June 25, 2025 • 36 mins
The Trump administration has made no bones about its desire to revitalize the US’s nuclear power industry. With four new executive orders hot off the president’s desk, nuclear is being treated as a silver bullet, capable of meeting AI power demand while shoring up the country’s energy independence. The US is also looking to counter China and Russia, which in recent years have led the way in nuclear technology rollout both at home and abroad. But can this new policy push elicit the market response required to rebuild the US’s nuclear energy industrial base? On today’s show, Tom Rowlands-Rees is joined by BloombergNEF’s lead nuclear analyst, Chris Gadomski, to discuss findings from his note “Trump Pushes Nuclear But Market Pull Is Uncertain.”
Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com
Links to research notes from this episode:
Trump Pushes Nuclear But Market Pull Is Uncertain - https://www.bnef.com/insights/36697
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This is Tom Rowland's Reese, and you're listening to Switched
on the podcast brought to you by B and EF.
After the Fukushima incident of twenty eleven, attitudes towards nuclear
power as a secure energy source shifted, with some nations
such as Germany, accelerating the phase out of its nuclear fleet,
while the US increased regulations Once in nuclear energy heavyweight,
(00:21):
the US has seen construction of nuclear plants slow to
a crawl. The country has fallen far behind Russia and
China in terms of its technology and equipment being used
for nuclear power builds around the world. The Trump administration
has made no secret of its desire to change this,
and last month issued four executive orders that seek to
reinvigorate the US's domestic nuclear power fleet. But is this
policy push enough to stimulate a risk averse private sector
(00:43):
and what forms of nuclear technology are North American companies
looking at today? I am joined by B and EF's
lead nuclear analyst, Kris Kodoonsky, and we discussed findings from
his note, Trump pushes nuclear, but market pull is uncertain.
Which B and EF plants can find at BNEF go
on the Bloomberg terminal or on BNF dot com. All right,
let's get to talk about the future of US nuclear
energy with Chris.
Speaker 2 (01:13):
Chris, welcome to the show.
Speaker 3 (01:14):
Thank you, Tom, it's a pleasure to be back. Yeah.
Speaker 1 (01:16):
I was just going to say, it doesn't feel like
it was that long ago that we had you on
the podcast.
Speaker 2 (01:22):
So why are we speaking today.
Speaker 3 (01:24):
Well, there's a lot of excitement about nuclear power in
the media, among governments and larger organizations institutions, and that
has been triggered most recently by the May twenty third
signing by President Trump of four Executive Orders. And the
four executive Orders are taking aim at some of the
fundamental issues and problems that has led to the US
(01:49):
becoming a laggard in nuclear energy construction around the world.
And so I'll be very very curious to see what
transpires and how the executive orders will be able to
work and coexist with Everetts by DOGE to sort of
cut the government workforce and create an environment where the
private sector will rally behind what is left of government
(02:11):
funding to support this to go ahead and build out
nuclear power in the country.
Speaker 1 (02:16):
So you recently published a report on this, and the
title of the report Trump pushes nuclear but market poll
is uncertain, which kind of tells maybe, I mean gives
in a nutshell where you stand on this. I think
it was interesting, and you know, when it comes to Chris,
I'm not just a fan who has come lately. I'm
familiar with your entire back catalog, so I know that
(02:37):
in December twenty twenty four you also published a piece
called US Nuclear Goals in the Cards or just an Illusion,
which was in reference to some targets put in place
by the Biden administration. And I also remember that in
May twenty twenty you published a piece I've got all
the receipts here called Trump Administration Aims to make Nuclear
Greats Again, which, unlike those other two titles, doesn't at
(03:00):
a slight skepticism on your part on the gap between
ambitions and reality. But I'm just going to read from
the executive's summary, and this is again from May twenty twenty.
The US nuclear industry has ceded global leadership to Russia
and China, as evidenced by the underwhelming presence of US
vendors participating in global markets. Be in the f questions
whether the appropriate strategic elements in place in the nfwg's plan. NFWG,
(03:24):
by the way, Sorry's Nuclear Fuel Working Group will materialize
to US re establish the US as a contender without
bipartisan support and appropriate funding. The nfwg's policy goals represent
wishful thinking rather than an executable objectives to restore global leadership.
So again, although it was in the title definitely have
your and I say this, you're someone who is I
(03:44):
think it's fair to say pro nuclear.
Speaker 2 (03:47):
I don't think that you are.
Speaker 1 (03:48):
Just saying this because you are not in favor of nuclear,
but you, I think appreciate the challenges and how far
behind the US is. So I suppose over the years
we've seen that sort of skepticism on your part. The
thing that's interesting though, is now when we look at
this sort of the pattern is Trump administration Mark one
was pro nuclear. The Biden administration for the most part
(04:10):
was kind of most of its time, I would say,
slightly neutral. It had those tax credits in the IRA
to support nuclear if the economics weren't working out. But
then right at the end there was this ambitious set
of goals set out for nuclear and then of Trump
has come back in and he has come out as
being very pro nuclear with these executive orders. So we're
(04:32):
starting to see actually a little bit of bipartisanship emerging
around nuclear. And yet you're still a bit skeptical maybe
about how challenging this is and whether that challenge is
fully appreciated.
Speaker 2 (04:43):
Is that fair?
Speaker 1 (04:44):
I am I being fair to your read on this
whole space.
Speaker 3 (04:48):
I think it's absolutely correct, and maybe an anecdote can
illustrate the reasons for my skepticism. Back in twenty ten
or twenty eleven, before the fu Kushimi event, we had
a conversation with an SMR developer in the US and
with the Russians, and the conversation in twenty ten went
like this. The Russians said, we're going to have a
(05:10):
SMR operating north the Arctic Circle by twenty twenty, and
the US SMR developer said, well, we will have a
SMR operating in the US by twenty twenty. Come twenty twenty,
what has happened is that the Russians are operating in
SMR north of the Arctic Circle in a floating nuclear
power plant, a tremendous innovation that has implications for global
(05:33):
markets in South Asia and in Pacific region, and the
US development looks like, well, we might be likely if
we have something by twenty thirty. So I'm trying to
look and say, well, what has happened to the US
industry why we can't deliver where you look at the
Russians and they are very very aggressive in delivering SMRs
(05:54):
in remote places, and they're leading global construction, and so
I sort of am and wondering what it is that
has handicapped the US industry so we can't build, And
there are a whole slew of reasons for doing so.
