale’s deal to build a small modular reactor failed last year, TerraPower is currently building the U.S.’s first advanced non-light water reactor in Wyoming. So we’re revisiting an episode from last November with The Good Energy Collective’s Dr. Jessica Lovering unpacking one of nuclear’s biggest challenges: cost. Nuclear construction costs in the U.S. are some of the highest in the world. Recent estimates put the cost of building conventional nuclear reactors at more than $6,000 per kilowatt, as measured by overnight capital cost. But high costs are a problem for new small modular reactors (SMRs) too, killing what was going to be the country’s first SMR before it got built. Meanwhile, South Korea has some of the lowest costs in the world. Estimated overnight capital costs for reactors in South Korea are closer to $2,200 per kilowatt.And then there are countries like China, France, and the United Arab Emirates that fall between those extremes. So why the wide range in costs?  In this episode, Shayle talks to Dr. Jessica Lovering, co-founder and executive director at the Good Energy Collective, a non-profit that researches and promotes policies that support nuclear power. A former director of energy at the Breakthrough Institute, she also authored a comprehensive study of nuclear construction costs in 2016.  Shayle and Jessica talk about things like: What goes into the cost of construction and South Korea’s secret sauce for low-cost nuclear reactors Why Jessica thinks we should manufacture and regulate reactors like large aircraft Driving down costs with modularity, small reactors, passive safety features, and more construction  Why changing regulations might be necessary, but not a silver bullet  Why the pro- and anti-nuclear camps talk past each other — and why Jessica says she’s somewhere in between  Recommended Resources: Latitude Media: Is large-scale nuclear poised for a comeback? Energy Policy: Historical construction costs of global nuclear power reactors National Academy of Engineering: Chasing Cheap Nuclear: Economic Trade-Offs for Small Modular Reactors Joule: Evaluating the Role of Unit Size in Learning-by-Doing of Energy Technologies Science: Granular technologies to accelerate decarbonization Canary: Future of small reactors at stake as NuScale deal flops Catalyst is brought to you by Anza, a revolutionary platform enabling solar and energy storage equipment buyers and developers to save time, increase profits, and reduce risk. Instantly see pricing, product, and counterparty data and comparison tools. Learn more at go.anzarenewables.com/latitude. Catalyst is brought to you by Kraken, the advanced operating system for energy. Kraken is helping utilities offer excellent customer service and develop innovative products and tariffs through the connection and optimization of smart home energy assets. Already licensed by major players across the globe, including Origin Energy, E.ON, and EDF, Kraken can help you create a smarter, greener grid. Visit kraken.tech. Catalyst is brought to you by Antenna Group, the global leader in integrated marketing, public relations, creative, and public affairs for energy and climate brands. If you're a startup, investor, or enterprise that's trying to make a name for yourself, Antenna Group's team of industry insiders is ready to help tell your story and accelerate your growth engine. Learn more at antennagroup.com.

Latitude Media, podcast at the frontier of climate technology. I'm Shail Khan, and this is Catalyst. There are ways that how we license reactors could be modernized to meet the needs of these advanced reactors that have all these passive safety features. But I don't think it's a silver bullet. With new nuclear, it's all about physical safety, not an engineered system. But that's splitting atoms. When utilities need flexible,

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CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fish Tank PR, an award-winning PR firm focused on climate and energy tech, renewables, and sustainability. Fish Tank is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight, and gets results, you'll like Fish Tank PR. To learn more about Fish Tank's approach, visit fish tankpr.com. That's F-I-S-C-H-F-T-T-T-T-T-T-P-R.com. That's F-I-S-C-T-T-T-T-T-E-S-T-T-E-S-T-T-P.

I'm Shail Khan. I invest in revolutionary climate technologies at energy impact partners. Welcome. Well, nuclear is hot again. There are bills going through Congress to try to unstick our very sticky nuclear licensing and development problem in the United States. There's funding going towards new projects. There are hyperscalers who are trying desperately to get capacity. from nuclear projects so they can get 24-7 clean energy. The companies that own a bunch of merchant nuclear in the United States are seeing their stock prices rise. It's cool to be talking about nuclear again.

