This is Dana Perkins and you're listening to Switched on the BNAF podcast. Today we talk about nuclear energy. It's really fallen out of fashion over the last decade with retirements taking place all over the world, but recently countries are starting to make noises again about this proven low carbon technology and the question is really is it back Well, it all depends on whether or not words become action.
At COP twenty eight in Dubai. At the end of last year, twenty five nations committed to tripling global nuclear capacity by twenty fifty. So how might that take shape? Will they be reopening shutter nuclear facilities or building new ones, and if they are new, will the new ones be small modular reactors? And does the recent spike in the
price of enriched uranium dampen that outlook? So today we feature our b and EF resident nuclear expert, Kris Kodomski, and he shares some of the findings from the most recently published Nuclear Market Outlook. As a quick reminder, give us a review if you want to help other people find us and subscribe if you want to help yourself find future shows as they're published. But right now, let's talk about nuclear's potential for a comeback story with Chris Kadomski. Chris,
welcome back to the show. Well, thank you, we're here to talk about nuclear what else? And well we've had you on the show before. You give us an update on what's happening in this space. Post Fukushima. There were a lot of retirements of nuclear power plans. Plenty of countries, including Japan, including Germany, really backed away from it. And I would say the temperature in the room got a bit cold for nuclear. But now I want to know what would you say the temperature in the room is
is nuclear? Is it back? Is it coming back?
Well, one of the younger analysts that BF came up to me and said that nuclear energy, specifically SMR small module reactors, is trending now. And I was very very happy to hear that. It certainly is trending when you look at say the media coverage and interest from politicians and interest from environmental groups and goos or so, it
certainly is trending. But being a cheerleader for nuclear power does not necessarily translate to an actual build out and rapid expansion of nuclear power, which we would all sort of hope would happen for us to go ahead and tackle our net zero aspiration and our climate change goals.
I mean because in many respects, when you think about nuclear as this carbon free source of energy, everything that we shut down we've got to backfill with something else, and in some cases that's ended up being coal, and that certainly is not carbon free. And for everything that we shut down, that's something else that it doesn't actually get to replace. So the renewables are replacing then the nuclear instead of other high carbon parts of the economy.
So it certainly is part of the solution, and let's talk a bit about what part of the solution it could be in the future. So with small modular let's just do a definition for everybody who's listening, how do you define small modular reactors?
Small module actors of which they're about eighty being developed around the world, are defined to be somewhat less than three hundred megawats electric, but of course there's exemptions to that. Or the Rolls Royce reactor is coming in at over four hundred and forty megawats a reactor, and so it's also I characterize that as being an SMR. So besides the size characteristic. We want to look at other aspects
of the technology. That it's safer, that it's modular, it could be manufactured in a factory instead of built on site, and that provides a lot of advantages as far as getting down the cost learning curve and hoping to produce a reactor that is going to be less expensive on a per kilowatt basis. There also is extinction that we need to sort of make between SMR which are small and advanced reactors. Small SMRs are typically characterized by being
light water reactors, so it's in small innovations. It's a small move and the only really innovation is really shrinkages side. Maybe there's some additional safety features that they incorporate in the post Fukushima environment. There's also something that I characterizes advanced reactors that are using different types of technology, new technologies, and the example would be the fast reactor that Bill Gates is developing with terror power, which neutrons and electrons
are flying around at a much faster speed. They have the ability therefore to sort of consume spent fuel and to burn the fuel much more effectively. It's a hedge against proliferation and it perhaps deals with the longevity issue of spent nuclear fuel. There are also high temperature gas reactors which theoretically cannot melt down, and there's molten salt reactors where the uranium is already in molten state, very
very hot. So these are advanced features, more safety and suggests that these reactors could be located closer to population centers and also without the extensive then and expensive containment that typically characterize the large reactors.
So more safety and certainly a lot of new technology that's coming out. So yeah, definitely trending from a news standpoint, trending topically, but let's talk about implementation. So where in the world have they started working with SMRs.