But that's why I remain skeptical, because what's really really
important is not so much policy push but market pull.
(06:16):
Then I use the analogy of pushing a string as
opposed to pulling a string, And so if we had
a lot of market pull, if you until the executives
stood up, raises hands says, I want a nuclear reactor
that's a very very strong single and we're starting to
see that from the hyperscalers because they are facing tremendous
demands for electricity to power their data centers.
Speaker 1 (06:36):
I want us to explore this idea of market pull,
and we'll get to it in de course. And also
I think we just a moment, will we'll dive into
some of the reasons or your assessment of the reasons
why the US has sort of fallen behind in this race.
One thing I meant to mention, for those of you
who are not familiar with the term SMO that sounds
for small modular reactor. It's a next generation nuclear reactor,
(06:59):
and as the names just, it's significantly smaller than a
conventional nuclear actor and therefore is less restricted by where
it can be deployed. Before we dive into the reasons
why we think that nuclear progress in the US has
fallen so far behind, I think that you actually, and
you laid it out really well in the note you
recently published the number of reactors under construction worldwide by
(07:23):
the country, not of where they're being constructed, but by
where the technology comes from. It paints a very stark picture.
Can you just really illustrate your point talk us through
that very quickly.
Speaker 3 (07:33):
So, the country in which the greatest construction effort is
going on as China, something like twenty eight twenty nine reactors.
Of those twenty eight twenty nine reactors for those reactors
are being built by the Russians. Russia is only building
four reactors in its own country, but it's also building
four reactors in Turkey, four reactors in Egypt, two reactors
(07:54):
in Bangladesh, and four reactors in India. So that brings
Russia to a total amount of twenty six reactors under
construction that are Russian designs, and if you compare that
to the US, there are no nuclear reactors under construction
of US design. Now there's an issue here is that
China is building several CAP one thousands. CAP one thousands
(08:18):
are the Chinese version of the AP one thousand that
is a Westinghouse or US design. Westinghouse will argue that
is they're part of their design, but we look at
the components are eighty percent manufactured in China. There are
certain other modifications and changes that they've done, so we
characterize that perhaps incorrectly, but I think realistically as as
(08:39):
a reactor of Chinese design as opposed to US design,
that will be a debatable point.
Speaker 1 (08:44):
It's a debatable point, but you know, whatever the actual answer,
and I think there's not a right or wrong answer.
You know, the picture that emerges is very clear. China
is the biggest market for nuclear power and a significant
proportion of that is being served by Chinese supply chain,
Chinese developers, and so this puts, like with so many
other markets, China in a good position in the future
(09:05):
to be an exporter of that expertise and know how.
Russia is currently the world's leading exporter of that expertise
and know how. And the US neither has a thriving
domestic market like China which would be a platform to
become an exporter, and it is certainly not an exporter today.
So this is a pretty clear picture and it's hard
(09:25):
to argue with it. So before we talk about how
these executive orders might try and address some of this,
before we talk about the demand pool, what in your
view has gone wrong here, Like if we go back
to when you were having that conversation in twenty ten,
where there was ambitions around small modular reactors, for example,
at that point in time, maybe already the US was
being to lag, but at least people to be making
(09:47):
the claims that have a smaller modul reactor. By twenty twenty,
there must have been stakeholders in the US who felt
the US was in the race, you know, And since
then the US are so comprehensively lost.
Speaker 2 (09:56):
So what has gone wrong?
Speaker 3 (09:57):
Well, let me clarify a few things. I'm there the nuances.
Nuance is a very good word to use with regards
to the discussion of the nuclear power industry as far
as development of advanced reactors, by far in the way,
the US is in first place. We have a whole
slew of advanced reactive technologies that are being developed by
a wide variety of companies. However, we haven't gotten to
(10:19):
the point where we are licensing them or building them,
and that are two necessary steps. And licensing is a
very challenging process to undergo in the US, and it's
one of the executive orders that Trump signed on May
twenty third was to address NRC reform and but doing
so it will help speed up the process and reduce
(10:39):
the risk of these nuclear technologies. We're all new innovative technologies,
most of them coming across the finish line getting licensed
and then get it constructed and built. So I don't
want to paint a picture that there's no nuclear leadership
in the US. There's nuclear leadership as far as developing
new technologies, but we are certainly laggards in actually building
(11:00):
UCAR power plants. We have no nuclear reactors under construction
in North America, never mind in the US all lot.
Speaker 1 (11:06):
So I suppose maybe a more nuanced picture that we
could paint is, when it comes to what is happening
right now, the US has fallen behind in terms of
the deployment of nuclear technologies, and a lot of what
we've spoken about in terms of those figures refers to
conventional nuclear technologies where Russia is the global exporter of
China is the biggest market, and so the US's hopes
(11:27):
of establishing leadership globally in this space do not hinge
on I guess what you'd call say, catching up in
that area. It is making sure that this other great
hope of these next generation of technologies is that the
US doesn't get in its own way of winning that race,
which it is well positioned to win.
Speaker 2 (11:48):
Is that maybe the.
Speaker 1 (11:49):
Nuanced take of what the picture currently looks like, and
maybe what these executive orders are aiming to address is,
let's ensure that the US can capitalize on this sort
of new generation of technologies that it has led the
way in developing.
Speaker 3 (12:04):
A fundamental first step is building advanced reactors in the US,
whether or not on military basis, on federal land or
by utilities or with hyperscalar demand pull to go ahead
and do that. That's the first step. Once we start
building nuclear reactors in the US, we can expect interest
from other markets overseas to follow, and that makes a
(12:25):
lot of sense. There are a couple of proposals right
now to build reactors in Eastern Europe that have not
been built in the US, and to me, that strikes
me as a very risky proposition for the new host
country to consider a technology that has yet to be
built in the US. And I think that.
Speaker 2 (12:41):
And these are American technologies.
Speaker 3 (12:43):
American technologies or so, and we're starting to see some progress.
The most exciting development is the General Electric Kitachi nuclear
power plant that's going to be built in Ontario, Canada
by Ontario Power Generation. They're going to be four units.