And so I thought this would be a good time to go back and revisit a conversation that I had last year with Dr. Jessica Lovering. She's the founder and executive director of the Good Energy Collective and a nuclear expert. And we talked not so much about what exactly is the bottle. in building nuclear in the United States and more about the cost side of nuclear. Why does it cost what it costs when we build it here, when we have built it here, which is vanishingly few times in recent decades? But what does it cost in other countries as well? And how can we get down

that cost curve if indeed we are going to see a nuclear renaissance here in the United States? So we'll be back with a new episode next week. But in the meantime, here's my conversation with Jessica. Jessica, welcome. Hi, thanks for having me. I'm excited to talk to you about the cost of nuclear, which is the topic that we want to talk about here. I think it's difficult to talk about the cost of nuclear without talking about a bunch of other things related to nuclear, obviously, regulation and things like that. So we're going to see as much as we can how to talk about all of that through the lens of cost, ultimately, which is one among a bunch of variables that are important, I think, as we think about the future of nuclear fission. But before we get directly

into cost, I think we're going to talk a lot about the global context here, because I know there's a big difference between what's going on here in the U.S. and what's going on in lots of other countries. So let's start with the global context. Where in the world is there a lot of nuclear development activity today and where is there relatively little? Yeah. So I think from a U.S. context or a U.S. audience, nuclear can feel pretty stagnant because we haven't built. We've barely built any nuclear in the last 30 years. But globally, you know, there's huge growth in deployment of nuclear. So nuclear is mainly being built where there is rapid growth in demand for electricity, because nuclear is very large-scale technology. So East Asia, South Asia, Central Asia, primarily, places like

China, India, South Korea. But there are also like over 30 countries that are looking to develop their first nuclear power plants. We call them these like nuclear newcomers or nuclear aspirin countries. This is a lot of lower-income, middle-income countries that are still industrializing. So it's a lot of places across Asia but also sub-Saharan Africa, Central America, South America. So there's a lot of places that are interested in nuclear. And some of the countries that have joined recently that have started or have nuclear under construction, United Arab Emirates has brought online. They're about to bring their fourth reactor online, but this is their first nuclear power plant.

Each reactor is huge, so it's 5.6 gigawatts of power. and it'll be 20%. That's one project? One project, four reactors. 5.6 gigawatts for a single project. Yeah. Would that be, what's the largest nuclear project in the world? I believe it's in South Korea and it's eight reactors.

So, yeah, they can get pretty big. The largest power plants in the world are all nuclear power plants. The largest power plant in the U.S. is a nuclear power plant. And they can generate huge amounts of electricity. But I think what's crazy about the UAE project is that this is 20% of their electricity when the project's complete. And it took, you know, a decade to get it up and running. Other countries that have their first projects under construction, Turkey, Egypt, Bangladesh, there's a lot of interest in Eastern Europe. We can come back to that, like Romania and

Poland. But we're also seeing, you know, places that already have a lot of experience with nuclear are looking to expand or build new projects in light of recent energy crisis after the Russian invasion of Ukraine and the shutoff of Russian gas. So places like Sweden, the UK, even Belgium, which had a planned phase out of nuclear power, putting their phase out on hold for 10 years. So a lot of places are rethinking nuclear, even in wealthy countries that already were reconsidering nuclear, looking to end nuclear in favor of renewables, are now rethinking that. So there's a lot in flux right now. So if we were stepping back and just looking at the global picture, like what would the

curve of nuclear development have looked like over the last 30 years or something like that on a global basis? Yeah. So if you look at just the deployment curve, it really was fast in the 70s and 80s, and it has leveled off. It's growing again, but it's pretty slow and it's definitely slow in comparison to just growth in energy demand overall. It's not the scale it was in the 70s and 80s there was this huge explosion. That's a terrible term. Huge growth in this year. I'm sure working on nuclear all the time,

you have to be particularly careful about the random terms that you use. So we don't see that kind of rapid growth, but there is still growth. There was a big drop after Fukushima. A lot of countries closed reactors, short term or permanently. And so we're seeing a rebound from that now,

but it's slow growth. I think unlike what happened in the U.S., there were still places that had big nuclear fleets building in the 90s and early 2000s. Like France and Japan kept building nuclear. But places like the U.S., which still has the largest fleet of nuclear power in the world, really stopped in the 80s. Okay. So one of the reasons I wanted to talk about the global context is because, as I understand it, the cost of nuclear, the cost of nuclear power. and the capital cost of developing nuclear projects is quite variable from location to location.