For example, there's only two SMRs that operate in the world today. One is in Russia north of the Arctic Circle that's been operating since twenty nineteen early twenty twenty. The other one has been operating for six months in China, and it's an advanced reactor, a high temperature gas reactor. Both the Russians and the Chinese are working on additional SMRs,
and there are other places in the world. Argentina has been working on an SMR for the last ten years, so and with very little progress for political and management changes that are going on at the site. And very sadly, the US had a leading SMR project that was to be built in Idaho at Idaho National Labs, and that project fell on its sword last November because they realized that the cost of electricity they were delivering to the customer ums was going to be too high and they
mutually agreed to terminate the project. So there are a lot of questions about whether SMRs can deliver on the promise of providing inexpensive electricity or competitive electricity that makes it worthy of consideration by utility customer.
So now there are a number of countries though, that are looking to really ramp up their nuclear capacity, or at least that's what they said at COP twenty eight. Can you talk a little bit about what those commitments were and how much they're looking to increase nuclear on their grids.
So the big news that came out of COP twenty eight eight, who was an agreement between twenty five countries or so to triple nuclear capacity from about three hundred and seventy gigawatts now presently installed around the world to over eleven hundred gigawatts by twenty fifty and so that's a huge, huge lift. And so the question is that was a proclamation by politicians NGOs, and I question whether or not the execution can be followed through so that
we actually go ahead and get there. And if you look at the ramp, you know, nuclear capacity around the world has been essentially flat since Fukushima. This varies a little bit, but if we're going to triple capacity in the next say twenty five years twenty six years, we really need to step on the gas and start developing things. And the world is going to be characterized by different
technologies in different markets. In the East, where there's a tremendous growth in demand for electricity, think China, India, Indonesia, Vietnam, large reactors will probably fill role better than small reactors. In the West where you have slower growth. Nevertheless, you are having a lot of growth from the data centers now projected, but they all the SMR technology would be used preferably over large reactors for a variety of different reasons. And in a market like the UK, UK is relying
on both large reactors. They're building Hinkley and they're planning to build sizeball. But they'll also complement that with smaller reactors. And the ideal thing about small reactors that they're more agile, quicker to build, allegedly, less expensive to build, less risky to build, and they sort of can replace the existing coal infrastructure the country like the UK or Poland or the US may have. So there's a little niche for these SMRs to sort of replace coal and act as
a compliment to renewables. What's happening now, renewables is growing like crazy, and as renewables grow, we need to add natural gas capacity for the backup stand by a power for when the wind is and blow or the sun doesn't shine. We need to replace those natural guess capacity with small SMRs that are agile enough to ramp up to rapidly changing conditions and demand for electricity on the grid.
Now, I know it's been less than a year since the last COP so these twenty five countries or so haven't had a chance to actually really well build any of these new projects. But does it look like what are they making noises about potentially doing? Is it going to be really varied all over the world? Are they waiting for new technology? And you think they're going to essentially say we're going to do this a little bit closer to twenty fifty or some countries really getting started right now.
Well, we've been tracking the development of SMRs and the prognosis is not very very exciting as far as how quickly they can be deployed. You know, there's twelve reactors or ten reactors in the US that are undergoing pre application feasibility studies or negotiations with the Nuclear Regulatory Commission, and after they complete those pre application studies, the next step will be for them to go ahead and formally apply for an application to get a license to operate
and build a nuclear power plant. New Scale spent between five hundred and six hundred million dollars to license its technology, so it's a huge financial challenge and it takes a very very long time, especially with some of these advanced reactors which are atypical of what has come beforehand, which is the light water boiling water reactors are pressurized water reactors.
So the NRC in the US and the Canadian authorities and the authorities in the UK, you need to gear up to understand the differences between the new types of reactors that will be coming forward and respond accordingly. So time is a problem, at cost is a problem, and there's a lot of technological risks. We don't understand which one of these reactors are going to be most sought after by utility customers and by data centers and to
produce hydrogen. So there's a lot of opaque in the market right now, and I'm hoping that that can clear and we can make some decisions quickly and move forward for the technology to deploy.
And when technology is kind of just getting started and just getting momentum, those first companies that are doing it really under a lot of scrutiny. And sometimes when things don't go very well, they become a canary in the coal mine, and other times they are just the fact that businesses, maybe not every single one makes it along this road to scale. So that then brings me to
New Scale. Can you talk a little bit about what happened at New Scale and whether or not this is something that is teaching lessons to other part of the market or is it just isolated to that specific company.