Four days before the executive orders were signed by President Trump,
(13:04):
the Tennessee Value Authority, with large government utility has also
decided to submit a construction permit for several of the
same reactors. And that's a very very important key is
that the key too mass deployment of these nuclear reactors
is having a significant project pipeline. It's very hard for
a developer or a vendor of a nuclear power plan
(13:25):
to say, give me a couple of billion dollars and
I'll build your reactor. It's a much easier line, and
the financial community is much more receptive. It says, give
me a couple of billion dollars to build a factory
with which I can manufacture ten to twenty reactors, and
here's the project pipeline I have. So General Electric Hitachi,
for example, has four projects now underway, at least in Canada,
(13:48):
more in Alberta and Saskatchewan. For in the US at
the Tennessee Value Authority, some perhaps in Estonia too. The
General Electric Attachi maybe was a contender for the Great
British Nuclear Program, although Rolls Royce has seemed to have
succeeded in taking being nominated first. But that doesn't preclude
General Electric Katachi for participating in that market. And if
(14:10):
I was the UK policy makers, I've sort of divide
allocate eighty twenty percent, give eighty percent to the SMR
of Rolls Royce Company and twenty percent to General Electric
Tiktaci to create some tension in the marketplace so that
there'll be some cost considerations and that if Rolls Royce
is too expensive, we have another operation. And finally, in Poland,
(14:31):
they have talked about building twenty four of these general
electric katachis. That's a pretty long project pipeline, and they
can make the long term investment necessary to get from
a first of a kind cost to end of a
kind cost as quickly as possible. That's the secret to
getting a widespread deployment of nuclear power.
Speaker 2 (14:49):
So, I mean, that's really interesting.
Speaker 1 (14:50):
So Poland is potentially a key market for next generation
technologies because they've they've put in place dot ambition, not
just in terms of a gig target, but specifically actual
projects under development for these technologies.
Speaker 3 (15:05):
My cousins of Poland present a very complicated picture. They've
articulated that they have no nuclear power. And Poland is
the only country that built nuclear power plants and decommissioned
them without ever operating them in the wake of the
Chernobyl disaster. Now Poland has said we need six to
nine gigawatts of nuclear power to reduce our carbon footprint
(15:26):
because it's largely generating electricity through coal plants. That's very
very ambitious. There's three potential pathways that have surfaced right
now for them to do that. One, they've signed contracts
with the Westinghouse eight p one thousand for three reactors
or went to three reactors at a very very high cost.
They've also looked at the General Electric Katachi and looked
to build They've announced twenty four projects and finally the
(15:48):
Koreans wanted to get into the act as well, and
they're making proposals for a smaller one gigawatt version of
their reactor at another site. So you have three potential
solutions to Poland's nuclear ambitions. Perhaps two or three will
go through. But it's important to recognize that for Poland,
building large reactors that are manufactured in the US or
(16:10):
Korea does not necessarily solve all of their social and
political problems. You have a large percentage of the population
who is reliant on coal and a coal industry that
you're introducing technologies to reduce their participation in the Polish economy.
So the idea for Poland to sort of develop a
technology that they can build locally and create a knowledge
(16:32):
industry and industry where there is a lot of participation
from society to support the developing commercialation of lear power
is very very important. And if they can build a
lot of the components in Poland for the long term perspective,
that would be much healthier.
Speaker 1 (16:49):
So with thinking about US technologies, this is maybe partly
the reason, one of the reasons why the plan is
so much more robust if it'll relies on the US
market first. So let's bring it back to the US.
You know, we're going to get to these executive orders
in a moment, so we painted this picture. US is
very well poised in terms of next generation technologies. Maybe,
(17:11):
and I say this because I read a lot of
your research. They're not going to be commercial as soon
as some might hope, but they are still you know,
one day, these next generation nuclear technology is going to
be very relevant, and the US is in the lead
on those, but has fallen behind when it comes to
conventional nuclear technology. And so this is the narrative I'm
going with is that, you know, maybe these executive orders
(17:34):
will help ensure the success of these new technologies by
removing roadblocks. And so I think it is still important
to understand why the US fell behind in conventional nuclear
technology because I'm presuming that some of the challenges faced
there could impact the next generation of nuclear technologies and
therefore why some of these challenges need to be addressed
(17:54):
by these executive orders. So why has the US fallen
behind in conventional nuclear technology if you.
Speaker 3 (18:00):
Look over the last fifteen years. The Fukushima event in
twenty eleven in March of twenty eleven cast a poll
over the global nuclear power industries and infected countries in
different ways. Japan ended up reducing their fleet significantly, Germany
closed their entire fleet and closed them I get the
(18:20):
end of twenty twenty three or so, and in the
US we closed thirteen reactors for a variety of different purposes.
So you had this poll hanging over the industry globally.
In some countries were China and Russia paused but realized
that nuclear has a very big role to play in
their societies, and so they went forward and recovered more quickly.
(18:41):
In the US, we have a preference for renewables, and
we had some support for renewables, and so that has
been a priority in many many ways. And we also
had very cheap natural gas, and we also have very
high labor costs that made the prospect of building and
operating large new your power plants more problematic than it
(19:02):
was in other parts of the country. Remember this, Our
analysis suggests that to build a nuclear power plant in China,
they can do it for approximately one fifth cost that
it costs us to build the last two ap one
thousands in Georgia. That's a huge delta. So one can understand, well,
I can build reactors for one fifth of costs in China,
continued doing so, and so in this country where where
(19:23):
we have this high cost label attached to the nuclear
power and I don't think we'll go forward unless we
can somehow address that. And some of the executive orders
that Trump has signed may address some of those issues.
Speaker 2 (19:36):
Well, let's let's get onto the main event. Then.
Speaker 1 (19:38):
I think we've done a lot of contextualizing so far.
But we came here to talk about these executive orders.
So talk us through these executive orders and what they're
intended to accomplish, and you know your view on whether
they can accomplish those things.
Speaker 3 (19:53):
We sign four nuclear executive orders and their aim is
to revitalize the nuclear energy industry. And some of the
issues that we have or the arguments that the Nuclear
Regulatory Commission, which is the gold standard of regulation of
nuclear power, has been too constraining to the society, and
so we're talking about perhaps let's think of a way
(20:15):
to make the process less expensive, less daunting to the
companies that are trying to run down that path and
accomplish that in say twenty four months, as opposed to
forty four months that has taken the less licensed application
to get approved. So that's a very very important thing.