And so this is sort of the first key point. So how variable? Like if I was looking at the low end and high end globally of what it cost to build a nuclear reactor or a nuclear project, like how different are those costs from each other? That's a great question. It is quite a big range

where something like a solar panel, it's pretty similar globally. Yeah, there are differences, right? Like the cost of modules doesn't vary that much. It varies a little bit globally. The cost of installation does vary. And so, you know, at utility scale, there's meaningful variability, but it's not day and night. It's like once you get down to residential solar, then people will point out to you that it costs like a third as much to install in Australia as it does in the U.S.

But there's some variability. But my sense is that the variability is higher in nuclear, I think. Definitely. And there's not, while there used to be a lot more. more trade in nuclear? Like the U.S. used to export a lot of nuclear, commercial nuclear around the world. It's more today built like an infrastructure project. So it's very country-specific. So the cost can really range, I would say, the cheapest nuclear in the world. And I'm so glad that your audience can understand if I say dollars per kilowatt is in South Korea. And that's about

$2,200 per kilowatt. And that's the cost of reactors that have been built recently. This is like current day. So $2,200 a kilowatt. So that's a good benchmark for us to start talking about. So that's the low end. What's the high end? Yeah.

And I was just looking at the, you know, it can be hard to get these costs in this number for these large projects that took decades to bill. But the Vogel project, which just finished in the U.S., is probably at the high hand. I think the project that just came online in Finland is probably up at this level as well. It's about $8,000 per kilowatt, so four times more. Yeah, so it's a big range. And the U.S., you know, in terms of thinking about like a moonshot, like what sort of goal would you have for the cost of nuclear? Under $2,000 per kilowatt is really the goal that people think to make nuclear cost competitive with.

natural gas, it would need to be under $2,000 per kilowatt. Okay, so that's useful. So a moonshide eagle would be under $2,000 a kilowatt. Can you translate that? Obviously, it's dependent on the cost of capital and other things, but what is the dollar per kilowatt hour cost that that targets? Yeah, that's a good question. I think under, this is a rough estimate, I think that's under $60 per megawatt hour.

Yep. Yeah, and I will just point out, I think something that's really important. and we think about nuclear as being really expensive. And it is in terms of total project costs. But for existing nuclear power plants, the electricity is some of the cheapest we have in the world. In the U.S., existing nuclear power, the electricity generated is the second cheapest only after hydroelectric.

Again, this big infrastructure project that was really expensive at the beginning, but now is just churning out tons of electricity. France has the cheapest electricity in Europe. up and it's 80% nuclear. So this gets to one of the things I wanted to talk about though, because you hear that. And like, but then we say a moonshot goal for the cost that we should be shooting for in the future is works out to $60 a megawatt hour or something like that, which would be cheap for clean baseload power and certainly like in the money, but not like, not as cheap as

what you're describing, not the cheapest thing besides hydro. So that implies that historically, this is the other kind. There's a global context and there's a historical context. That implies that the historical cost of nuclear or the cost of historically developed reactors, I guess I should say, is even cheaper than the future moonshot. Is that right? Yeah. It is true that the reactors that the U.S. built in the early days in the 60s were much cheaper than the ones today. There's a lot of reasons for that.

But also, you know, it's similar to what South Korea. is building nuclear for it today. So it's not like the standards are different. It's a lot about how the industry is structured. And so really what makes nuclear cheap and where nuclear is cheapest, whether you're looking at history or where it's cheap currently, it's where countries and utilities are building a lot of reactors in series of a standardized design. And the not just you're learning with the technology, but the industry is learning. The workers are learning.

The regulator is learning, and you have those sorts of economies of multiples. And that's really what nuclear has lacked in the U.S., Europe, most places that aren't building a lot of it today. And so in the places where we are seeing more if it get built, take South Korea as an example, are we seeing a predictable cost curve right now? Yes. You do in South Korea.

And they started out much higher, actually, more like $4,000 or $5,000 per kilowatt and came down. And you do actually see learning in France in their history, but it jumps up every time they introduce a new reactor design and then they learn. So it's kind of like first of a kind, and then they learn and get better. So, yeah. It's what you'd expect. Right. And then I guess the other place that we haven't really talked about, you mentioned that it's on the list of places it's building a bunch of nuclear, but we haven't talked about it in the context of cause. But I think you hear about a lot is China.

Do we have any sense, first of all, how much nuclear is China actually building? And second of all, what do we know about the cost of that nuclear? Yeah, so China has the most nuclear under construction of any country. It has about, I think, 22 reactors under construction right now. When those are complete, actually just when a few more come online, they will surpass France as having the largest fleet of nuclear, so the second largest in the world up to the U.S. and they're building a ton of nuclear.