So and your Scale is developing a seventy seven megawatt reactor and they intend to bundle two four six of them, possibly twelve of them together to fulfill the demand requirements from their customer. And what their approach is is to have these individual reactors sitting in a pool of water, six story swimming pool if you can imagine, and that requires a lot of physical concrete excavation of the ground
and whatever. So they tried to simplify the approach by manufacturing these these reactors in an assembly line and to produce them simply and get them across because the smaller the reactor is, the broader the amount of companies that can manufacture these technologies. But in doing so they also created, you know, a law of unforeseen circumstances where there is a problem now that you need to dig deep into
the ground to keep this reactor swimming pool. Into encase, these these six to twelve reactors underground, and so you now have an excavation course that some of the other reactors do not have. So apparently the cost of doing so in Idaho was prohibitive, and there were some unique circumstances that existed at Idaho where the site was proposed that made them sort of raise the cost for building
producing the reactor. Secondly, the customer was UAMS. UAMS is an association of fifty or so municipal utilities, and they didn't have any historic experience operating nuclear power plants. It would have been much easier had you had a Duke Energy or a Southern Company or Dominion, which are large nuclear operators in the US. They could have better understand some of the challenges that would have existed in building a first of a kind reactor in a remote place.
And so the customer was perhaps ill prepared for the complexities of building and operating a nuclear power plant, and they threw a lot of money the Department of Energy, and there was nobody else around the town. New Scale was the only company that has gotten an NRC license to date, and so we were hoping that this would be leading the way and that they would have some
sort of success in developing that. So a combination of technology that perhaps was not really thought out as well as that should have been for that particular location, a customer that didn't have the expertise that some of the other larger utilities could have provided and could have foreseen some of the issues and cut them off at the pass. And the fact that you had one company going forward that had a lot of US government support, and perhaps
there were some questions and issues over there. The New Scale technology represents an incremental move forward. The innovation was a shrinkage in size, and it did not provide some of the other advantages that say, a fast reactor or a high temperature gas reactor would have provided. And it turned out to be more complicated and more expensive than people had anticipated.
But not wholly uncommon when we think about new technology of any kind. And I know you know the stakes are high with nuclear, but when you're thinking about implementing new technology, there are going to be some implementation hiccups. Do you think that this, because the stakes are so high, is going to cause problems for the wider industry for us or will it just be that this particular thing has been difficult and maybe the next one will be less difficult.
Well, we asked New Scale those questions, and they were very quick to point out that the site characteristics and the individual circumstances of the Carbon Free project, which was the name of the project, were unique. And New Scale has been pretty aggressive and developing other data center applications forwards technology, and some of the competitors to New Scale
a whole tech or a terror power or whatever. They are all very quick to distinguish the differences between their approach and their technology and what went wrong at the Carbon Free project. So there's hope that there will be additional pathways or new pathways that these other companies can run down and succeed. And I hope that's the case.
So let's talk a second about enriched uranium and what's been happening on that side. Last time we had you on this show, I asked you whether or not there was enough uranium in the world for are current and future nuclear plans, and there was a resounding yes. But from the enrichment side, we've actually seen enriched uranium fluctuating
prices this year. We've seen prices go up. Can you talk a little bit about what has caused that and really what's going to happen on the price side when it comes to enriched uranium.
Okay, so from the price of uranium, uranium is traded in the form of yellowcake U three eight, and there is uranium is traded in the spot market, which utilities and minors can sort of negotiate sell on a short term basis. But what's really really important is the term market. The term market is long term pricing contracts because utilities understand that what's really important is not so much the price of the uranium, but the availability of the uranium.
Nuclear utility does not want to not have uranium to operate, so it's must of concern for the price than it is for the availability. Availability is very, very important, and we've seen the price of uranium double in twenty twenty three, and there has been a set of hive around one hundred and six earlier this year, sometime in February. It's retreated a little bit about out since then, but there's been in the news a lot because of the fact
that enriched uranium. Uranium comes out of the ground at points zero seven percent uranium two thirty five, which is the fissile part of the atom, which is unstable, as opposed to uranium two thirty eight, which is the more stable fertile part of the atom. And so you enriched the natural uranium from points zero seven percent in its natural state up to four and a half percent for
suitable use for a nuclear power plant. If you are having an advanced reactor, you'll want to go ahead and push that uranium up to say nineteen and a half twenty percent or somewhere in between, and that's called HALU. Highest say low enriched uranium and I say loan rich uranium. The only commercial source for that in the world these days are the Russians, and it's a very expensive process.