And we're also talking about leveraging US Department of Energy
(20:38):
research laboratories to help speed speed that forward. And that
is something that we could also have. You have a
lot of resources available to sponsor and spur research and development.
We'll try to adjuss that. And we want to reinvigorate
the nuclear industrial base, and so Trump has said, let's
try to have ten new reactors under construction by twenty
(20:59):
third and he has set a target for four hundred
giga wats of capacity, adding an additional three hundred capacity
to the existing fleet by twenty to fifty. Those are
very very ambition plans, more ambitious than the preceding plan.
It's also important that we try to develop and supply
some of these nuclear power plants to support our military
(21:22):
basis and also to support the anticipated demand from hyperscalers
to power the data centers, which is in many ways
a national security issue. We've seen some progress already. There
was a discussion about Oklahm, one of the companies that
is developing an innovative advanced react to technology, was recently
given the go ahead to move forward for supplying electricity
(21:46):
very nuclear their five banguwatt reactor to a site Alsaid
Air Force Base in Alaska, and that has created a
tremendous amount of enthusiasm for the fact that perhaps the
environment created by releasing these executive orthors may speed up
the process for the commercialization of a lot of different
advanced reactors.
Speaker 1 (22:06):
So there's this government push on various fronts to unlock
the potential of US nuclear And yet I know that
you as someone who maybe appreciates how challenging this is,
how long people have been trying, I still sense a
certain amount of skepticism. I mean, just you know, as
we said before, the title of your note was Trump
pushes nuclear, but market pull is uncertain. So the market
(22:29):
pull is a really important factor there. We can all
about the market pull in a moment, but why is
it that policy push is not enough? You use this
analogy of trying to push a piece of string. Can
we just explain a little bit more why why that
wouldn't be enough? Because in some areas policy push is enough,
but why not for nuclear.
Speaker 3 (22:47):
So if you are a utility executive, the CEO of utility,
you're at the job for seven to eight years and
your compensation is largely based upon the performance of the
utility stock. And so you may a decision, an announcement
to the world that you are going to build a
large nuclear power plant. And because we don't have the
experience and the workflows and the workforce that the Chinese
(23:11):
have now in building that, Wall Street views this, Oh
my god, they're going to go and build a nuclear
power plant. Let's short the stock. Because the Wall Street's view,
at least some of the bankers that I talked to
on a regular basis, suggests that every project in the
US will be first of a kind project, as opposed
to down the pathway towards the end of a kind.
(23:32):
And that's the case that all the workers who were
assembled for the Westinghouse AP one thousand project in Georgia,
there's no second project. They're all dispersed, and so recreating
that workforce is going to be much more challenging. So
you're starting at a new site with a large percentage
of a new workforce, and it's not like a cooker
(23:52):
cutting approach like the Chinese. The Chinese will build six
reactors at the same site, so the workforce goes the
one reactor to the next reactor, the next reactor, and
each one becomes less and less expensive. And as a
result of that, they can build reactors in a short
period of time five years as opposed to ten years,
and for a one fifth of cost that we can
over there. So the utility executive is kind of saying, well,
(24:14):
I don't want to be the next nuclear power plant
builder because of the risks to the company by making
a decision to go ahead and do that. I happen
to have visited Saudi Arabia at a time when Saudi
Arabia was considering building nuclear power plants, and the reason
I visited Saudi Arabia was to understand which company in
Saudi Arabia could be the host institution to do that,
(24:36):
and the only company that I have discovered in my
travels there was Saudi Aramco. Saudis are still discussing building
nuclear power plants, but they always end up discussing them
without any firm plants. I'm moving forward. So utilities are
wary of the cost of building a nuclear power plant,
and so they're standing back and saying I prefer not
(24:57):
to be the next one to commit. Let's see if
some some of the estimates from the US government suggests
that maybe a thirty percent drop would be an appropriate
estimate for a new nuclear power plant in the US.
That takes it from thirty four billion dollars to twenty
four billion dollars or so. That's a huge cost. The Koreans,
on the other hand, are suggesting that they can build
two large reactors in Czech Republic for eighteen nineteen billion dollars,
(25:21):
so still significantly less. But in the nuclear industry, price
because of high interest rates inflation tend to rise, and
so very infrequently do you see a nuclear project in
the US or in Western Europe coming less than it's
forecast to the cost. It's always higher, and sometimes significantly higher.
The West has a terrible track record of building large
(25:42):
nuclear power plants. It's interesting the way you describe it.
You know that utilities would rather someone else goes first.
There's various idioms we could apply to that.
Speaker 1 (25:53):
One would be the US nuclear industry faces a bit
of a chicken and egg problem. I would prefer to
say that you need a critical of projects.
Speaker 3 (26:02):
There are ideas circulating around where there should be some
sort of mechanism among US utilities to share risk and
perhaps to form consortiums so that you have access to
a project that's going through the construction phase, but you're
not on the hook for the entire cost for doing so,
and so by sharing that risk, you may have a
(26:23):
fifteen to twenty percent risk for the cost overrun. But
by doing so you start the process and perhaps the
third or fourth project you'll be able to have a
better higher confidence on what the cost will actually be.
And there's also mechanisms to isolate the cost of the
nuclear components from the construction cost, so you can offer
the utility a fixed cost contract for the reactor, pressure
(26:45):
vessel and associated nuclear commitment, and then put it on
the utility to manage the construction costs, so that you
have partially a fixed price contract and a construction contract
with the utility itself will manage and that will tend
to sort of take some of the risk way from
the large deployment risk that is slowing to US utilities
from buying Nuco. No Nuco's under construction in this country.
Speaker 1 (27:08):
I mean, it's really interesting this idea of the sort
of the high risks of project overruns, and so if
it relates to the project scale, it seems almost you know,
from what you're describing, that private sector will inherently struggle
to make this market happen. And you know, in the
US is it is the archetype of capitalism. It is
(27:29):
an inherently a country that relies on the private sector
for innovation and development, and maybe this technology, because of
the scale of involved, is not well suited to.
Speaker 2 (27:40):
Thrive in that environment.
Speaker 1 (27:41):
Now, obviously, the next generation wave of technologies are not
so big in scale, which might mean that it's less challenging.
But there are private sector organizations that do have a
certain amount of scale that goes, you know, way beyond utilities.