There are some estimates from the International Energy Agency on costs in China, but we really don't know. You know, it's state-owned utility, state-owned developers. But we do know how long it takes them to build projects because when you start construction and when you end construction, that's reported to the International Atomic Energy Agency, which is kind of like an international regulator, not entirely. So we know the construction duration of projects in China, and they are following a trend that looks like South Korea in terms of how long it takes.

And time is a pretty good proxy of cost, as you can imagine. So from our estimates, we can say China's probably building at about $2,500 per kilowatt, so not quite as cheap as South Korea, but nowhere near the U.S. And again, that's probably because they're building a lot of the same design. China's also had a much larger focus on indigionizing technology. So they started by importing nuclear designs from France, from the U.S. And they had technology transfer agreements. So they leased the design and then they worked on developing their own domestic design. And then they're working on indigenizing the supply chain.

So now their projects are 80%. The components are manufactured in China. They're working towards 100%. So they've put more of a focus on that. and that maybe made their projects more expensive in the short run, but for them it was worth it because they wanted to bring the technology and the manufacturing in-house. I will say, from what we know, a lot of the cost of nuclear is not necessarily in concrete and steel. It's a lot of engineering and design costs and project management.

And that's one reason. This is not my specialty, but there are some case studies that look at what's going on what South Korea is doing right. And a lot of it comes down to really good project management, which is something that's harder to kind of export. But it does make a really big difference. And that's where having a standardized design really helps. Yeah, that gets to what I wanted to talk about next, which is you hear about nuclear costs as this single, it's a single data point, whatever dollars per kilowatt, ultimately. You could talk about length of time as well. But I've always been curious to dive in one level deeper than that and like figure out what actually

does comprise the, what's the pie that makes up that X dollars per kilowatt? Ultimately, I mean, you just alluded to it somewhat, but can you kind of walk through what are the major categories of cost and maybe, I don't know, take whatever representative example you want and sort of how large are they proportionate to each other in a typical development? Yeah. So I'll start with the cost of electricity and then I'll break down the capital cost. But cost of electricity, the cost is almost entirely in the capital cost. So it's similar to, more similar to wind, solar, hydroelectric and doesn't really look like a fossil fuel plant. So even though it's a thermal generator, the fuel is a very small proportion of the cost. So unlike a wind farm or a solar plant, the capital cost is really large because we've typically been building huge plants.

So that's really important. If we want to bring down the cost of nuclear, you have to bring down the capital cost. Now, what actually goes into that cost? So I actually pulled up this report from 2012, which is one of the only breakdowns that you can find. And so this is for an AP-1-000 estimate in the U.S. And about- Describe what AP-1-000 is?

AP-1,000. So, yeah, that's the reactor that was built in Georgia at the Vogel plant. It's a Westinghouse design. It's 1.1 gigawatts, huge. Has, you know, it has some innovative features, has some modular components, but it's still a large stick-built nuclear power plant. So for a plant like that, about half of the costs come from the power plant outside of the reactor. So what's like the yard, the cooling infrastructure is huge and installation.

So a lot of that groundwork. So nothing to do with nuclear. But there are a lot of regulations on that concrete and steel. The actual like nuclear component was called the nuclear island. So it's like the reactor, the pressure containment structure. That's only like 12% of the total cost. So that nuclear part is very small. And then a huge portion like 35% is engineering,

procurement, construction management, and owner's costs, which is like my interest during construction and things like that. So it's not a lot of the actual nuclear part. It's a lot of this other construction thing. And that's, I think, something to remember when we're asking, like, why is nuclear so expensive? It's that they're still built, like, large infrastructure projects. It's not like building a car or an airplane. It's like building a highway or hydroelectric dam or a bridge.

Each one's very unique. And so these, you know, secondary sort of ancillary costs really add up. So that obviously gets to there's a series of new technologies that are aimed at solving sort of that problem, right? Which is let's figure out how to make these less like infrastructure projects and more like rinse and repeat things because, as you said, it's not the cost. It turns out it's not the cost of the reactor that really matters. It's the cost of one, everything outside of the reactor. And two, the soft cost, so to speak, the engineering and construction labor and all that kind of stuff. I guess based on what you've said so far, I could see that going two directions.