You just don't all of a sudden decide well, I want to go ahead increase my uranium levels enrichment levels from four and a half percent up to twenty percent, because you have to go through a lot of regulatory and licensing steps in order to do that. So it's pretty expensive proposition. And also another problem is that there's an uncertainty of demand. You have ten to twelve companies in the US, as an example, that are going through
the licensing process or discussions with the NRC. We're not sure how many of them will go through and whether or not those companies that do go through the process will actually deliver a commercial product that will have a demand for uranium. So it's like a chicken and egg situation as far as HALU demand is concerned. Now, the US government has stepped in and made a lot of incentives recently to sort of support a domestic uranium industry
laws left and right. Most recently earlier this week, there's executive order from the President of Biden that he's going to try to support large reactors, which I think is a surprising development. He's also going to support the deployment of advanced reactors on military basis, and he's also providing a lot of support to the uranium industry to create
and strengthen the uranium industry in the US. The uranium we used to produce a lot of uranium in this country and then for environmental reasons and for the fact that nuclear fill out of favor in the wake of Fukushima, you know, our production has gone down to next to nothing.
Now we're starting to produce more and more uranium. But we have only one facility in the US that can make highes say loan rich uranium, and that's Centrist and that company is just gearing up and looking to try to expand its operations and hopefully with support from the US government, financing will flow to the construction of a larger facility with which they'll be able to provide commercial amounts of HALO for the US industry and other markets globally.
So if the Biden administration, during an election year, has announced that they want to see more uranium enrichment and more large nuclear plans. What I want to understand is really what underlies that. Is it domestic security of energy supply and invariably this is a country that exports natural gas, or is it a big job creator? And are we talking about jobs here something else that maybe I'm not getting well.
Jobs has been one of the big highlights of the nuclear power industry. One of the reasons that I believe that they went forward with the Hinckley project because it's not an expensive electricity, but it was twenty five thousand jobs. So the decision was made by politicians years ago to build this facility because I'll put twenty five thousand people to work and would produce a tremendous amount of electricity, and it would be domestically produced electricity, carbon free electricity.
So there was a lot of reasons for going ahead with that decision, aside from producing the least expensive election electricity. And so that's a big driver for nuclear power is the fact that it keeps people at work, and it provides energy security, and it's also carbon free, and it's a good balance and a good complement to the increasing amount of renewables that are being deployed. So I think people, I think erroneously look at nuclear as a competitor to renewables.
I look at nuclear as a complement to renewables, and that you have renewables as a preferred option, and you have a complementary source that's baseload that's available twenty four hours a day that can sort of complement and enable the growth of carbon free energy, especially renewables. And we see data centers entering the picture right now. Data centers have a requirement for twenty four to seven clean energy and that can be best supplied with nuclear power.
So essentially the US's solution to enriched uranium is to do it domestically.
Yes, there's Urinko is another supplier of enriched uranium. They have operations in Europe and they have an operation in New Mexico. But I think that Russians we're providing a pretty substantial chunk, about twenty seven percent of the enrich uranium to the US, and that's something that needs to be changed from a political perspective, and also it's a very very helpful, healthy thing for the US to go ahead, and because we are the largest market for uranium in
the world with ninety four reactors operating. The other closest country is France and China, which have you know, just over fifty.
You had mentioned twenty four to seven clean power, and the question I have for you is can you give me some examples of where those projects are kind of the companies that are looking at those sorts of projects And additionally, you know, are they including nuclear in this or when they're seeing twenty four seven clean power, they trying to figure out how to do it with renewables only.
I think that if you look at all of the press releases that are coming out from some of these advanced reacted to companies SMR developers, they're all talking about the big opportunities from data centers, new scale being one, oklow being another one. And so this is a very very important thing. Microsoft operates a huge fleet of data centers and they've signed a contract with a fusion company, Helion, to provide electricity for that data center by twenty twenty eight.