We think of utilities as big, but tech companies they
are another proposition entirely. And you mentioned and already the
demand pull, and you mentioned hyperscalers. Do you think they
(28:04):
can help untangle this challenging puzzle? And they certainly have
incentives to do so with the need for power for
AI and how do the executive orders from Trump sort
of enable those organizations to play a more leading role
in the development of nuclear in this country.
Speaker 3 (28:19):
So before the Trump executive authors, there was a note
I wrote and I guess December and November of last
year reflecting the fact that Amazon had participated in a
Series A or B or C investment in x Energy.
And there is also Google committed to purchase three hundred
gig ors the capacity of chirostud reactors. So you do
(28:41):
have hyperscalers, large data center companies coming in saying yes,
we have an interest in this technology and we're supportive
of that. But the question has to be is how
much money are they investing in the company itself versus
how much are they committing in a power purchase agreement
for that and so, or how strong is that commitment
(29:01):
and how quickly can the vendors mobilize the technology. Some
of these companies have yet to go through the licensing process,
so there's still licensing risk and construction risk for a
first of a kind. So the large hyperscalers are circling
the area looking where to place their bets, and we
see companies like Amazon being a leader in that effort,
(29:24):
and I would be curious to see how Meta, Microsoft
and Google will sort of follow in placing bets on
various nuclear companies.
Speaker 1 (29:32):
It's so interesting because it's almost for those large tech companies,
it's the opposite challenge that say the utilities face. The
utilities don't want to go first, they don't want to
move too quickly. They want someone else to do the
work to bring the costs down. The problem that the
large tech companies face is they need power sooner rather
than later. Is this technology ready enough? And maybe they
are less averse to investing in first of a kind
(29:54):
and being the first mover on some of these But
actually there's some of these nuclear technology developers are not
far enough along in the development process and the process
of getting licensed to meet their needs. And so do
you think the executive orders could help address some of
that of that challenge?
Speaker 3 (30:11):
Well, the executive officers address the NRC reform, they're creating
an environment that's uncertain with regards to the tax incentives
that are going to be available to the advanced nuclear
power industry. It's something that's in discussion right now even
as we sit here talking about nuclear power right now.
But I think the fundamental thing that the Executive Orders
(30:32):
done is giving government support to the industry, or vocalizing
government support. How that can be monetized is very very
important issue. China and Russia are leading the commercialization of
nuclear power because they have very strong support from the
top The Russian government is very interested in nuclear, as
is the Chinese government in very interested in nuclear We
(30:52):
have not had a significant because of our nature, because
of our capitalist system, we tend to not have such
strong from the top down support. Perhaps this is an
opportunity through the Executive Orders to demonstrate that yes, we
have it, and we're starting to see some indication of that,
specifically with the rapid announcement of the fact that Oklow,
a project that has been languishing for two years, all
(31:15):
of a sudden has been announced that now they had
the go ahead there that one's selected. So the nukea
industry moves forward like molasses. Hopefully the Executive Orders will
create an environment where we move some of the uncertainty
and gives a clear path we're going forward. What's also helping,
quite frankly, is the fact that there's been such a
Definius demanded interest in large combined cycle turpins, that the
(31:37):
backlog for that is now extending to the point that
perhaps you may not be able to get a guest
turbine soon enough to meet your requirements. And so if
you can have a very fast track for an advanced reactor,
perhaps that might be an option that becomes increasingly more attractive,
even though the technical readiness is perhaps not there, and
the technical risk and the regulatory risk still.
Speaker 1 (32:00):
I'm sort of reminded as we talk about this conversation
of that famous American movie, The Field of Dreams, which
originated the famous phrase, if you build it, they will come.
Speaker 2 (32:12):
Have you seen that movie? Yes, so you know what
I'm referring to. It's a good movie. You should check
it out if you don't know what I'm talking about.
Speaker 1 (32:18):
So it seems like this US nuclear renaissance is a
bit of a dream right now.
Speaker 2 (32:25):
You know.
Speaker 1 (32:25):
You look at what is possible, and it could be
so good for the power section in this country. It
could create jobs in the country, and so the government
is in this position of trying to build the right
environment within this framework. As we've mentioned, of a company
that is inherently driven by the private sector create the
right environment so that these projects, these technologies will come.
(32:47):
So I was saying, it reminds me of the field
of dreams. I'm left with this thought, if you build it,
they will come. Maybe that's what these executive orders are
part of. And again, this is not a partisan issue.
In quite the same way, the previous administration was also
very pro nuclear. It seems like successive US governments are
trying to figure out how to build the right environment
to allow the US to capsulize on the progress that
(33:10):
has already made in the next generation of nuclear That
is my takeaway from all of this. Interesting to see
if you think that's a bad way of thinking of
it or does that make sense to you, Chris.
Speaker 3 (33:19):
I think it makes a tremendous amount of sense. But
I'll introduce one final complicating factor. There are five pathways
to putting nuclear electrons on the grid. There's large reactors,
which is problematic in the US because of the big
deployment risk. There are small reactors that we see moving
forward in Canada and hopefully in the US. Then you
(33:41):
have advanced reactors, the reactors that offer some innovation and
a fast reactor, high temperature gas reactor a molten salt
reactor that are technologically different and perhaps won't be more
quest competitive and safer. And then you have the microreactors,
which are very small reactors can be deployed in the
back of a truck, and the lorry in an airplane yourself.
(34:01):
And finally, the biggest confusing factor perhaps is the advent
of fusion. Okay, so if you are looking to buy
nuclear electrons, there's a big shopping list, five different pathways,
different timelines, uncertain courts, different technical readiness lists, different types
of risks. So it's a very confusing landscape for the
(34:21):
utilities and hyperscalers to operate in right now. And it's
going to be fascinating to see which one of those
many many companies that are participating will cross the finish
line generate reactors or respond to your field of dreams.
Speaker 2 (34:34):
If we build it, they will come.
Speaker 1 (34:36):
Well, you know, thinking of the field of dreams. You know,
in that movie for those you haven't seen it, Kevin
Costner builds a baseball field and a bunch of ghosts
of famous baseball players show up and start playing baseball.
I don't think the film ever addresses which of the
Ghosts one at baseball. But this is a little bit
like from Kevin Costner's point of view, it didn't matter
which of the ghosts one, but for the ghosts, presumably
(34:58):
as competitive baseball players, they wanted to have been the
one to win. So maybe the government here is Kevin Costner.