On one hand, great, it's attacking the right problem from a cost perspective. If you can do it, maybe this is why the next generation should be smaller and this whole concept of SMRs or whatever it's going to be. So on one hand, it seems like that's attacking the right problem. On the other hand, what you said before about how to drive cost down is basically we build a lot of the same reactor type over and over again. But instead, at least in the U.S., what's happening right now is you've got up. bunch of contenders with a bunch of different reactor technologies who are all simultaneously trying to squeeze through the window to get to first commercialization. And so if it works, but 15 of them get to first of a kind, does that mean that every one of them starts at the top

of the cost curve and we have an even harder time driving down? So I'm curious how you think about that with this raft of new opportunities. I definitely hear that argument. And I think it's something to keep in mind because I often give this analogy of how we could do nuclear better in the future is like wide-body aircraft. So like Boeing and Airbus. And what's interesting about that example is it's really just Boeing and Airbus. It's a duopoly. And honestly, the market could really only support one of those companies if it wasn't that both the US and the EU are heavily state supporting those in different ways because they're, you know, they're critical. So for nuclear, I think it's an open question of how many companies there could be. But at this point,

There's a sense, and this comes from nuclear's history, that we don't want government to choose which design, because there's been, you know, this phrase of, like, government shouldn't pick winners. And I think that that is a legitimate concern with nuclear, that what's gone wrong in the past is that nuclear power plants were designed by engineers, you know, for the needs of the military. they weren't always chosen, the design wasn't always chosen with sort of market needs. And that's where a lot of these companies that are working on new nuclear technologies are focused on what could be competitive in liberalized power markets and how do we meet the needs of those markets and the customers, which is utilities. And so I don't think we're going to have, you know, eight companies building thousands of reactors in the U.S.

but I do think we're going to get demonstrations of several, and we'll probably see which ones work, and some of them aren't going to work. And I think that's what we've seen with, you know, the recent cancellation of the first new scale project. It didn't work out. And I think that's okay. There's still a robust industry with lots of other companies,

but we are going to need to sort of have some built, get able to see how much they cost, kick the tires, and that's when orders are going to start coming in. Because that's something with, you know, when Boeing designs a new, aircraft like the 787, they have an order book of several hundred airplanes before they even start manufacturing. And that's really what the nuclear industry needs to be successful. So, okay, coming back to modularity and whether that's going to work, I think there is a lot of

skepticism that new nuclear designs will be cheaper because it feels like a promise that's been made and broken a lot. You know, this idea of nuclear is supposed to be too cheap to me there. And we've seen with Vogel and these projects in Europe, like in Finland and France, just going way over budget. But there are really good reasons to think that these new technologies will be cheaper. But they have to be built first to prove that case. So modularity and factory fabrication are huge. And it's uncertain yet if it'll work for nuclear. But we've seen it work for all other energy technologies.

And there's two really good papers, which I will share with you. So one is Wilson at all 2020 and Schwartz at all 2020. But they both look at the size of energy technologies and their learning rates. And they find that across all sorts of energy technologies, batteries, generators, the smaller they are, the faster they learn. And that just makes sense. But there's no reason to think it wouldn't also make sense for nuclear. And then the other thing, a lot of these technologies that we call advanced nuclear, it's a lot of different technologies. I can talk more about them, but the big thing is that a lot of them rely on passive safety.

So it's safety that's derived from physical processes, not engineered systems. And why that matters in a simple way to explain it is that you can have much simpler engineering. So it reduces complexity in the design. And that can also make it cheaper to manufacture and make the operations and maintenance simpler and cheaper as well. Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched, and being able to prove it, from the control room to the living room. Energy Hub's platform handles the full picture, from near real-time forecasting, locational dispatch, and the kind of rigorous verification that holds up when regulators, grid operators, or leadership, ask, did it deliver? easy enrollment creates momentum, proven performance builds trust.

That's why more than 170 utilities rely on Energy Hub to manage over 2.5 million devices delivering 3.4 gigawatts of flexible capacity. See what that looks like at energyhub.com. We're living through a profound economic shift, and energy sits at the center of all of it. Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers, but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital, as I talk with people deploying capital, shaping policy and building projects. Together,

we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital Capital on Spotify, Apple, or wherever you get your podcasts. Are you tired of overpaying for big-name PR firms, but not really knowing what they're delivering? Is your comms team wasting time reviewing lengthy messaging briefs and decks, instead of engaging journalists or producing content? Are you wondering why your competitors are getting press and you aren't? Fish Tank PR is an award-winning climate and energy tech, renewables, and sustainability-focused PR firm dedicated to elevating the work of both early stage and established companies. Whether you need to position yourself as a thought leader in between project announcements

or translate complex ideas and technologies into tangible, compelling stories that resonate with the media, fish tank can help. Check out fish tankpr.com. That's f-i-s-c-h-fish-tankpr.com. This may be impossible, but can you, in layperson's terms, explain the difference between physical processes that deliver safety versus engineered systems that deliver safety? I have a good example that is tested on my mom who has explained it to her bowling team. So there's many different aspects of passive safety, but here's one that I think most people can grasp.