And so there's a lot of interest from data centers to sort of gear up and have carbon free power, which reliable, secure and affordable because what will happen is that the data centers will contract directly with these nuclear operations and sort of bypass the retail and wholesale rates that they would have to pay by buying that electricity from the grid. So we're seeing situations where nuclear power plans are signing power purchase agreements with data centers to directly supply them.
So we had talked about the new projects that the Biden administration is encouraging and then commitment to cop to trouble nuclear capacity and new technology, But what about the existing technology that's already online. In this post Fukushima way, we saw a number of those getting retired. Have the retirements stopped?
I think that the era of nuclear retirements is behind us. It's now very politically unacceptable to close down a nuclear power plant which is carbon free for a variety of different reasons. In the US, most of the nuclear power plants were closed down because they were uncompetitive with chief
natural gas. And we're seeing for the first time in the US, if not the world, where a nuclear power plant that was closed because I couldn't compete with cheap natural gas is now being supported by the US government and the state government of Michigan to bring it back online, and that's a very very significant thing. And the Biden administration is also talking perhaps about other nuclear power plants that have been closed in an era a very cheap natural gas to try to bring them back online, and
that's something that would be of great interest. It's part of a triative strategy to keep the existing fleet operating longer, to expand the capacity of the existing fleet, to bring
back some reactors that have closed. I don't know how successful and to what extent that will be, And to build advanced reactors in this country and in the US market, I really question the wisdom about building large reactors because large reactors take ten years to build, they're very, very expensive, and the decision process of a utility is such that the CEOs typically last five to six seven years at
a leadership position. So CEO who starts initiates a project to go ahead and build a nuclear actor will not be there when it finally comes online. And so there's a lot of risk and a lot of cost overrun and time scheduling, and it takes a very long time to build these reactors, and I think that poses a huge amount of risk for you toies what distinguishes the nuclear power industry from the other renewable industries is that policy decisions are less effective than market pull to get
nuclear power plants built. So you can have all the policy in the world, but you really need to have a utility say hey, I really need this twenty four to seven carbon free energy, and I'm willing to spend a lot of money to go ahead and get that, and the cost of doing so and the time frames for doing so are so prohibitive in the United States that I suggest that the solution will be for advanced reactors which are smaller, provide less capital risk, in fact,
they costs. They're smaller, they cost less, and that they can build in a shorter period of time, and they sort of become more acceptable to the decision makers out of utility or are an operator of a lot of data centers to chase after smaller nuclear reactors as opposed to large reactors which can take forever.
So we know that nuclear is now providing flexibility, it's carbon free, it has a role to play in twenty four to seven clean power. And you had mentioned earlier that China was one of the countries that was looking
at installing more on the small modular side. Is there a parallel and can I essentially be hopeful that costs are going to come down, not just for the smaller reactors because they're smaller therefore less expensive, but are we going to see cost of clients, because when I think about what's happened with China and solar manufacturing and battery manufacturing, we have seen prices drop precipitously when they have entered a market really at scale. Are we going to see the same thing.
In nuclear There's a fundamental difference between the US market for nuclear power plants and the Chinese market for nuclear power plants, and the two significant differences. One is that in the US, we are greening the electrical grid. In China they're expanding the electrical grid in a much faster way. So large reactors become very very appropriate. If you're expanding the size of your generating capacity, We're going to do that in a smaller way than the Chinese are doing.
We have a lot of coal plants that we need to retire. So if you're retiring coal plants that are four or five hundred megawatts, typically you want to have them replaced by smaller mountor reactors that are closer in
size to what you're gearing down. And another most significant distinction between the Chinese market and the US market is that Chinese, because they have such experience building large nuclear power plants, they're very good at it, and they can produce and the cost of building a nuclear power plant is probably one quarter in China as it is in the US based on the data we have collected, So it makes a lot of sense for the Chinese to
go ahead and build large reactors. They'll put six reactors at one site and they'll do them sequentially, so it's a very very cost effective way of manufacturing and producing large reactors. So I see China being a leader in large reactive development for a while, even though they're starting to develop their own small react the technologies potentially for export and for smaller remote areas, and they're ahead of the US in doing so.