So long as somebody wins, that's a good outcome. And
for the ghosts, well, they've got to turn up to
the field of the dream and compete, but at least
they have an opportunity to compete. Chris, this has been,
as always a fascinating conversation. I hope that there's more
development so we have an excuse to bring you on
(35:19):
again because I always enjoy talking to you. But thank
you very much for joining us today.
Speaker 2 (35:23):
Thank you, Tavi.
Speaker 3 (35:24):
It's always the pleasure.
Speaker 1 (35:34):
Today's episode of Switched On was produced by Cam Gray
with production assistants from Kamala Shelling. Bloomberg NIF is a
service provided by Bloomberg Finance LP and its affiliates. This
recording does not constitute, nor should it be construed, as investment,
a vice, investment recommendations, or a recommendation as to an
investment or other strategy Bloomberg ANNIF should not be considered
(35:54):
as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in
Speaker 2 (36:05):
This recording, and any liability as a result of this
recording is expressly disclaimed
This is Tom Rowland's Reese, and you're listening to Switched
on the podcast brought to you by B and EF.
After the Fukushima incident of twenty eleven, attitudes towards nuclear
power as a secure energy source shifted, with some nations
such as Germany, accelerating the phase out of its nuclear fleet,
while the US increased regulations Once in nuclear energy heavyweight,
(00:21):
the US has seen construction of nuclear plants slow to
a crawl. The country has fallen far behind Russia and
China in terms of its technology and equipment being used
for nuclear power builds around the world. The Trump administration
has made no secret of its desire to change this,
and last month issued four executive orders that seek to
reinvigorate the US's domestic nuclear power fleet. But is this
policy push enough to stimulate a risk averse private sector
(00:43):
and what forms of nuclear technology are North American companies
looking at today? I am joined by B and EF's
lead nuclear analyst, Kris Kodoonsky, and we discussed findings from
his note, Trump pushes nuclear, but market pull is uncertain.
Which B and EF plants can find at BNEF go
on the Bloomberg terminal or on BNF dot com. All right,
let's get to talk about the future of US nuclear
energy with Chris.
Speaker 2 (01:13):
Chris, welcome to the show.
Speaker 3 (01:14):
Thank you, Tom, it's a pleasure to be back. Yeah.
Speaker 1 (01:16):
I was just going to say, it doesn't feel like
it was that long ago that we had you on
the podcast.
Speaker 2 (01:22):
So why are we speaking today.
Speaker 3 (01:24):
Well, there's a lot of excitement about nuclear power in
the media, among governments and larger organizations institutions, and that
has been triggered most recently by the May twenty third
signing by President Trump of four Executive Orders. And the
four executive Orders are taking aim at some of the
fundamental issues and problems that has led to the US
(01:49):
becoming a laggard in nuclear energy construction around the world.
And so I'll be very very curious to see what
transpires and how the executive orders will be able to
work and coexist with Everetts by DOGE to sort of
cut the government workforce and create an environment where the
private sector will rally behind what is left of government
(02:11):
funding to support this to go ahead and build out
nuclear power in the country.
Speaker 1 (02:16):
So you recently published a report on this, and the
title of the report Trump pushes nuclear but market poll
is uncertain, which kind of tells maybe, I mean gives
in a nutshell where you stand on this. I think
it was interesting, and you know, when it comes to Chris,
I'm not just a fan who has come lately. I'm
familiar with your entire back catalog, so I know that
(02:37):
in December twenty twenty four you also published a piece
called US Nuclear Goals in the Cards or just an Illusion,
which was in reference to some targets put in place
by the Biden administration. And I also remember that in
May twenty twenty you published a piece I've got all
the receipts here called Trump Administration Aims to make Nuclear
Greats Again, which, unlike those other two titles, doesn't at
(03:00):
a slight skepticism on your part on the gap between
ambitions and reality. But I'm just going to read from
the executive's summary, and this is again from May twenty twenty.
The US nuclear industry has ceded global leadership to Russia
and China, as evidenced by the underwhelming presence of US
vendors participating in global markets. Be in the f questions
whether the appropriate strategic elements in place in the nfwg's plan. NFWG,
(03:24):
by the way, Sorry's Nuclear Fuel Working Group will materialize
to US re establish the US as a contender without
bipartisan support and appropriate funding. The nfwg's policy goals represent
wishful thinking rather than an executable objectives to restore global leadership.
So again, although it was in the title definitely have
your and I say this, you're someone who is I
(03:44):
think it's fair to say pro nuclear.
Speaker 2 (03:47):
I don't think that you are.
Speaker 1 (03:48):
Just saying this because you are not in favor of nuclear,
but you, I think appreciate the challenges and how far
behind the US is. So I suppose over the years
we've seen that sort of skepticism on your part. The
thing that's interesting though, is now when we look at
this sort of the pattern is Trump administration Mark one
was pro nuclear. The Biden administration for the most part
(04:10):
was kind of most of its time, I would say,
slightly neutral. It had those tax credits in the IRA
to support nuclear if the economics weren't working out. But
then right at the end there was this ambitious set
of goals set out for nuclear and then of Trump
has come back in and he has come out as
being very pro nuclear with these executive orders. So we're
(04:32):
starting to see actually a little bit of bipartisanship emerging
around nuclear. And yet you're still a bit skeptical maybe
about how challenging this is and whether that challenge is
fully appreciated.
Speaker 2 (04:43):
Is that fair?
Speaker 1 (04:44):
I am I being fair to your read on this
whole space.
Speaker 3 (04:48):
I think it's absolutely correct, and maybe an anecdote can
illustrate the reasons for my skepticism. Back in twenty ten
or twenty eleven, before the fu Kushimi event, we had
a conversation with an SMR developer in the US and
with the Russians, and the conversation in twenty ten went
like this. The Russians said, we're going to have a
(05:10):
SMR operating north the Arctic Circle by twenty twenty, and
the US SMR developer said, well, we will have a
SMR operating in the US by twenty twenty. Come twenty twenty,
what has happened is that the Russians are operating in
SMR north of the Arctic Circle in a floating nuclear
power plant, a tremendous innovation that has implications for global
(05:33):
markets in South Asia and in Pacific region, and the
US development looks like, well, we might be likely if
we have something by twenty thirty. So I'm trying to
look and say, well, what has happened to the US
industry why we can't deliver where you look at the
Russians and they are very very aggressive in delivering SMRs
(05:54):
in remote places, and they're leading global construction, and so
I sort of am and wondering what it is that
has handicapped the US industry so we can't build, And
there are a whole slew of reasons for doing so.