So if the reactor gets too hot, you need to cool it. And so the way that's done in a lot of traditional water-cooled reactors is with pumps. And you need to have these really robust pumps that won't break down. And then you need to have redundant pumps in case they do break. breakdown. So you might have four pumps when you only need one. And they have to be able to operate at really high temperatures and with radioactivity and things like that. So these really over-engineered pumps. Now, with a lot of the advanced reactors, they rely on convective cooling to move that heat around. So that is like what happens in your tea kettle or your soup pot where hot stuff rises and then when it

cools down, it drops down. And so this convective cycle moves the heat through. And they do that through engineering and through the types of coolants they're using. So they don't have to have all those heavily over-engineered pumps to move their cooling around. That works. If I were on a bowling team, I feel like I would understand that. Okay, that's useful. I guess the other, you sort of, this is sort of getting to it, but just to ask it directly,

I mean, the other thing you hear a lot, and particularly, so when, I'd say nuclear advocates in the U.S. talk about, like, why aren't we building? So here's the debate that I see, right? And where I feel like people talk past each other a lot. Nuclear advocates say we should build more nuclear in the U.S., and we're holding ourselves back from doing so. Nuclear opponents say, look, set aside the safety thing, it's too expensive.

And we have data points to suggest that it's too expensive. Nuclear advocates respond, it's expensive because of how we regulate it in the United States. And because of that, we haven't been able to get down the cost curve. And so that gets to this question of like, are we able to ascribe some amount of that cost, that total cost, to regulation? I mean, clearly the cost to get a new reactor design licensed is very high, but maybe even setting that aside, how much of the cost associated with the cap-ex of a nuclear plant is because

of how we regulate nuclear in the United States versus how they do, say, in South Korea or somewhere else? Yeah, so I think it's one factor, but it's not the dominant factor. And you can see this and, you know, that huge range of costs that I cited in the beginning, you know, $2,000 in Korea, $8,000 in the U.S. It's not that South Korea has a vastly different regulator. It's actually modeled much on the U.S. And the U.S. regulator, the NRC is considered the gold standard, and a lot of other countries follow our example. So I think there are ways that how we license reactors could be modernized to meet the needs of these advanced reactors that have all these passive safety features.

But I don't think it's a silver bullet. And I think where sort of I'm in the middle between the nuclear advocates and the nuclear opponents is that I think the industry has made mistakes in terms of how, you know, They've managed construction projects and supply chains. And a lot of that could be done much better. And there's, you know, challenges of just, they scaled up too fast. And so they didn't understand how the safety was working. And they had to do, you know, go back and change designs as they learned more and sort of things like that.

I think one thing that I really like to emphasize that I think people don't think about is that what's really been missing with, nuclear in terms of policy to help bring down the cost is that demand pull policy. And so this is why you see that nuclear is cheaper and gets cheaper for time in places that have a lot of growth in demand for electricity because the plants are really needed. So there's demand for them. And that was true in the U.S. as well. That's when we built a lot of the nuclear, but cost didn't come down for a lot of reasons. But the U.S. hasn't ever really had policies to create or incentivized demand for nuclear or even for low carbon energy until quite recently with the IRA.

Unlike renewables, which have benefited from, you know, three decades of different kinds of incentives, production tax credits, investment tax credits that really caused that poll. And led to a dramatic decrease in price. I think, you know, if you look at the cost of solar in the 70s, it was like a hundred. $100,000 per kilowatt. And we never thought it would be this cheap. And it's been amazing. And that's due to a ton of innovation. But that innovation was really induced by these demand poll policies and these renewable energy or renewable portfolio standards that drove demand at the state level and all sorts of

different policies across countries. So I think that's where there are some of those incentives starting with the Inflation Reduction Act and also some states are changing their policies to focus on. clean energy mandates that are inclusive of nuclear. So we might see that change. So just to parrot it back to you, I guess what you're saying is that the cost, the embedded regulatory cost is not like the biggest driver of KAPX of nuclear in United States.