Already, you've already discussed that the US is getting back into the game here and that China's looking at it. And then historically Russia has been focused on nuclear power as well. The Middle East is potential growth area. Can we talk a little bit about some of the dynamics there and why that might be taking place.
The UAE signed a lot of agreements with US advanced reactor companies, which I think is very very encouraging because they can provide a source of capital and they can provide access to local markets in the region. One of the things that a very markedly difference between the market for electricity in the Middle East as opposed to the US is that the demand for electricity in August is typically twice what the demand is for electricity in December
because of the huge air conditioned load. So what you end up doing is you try to apply your peak demand and you have all this excess capacity. So we've had conversations with prospects in the Middle East who are looking to develop nuclear power in order to sort of provide that peak demand, and then they can use when there's less demand for electricity, switch the energy to desalidating
water and also to producing hydrogen. And that's not a very very effective way of not one hundred percent utilizing your electrolyizer, but it's very easy to store water. So you can have these nuclear power plants switching to desoalidating water or producing hydrogen, and that makes a lot of sense, and we see a lot of interest in the region. We see also a lot of growth in nuclear power where you have Turkey and Egypt are both building for
large nuclear power plants. The UAE has just completed for large nuclear power plants and it's talking about a second large plant over there. And also Saudi Arabia has been toying with building nuclear power plant for a lot of years, and they are at one time we're considering seventeen nuclear power plants. Now it's down to two or so. But there's a lot of a lot of issues and a lot of opportunity to provide some carbon free generation over there, to sort of have them stop burning oil for their
power generation needs. So the Middle East and other parts of Africa can be very very interesting prospects for the right type of nuclear technology.
One of the potential use cases for nuclear is for hydrogen. So, as we know from the show, you make hydrogen from other sources of energy and then use it for perhaps hard debate space and various things that are more difficult to decarbonize, like cement or steel or aluminum. Can you talk about some of the advantages of using nuclear as the energy source for hydrogen.
There are plans in the US to develop nuclear powered hydrogen hubs, and there is a big distinction between producing hydrogen from nuclear power as proposed to producing hydrogen from renewables and the fact that you can use solid oxide electrilizers, soees, and these things take effect electrilyizing steam as opposed to
electrializing water. And so the thermal energy available from a nuclear power plant combined with electrical energy from a nuclear power plant gives the cost give a certain cost advantage to producing hydrogen from nuclear power as opposed to producing hydrogen from renewables, And that's something that is being looked at, and whether or not it's actually true is perhaps something
that needs further exploration. I know in Poland Rolls Royce is talking to a company called Industria and they're thinking about developing nuclear and hydrogen projects in the country, but the timeframe for that is not going to be until mid to early twenty thirties.
Now, a girl's got a dream when it comes to thinking about technology breakthroughs that could really fundamentally change the economics and therefore missions of the energy industry. Can you tell me a bit about how close we are getting on fusion.
Fusion is a great topic. It's received about six billion dollars in private investment in the last several years, and there are several companies in the UK, in the US and Asia who are really pushing forward to sort of commercialize this technology. I have visited six or seven different fusion companies in Europe, in the UK, and in the US,
and I'm very impressed by what I see. One has to understand that what has enabled this rapid increase in interest in fusion, and it boils down to several things. The tools that the engineers and scientists need to produce fusion devices have suddenly become much more readily available, and they include supercomputing, three D printing, advanced material and high
temperatures some conductor magnets. So the available of these four things coming together all of a sudden gives these brilliant people the tools with which to go ahead and miniaturize fusion devices and to make them much more efficient. And as a result of that, we have progress made and several different continents to recognize the potential and realize the
potential of fusion. So we're very, very hopeful that we'll see some additional announcements in twenty twenty five that will sort of introduce a second wave of enthusiasm for fusion. Several companies took a billion dollars two billion dollars in one case of Commonwealth fusion in twenty twenty two, I believe, and so they're now investing that money and producing prototypes
which will hopefully produce net energy gain. And when that happens, then I expect we'll see another influx of capital that will be able to sort of lead to the commercialation of fusion devices, hopefully by the end of the decade.
So there's good reason to be hopeful. Chris, thank you so much for joining today and forgiving it's an update on what's happening in nuclear.
My pleasure always. Thank you.
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