But that's why I remain skeptical, because what's really really
important is not so much policy push but market pull.
(06:16):
Then I use the analogy of pushing a string as
opposed to pulling a string, And so if we had
a lot of market pull, if you until the executives
stood up, raises hands says, I want a nuclear reactor
that's a very very strong single and we're starting to
see that from the hyperscalers because they are facing tremendous
demands for electricity to power their data centers.
Speaker 1 (06:36):
I want us to explore this idea of market pull,
and we'll get to it in de course. And also
I think we just a moment, will we'll dive into
some of the reasons or your assessment of the reasons
why the US has sort of fallen behind in this race.
One thing I meant to mention, for those of you
who are not familiar with the term SMO that sounds
for small modular reactor. It's a next generation nuclear reactor,
(06:59):
and as the names just, it's significantly smaller than a
conventional nuclear actor and therefore is less restricted by where
it can be deployed. Before we dive into the reasons
why we think that nuclear progress in the US has
fallen so far behind, I think that you actually, and
you laid it out really well in the note you
recently published the number of reactors under construction worldwide by
(07:23):
the country, not of where they're being constructed, but by
where the technology comes from. It paints a very stark picture.
Can you just really illustrate your point talk us through
that very quickly.
Speaker 3 (07:33):
So, the country in which the greatest construction effort is
going on as China, something like twenty eight twenty nine reactors.
Of those twenty eight twenty nine reactors for those reactors
are being built by the Russians. Russia is only building
four reactors in its own country, but it's also building
four reactors in Turkey, four reactors in Egypt, two reactors
(07:54):
in Bangladesh, and four reactors in India. So that brings
Russia to a total amount of twenty six reactors under
construction that are Russian designs, and if you compare that
to the US, there are no nuclear reactors under construction
of US design. Now there's an issue here is that
China is building several CAP one thousands. CAP one thousands
(08:18):
are the Chinese version of the AP one thousand that
is a Westinghouse or US design. Westinghouse will argue that
is they're part of their design, but we look at
the components are eighty percent manufactured in China. There are
certain other modifications and changes that they've done, so we
characterize that perhaps incorrectly, but I think realistically as as
(08:39):
a reactor of Chinese design as opposed to US design,
that will be a debatable point.
Speaker 1 (08:44):
It's a debatable point, but you know, whatever the actual answer,
and I think there's not a right or wrong answer.
You know, the picture that emerges is very clear. China
is the biggest market for nuclear power and a significant
proportion of that is being served by Chinese supply chain,
Chinese developers, and so this puts, like with so many
other markets, China in a good position in the future
(09:05):
to be an exporter of that expertise and know how.
Russia is currently the world's leading exporter of that expertise
and know how. And the US neither has a thriving
domestic market like China which would be a platform to
become an exporter, and it is certainly not an exporter today.
So this is a pretty clear picture and it's hard
(09:25):
to argue with it. So before we talk about how
these executive orders might try and address some of this,
before we talk about the demand pool, what in your
view has gone wrong here, Like if we go back
to when you were having that conversation in twenty ten,
where there was ambitions around small modular reactors, for example,
at that point in time, maybe already the US was
being to lag, but at least people to be making
(09:47):
the claims that have a smaller modul reactor. By twenty twenty,
there must have been stakeholders in the US who felt
the US was in the race, you know, And since
then the US are so comprehensively lost.
Speaker 2 (09:56):
So what has gone wrong?
Speaker 3 (09:57):
Well, let me clarify a few things. I'm there the nuances.
Nuance is a very good word to use with regards
to the discussion of the nuclear power industry as far
as development of advanced reactors, by far in the way,
the US is in first place. We have a whole
slew of advanced reactive technologies that are being developed by
a wide variety of companies. However, we haven't gotten to
(10:19):
the point where we are licensing them or building them,
and that are two necessary steps. And licensing is a
very challenging process to undergo in the US, and it's
one of the executive orders that Trump signed on May
twenty third was to address NRC reform and but doing
so it will help speed up the process and reduce
(10:39):
the risk of these nuclear technologies. We're all new innovative technologies,
most of them coming across the finish line getting licensed
and then get it constructed and built. So I don't
want to paint a picture that there's no nuclear leadership
in the US. There's nuclear leadership as far as developing
new technologies, but we are certainly laggards in actually building
(11:00):
UCAR power plants. We have no nuclear reactors under construction
in North America, never mind in the US all lot.
Speaker 1 (11:06):
So I suppose maybe a more nuanced picture that we
could paint is, when it comes to what is happening
right now, the US has fallen behind in terms of
the deployment of nuclear technologies, and a lot of what
we've spoken about in terms of those figures refers to
conventional nuclear technologies where Russia is the global exporter of
China is the biggest market, and so the US's hopes
(11:27):
of establishing leadership globally in this space do not hinge
on I guess what you'd call say, catching up in
that area. It is making sure that this other great
hope of these next generation of technologies is that the
US doesn't get in its own way of winning that race,
which it is well positioned to win.
Speaker 2 (11:48):
Is that maybe the.
Speaker 1 (11:49):
Nuanced take of what the picture currently looks like, and
maybe what these executive orders are aiming to address is,
let's ensure that the US can capitalize on this sort
of new generation of technologies that it has led the
way in developing.
Speaker 3 (12:04):
A fundamental first step is building advanced reactors in the US,
whether or not on military basis, on federal land or
by utilities or with hyperscalar demand pull to go ahead
and do that. That's the first step. Once we start
building nuclear reactors in the US, we can expect interest
from other markets overseas to follow, and that makes a
(12:25):
lot of sense. There are a couple of proposals right
now to build reactors in Eastern Europe that have not
been built in the US, and to me, that strikes
me as a very risky proposition for the new host
country to consider a technology that has yet to be
built in the US. And I think that.
Speaker 2 (12:41):
And these are American technologies.
Speaker 3 (12:43):
American technologies or so, and we're starting to see some progress.
The most exciting development is the General Electric Kitachi nuclear
power plant that's going to be built in Ontario, Canada
by Ontario Power Generation. They're going to be four units.