However, what is probably the biggest driver of the fact that the United States has extremely high cost for nuclear, at least from the very, very, very few reactors we've built in any time recently, is that we don't have volume. and we don't have volume, in part because we don't have demand poll policies, probably also in part because the regulatory construct has made it tough to license reactors and so on. Yeah. So it's all circular. Yeah, and I think, you know, for what will be needed is if we're doing really modular plants,

like factory fabricated reactors, that will definitely need a regulatory change because we don't have those sorts of bulk licenses like you do for aircraft manufacturing. You're not licensing each individual aircraft as if it's a brand new project. And so that's definitely needed. But I think for these first demonstrations, the companies are able to muddle through with the current system. And the regulator is acting a good faith. They're trying to get up to speed. They're doing the best they can.

They need more resources in terms of funding and just people as well. So yeah. Okay. So what is your take on nuclear? in the U.S. then. It's an interesting moment that we're in right now. As you mentioned it, right, but recently in the news was this New Scale

project getting canceled, this UMAP's New Scale project, which is a big deal, as I understand it, just in part because New Scale is the first new reactor to get design certification in, you tell me, 30 years or something like that. That was the first project that they were going to develop.

You know, they had first cost had ballooned. So to our point that we've been talking about, they made an announcement. I think last year that cost were going to be, what, $90 a megawatt hour instead of 65 or something like that, and maybe even higher, and then they couldn't get enough subscriptions. And so the project's canceled. So, you know, you mentioned there's still sort of a vibrant ecosystem, but I guess the question is, what do we make of that?

Is that just an anomaly or indicative of something broader? And then I guess second to the point you made before about, so maybe what we do in the U.S. is we get 15, new reactors demoed and then we need to kick the tires on them and see what's cheap and then the order book will start coming in. Like, what's a realistic in your mind time horizon during which we can expect to kind of get the gears really turning on nuclear in the U.S.? I'll add one more point, which is that the one thing we do have going for ourselves now is a resumption in growth and electricity load, which, as you said, has been a hallmark of the countries that have really shown the ability to scale nuclear.

So we may get that back. But yeah, what do we make of the new scale thing and more broadly, like, how long, if it happens, how long is it going to take us to get momentum? Yeah. And on top of, you know, starting to see growth in electricity demand, whether it's from electrifying industry or transportation or making hydrogen, there's also a lot of states pushing for more aggressive decarbonization policies. So we're starting to see more, you know, serious.

ambition around clean energy. And so I think that's all positive for nuclear. With New Scale is really disappointing for sure. But I don't think it's any sort of death now. And the reason is there is just this vibrant, thriving, advanced nuclear industry. There's lots of other designs. New Scale was, you know, it had a lot of government support over the last decade. But it was a, it was a very different kind of project. It was water cooled. It looked more like a traditional nuclear power plant. It was also the plant was going to be quite large. It was closer, you know, it was modular units, but being built in a 12-pack. So looked more like 700 megawatts. So that's a very big, you know, power plant that you have to construct. So the other reactors going forward,

none of them are water-cooled. They're all very different technologies. And so, you know, I'm pretty optimistic. I think a lot of there's maybe six or seven that are seriously working with the regulator to get licensed for their first projects and I think we'll probably see ground start to get broken and maybe

the next five years and probably I would say a handful of projects coming online before 2030. That's actually pretty fat. I mean if you're saying a handful of projects beginning construction the next five years, I mean we're at the end of 2023. So if anything is going to come online by 2030, it's

this point, that's fairly, that's six years from now. Yeah. And, you know, what helps is that some of these projects are really small. So not just SMR, small modular reactors, but microreactors. So this is projects or reactors under 10 megawatts. So some of these are even on the order of one megawatt, which is tiny. That's like smaller than a wind turbine. And they can fit and, you know, a shipping container or two. So that's how we might see some, you know, commercial demonstrations really fast is, you know, even if it's a new technology, it just can't take that long to build something so small. So that's kind of how we could see is an acceleration in innovation and demonstration of these new technologies. But for the bigger technologies like Terra Powers Project in Wyoming,

that's a pretty big power plant. And so it's going to take, you know, different paths for these different projects. But to your question earlier about, is it too many? Is it too much diversity, do we need to sort of narrow down? I think there's a lot of different markets, and there might be sort of right-sizing. So different nuclear tech will work better for different markets. There still are these large investor on utilities. They might still want a really large nuclear power plant, maybe to replace a large coal plant they have coming offline or replace an aging nuclear power plant they want to shut down. And then you might have a rural electric co-op, which would love a one-migwatt microreactor

to help back up their wind and solar or a hospital that could take a 10-migwatt reactor for on-demand power. I think there's just a lot of different markets, and those markets haven't necessarily been able to access nuclear in the past, but now they can. So it's a very different business model

and way of thinking about nuclear. I guess final question for you, the other thing that strikes me as a challenge for the resumption of nuclear in the U.S. Not necessarily just that it's higher cost for first of a kind or first few of a kind. It's the cost uncertainty, right? Like that seems like the biggest challenge. If I'm going to be a buyer, if I'm a utility, and I'm contemplating adding nuclear

into my integrated resource plan, you know, how much certainty can I really, what are the error bars around the cost that I'm going to assume? And that's what seems like it has been the challenge of late. projects that got built like Vogel, projects that didn't get built, like the new scale one, you know,

these surprise, 50, 100% increases in cost relative to expectations. Like, I would think it would make it difficult to plan around that

for a big capital investment. So, let me give you some examples. Where these companies are thinking more about market needs, that's definitely something they're thinking about.

So coming back to the aircraft example, You know, as I said, Boeing has this long order book of aircrafts, even before they manufacture the first one. And how they priced them is not what it costs to manufacture it. It's somewhere sort of halfway down the learning curve. So the first few hundred they sell at a loss, but they need to commit to a price, a fixed price, to get those orders. So you might see something similar like that, probably not for the first of a kind, but for the second, third, fourth of a kind, saying, okay, we're going to, you are going to pay. 3,000 per kilowatt

fixed price, no matter what it costs us. That one is a good argument for smaller project sizes, right? Because nobody's going to stomach selling, you know, gigawatt scale projects at a loss for very long. But you could do it for 10 megawatt projects. And then some other companies, particularly more on the microreactor side, are looking at doing more like a build-own operate model where they'd be selling electricity through a power purchase agreement,

which, you know, looks very different. So the company would be maintaining ownership of the nuclear power plant. They'd install it on site and they would just sell the electricity at a fixed price. So that would really mitigate a great risk, especially for smaller utilities, municipal utilities. That's something they could stomach. Although isn't that exactly what the new scale project was going to be? And the problem was that the price ended up being, the price of power, not just the KAPX ended up a lot higher than expected?

Yeah, but the communities were given the option to opt out of the project, and they did. That was a mistake, right. It looks bad, but it was a success, at least from the community's perspective. They weren't sort of stuck with an expensive project, yeah. Right, they weren't on the hook with an albatross. Yeah, that's a good point. Okay, so I guess wrapping up then, so wait, how long have you been focused on nuclear? How long have you been spending time on nuclear?

Oh, I think since 2011, so quite a while now. Okay. So a dozen years looking at nuclear in the United States, where are you on the optimism spectrum today relative to where you have been over the last 12 years? Yeah, I think just in the past year, I've seen a lot change. So I live in California and seeing, you know, Diapel Canyon was supposed to shut down. this year and next year. And seeing a very liberal Democratic governor change the plan for nuclear in California, I think that's a big thing. And you're seeing this in a lot of other places like Japan and Sweden changing course on nuclear because of the realities of energy needs and natural gas, particularly after the Russian invasion of Ukraine, really got people thinking differently about energy security.

It kind of pulls us back to this 1970s energy crisis mentality, but that is really where nuclear was successful was supplying this huge displacement of fossil fuels in the 70s. And so I wouldn't have been this optimistic maybe a year or two ago. And then also seeing this much more ambitious commitments on climate. I think it's definitely not fast enough, not enough investment, not enough closure of fossil fuel plants, but it's better than we were where we were two years ago. So, you know, I am not like some nuclear advocates. I'm so excited by the rapid deployment of solar and wind and batteries.

And seeing nuclear get to play a growing role, even if it's a small role, I think is really positive for making progress of climate change. Jessica, thanks so much for doing this. This was very insightful for me. Yeah, my pleasure. It's great talking with you. Jessica Lovering is a co-founder and executive director of the Good Energy Collective. She's also formerly the director of energy at the Breakthrough Institute.

Latitude Media is supported by Prelude Ventures. Pralood backs visionaries, accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more about their portfolio and investment strategy at Preludeventures.com. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Marquan, theme song by Sean Markwan. I'm Shail Khan, and this is Catalyst.