Four days before the executive orders were signed by President Trump,
(13:04):
the Tennessee Value Authority, with large government utility has also
decided to submit a construction permit for several of the
same reactors. And that's a very very important key is
that the key too mass deployment of these nuclear reactors
is having a significant project pipeline. It's very hard for
a developer or a vendor of a nuclear power plan
(13:25):
to say, give me a couple of billion dollars and
I'll build your reactor. It's a much easier line, and
the financial community is much more receptive. It says, give
me a couple of billion dollars to build a factory
with which I can manufacture ten to twenty reactors, and
here's the project pipeline I have. So General Electric Hitachi,
for example, has four projects now underway, at least in Canada,
(13:48):
more in Alberta and Saskatchewan. For in the US at
the Tennessee Value Authority, some perhaps in Estonia too. The
General Electric Attachi maybe was a contender for the Great
British Nuclear Program, although Rolls Royce has seemed to have
succeeded in taking being nominated first. But that doesn't preclude
General Electric Katachi for participating in that market. And if
(14:10):
I was the UK policy makers, I've sort of divide
allocate eighty twenty percent, give eighty percent to the SMR
of Rolls Royce Company and twenty percent to General Electric
Tiktaci to create some tension in the marketplace so that
there'll be some cost considerations and that if Rolls Royce
is too expensive, we have another operation. And finally, in Poland,
(14:31):
they have talked about building twenty four of these general
electric katachis. That's a pretty long project pipeline, and they
can make the long term investment necessary to get from
a first of a kind cost to end of a
kind cost as quickly as possible. That's the secret to
getting a widespread deployment of nuclear power.
Speaker 2 (14:49):
So, I mean, that's really interesting.
Speaker 1 (14:50):
So Poland is potentially a key market for next generation
technologies because they've they've put in place dot ambition, not
just in terms of a gig target, but specifically actual
projects under development for these technologies.
Speaker 3 (15:05):
My cousins of Poland present a very complicated picture. They've
articulated that they have no nuclear power. And Poland is
the only country that built nuclear power plants and decommissioned
them without ever operating them in the wake of the
Chernobyl disaster. Now Poland has said we need six to
nine gigawatts of nuclear power to reduce our carbon footprint
(15:26):
because it's largely generating electricity through coal plants. That's very
very ambitious. There's three potential pathways that have surfaced right
now for them to do that. One, they've signed contracts
with the Westinghouse eight p one thousand for three reactors
or went to three reactors at a very very high cost.
They've also looked at the General Electric Katachi and looked
to build They've announced twenty four projects and finally the
(15:48):
Koreans wanted to get into the act as well, and
they're making proposals for a smaller one gigawatt version of
their reactor at another site. So you have three potential
solutions to Poland's nuclear ambitions. Perhaps two or three will
go through. But it's important to recognize that for Poland,
building large reactors that are manufactured in the US or
(16:10):
Korea does not necessarily solve all of their social and
political problems. You have a large percentage of the population
who is reliant on coal and a coal industry that
you're introducing technologies to reduce their participation in the Polish economy.
So the idea for Poland to sort of develop a
technology that they can build locally and create a knowledge
(16:32):
industry and industry where there is a lot of participation
from society to support the developing commercialation of lear power
is very very important. And if they can build a
lot of the components in Poland for the long term perspective,
that would be much healthier.
Speaker 1 (16:49):
So with thinking about US technologies, this is maybe partly
the reason, one of the reasons why the plan is
so much more robust if it'll relies on the US
market first. So let's bring it back to the US.
You know, we're going to get to these executive orders
in a moment, so we painted this picture. US is
very well poised in terms of next generation technologies. Maybe,
(17:11):
and I say this because I read a lot of
your research. They're not going to be commercial as soon
as some might hope, but they are still you know,
one day, these next generation nuclear technology is going to
be very relevant, and the US is in the lead
on those, but has fallen behind when it comes to
conventional nuclear technology. And so this is the narrative I'm
going with is that, you know, maybe these executive orders
(17:34):
will help ensure the success of these new technologies by
removing roadblocks. And so I think it is still important
to understand why the US fell behind in conventional nuclear
technology because I'm presuming that some of the challenges faced
there could impact the next generation of nuclear technologies and
therefore why some of these challenges need to be addressed
(17:54):
by these executive orders. So why has the US fallen
behind in conventional nuclear technology if you.
Speaker 3 (18:00):
Look over the last fifteen years. The Fukushima event in
twenty eleven in March of twenty eleven cast a poll
over the global nuclear power industries and infected countries in
different ways. Japan ended up reducing their fleet significantly, Germany
closed their entire fleet and closed them I get the
(18:20):
end of twenty twenty three or so, and in the
US we closed thirteen reactors for a variety of different purposes.
So you had this poll hanging over the industry globally.
In some countries were China and Russia paused but realized
that nuclear has a very big role to play in
their societies, and so they went forward and recovered more quickly.
(18:41):
In the US, we have a preference for renewables, and
we had some support for renewables, and so that has
been a priority in many many ways. And we also
had very cheap natural gas, and we also have very
high labor costs that made the prospect of building and
operating large new your power plants more problematic than it
(19:02):
was in other parts of the country. Remember this, Our
analysis suggests that to build a nuclear power plant in China,
they can do it for approximately one fifth cost that
it costs us to build the last two ap one
thousands in Georgia. That's a huge delta. So one can understand, well,
I can build reactors for one fifth of costs in China,
continued doing so, and so in this country where where
(19:23):
we have this high cost label attached to the nuclear
power and I don't think we'll go forward unless we
can somehow address that. And some of the executive orders
that Trump has signed may address some of those issues.
Speaker 2 (19:36):
Well, let's let's get onto the main event. Then.
Speaker 1 (19:38):
I think we've done a lot of contextualizing so far.
But we came here to talk about these executive orders.
So talk us through these executive orders and what they're
intended to accomplish, and you know your view on whether
they can accomplish those things.
Speaker 3 (19:53):
We sign four nuclear executive orders and their aim is
to revitalize the nuclear energy industry. And some of the
issues that we have or the arguments that the Nuclear
Regulatory Commission, which is the gold standard of regulation of
nuclear power, has been too constraining to the society, and
so we're talking about perhaps let's think of a way
(20:15):
to make the process less expensive, less daunting to the
companies that are trying to run down that path and
accomplish that in say twenty four months, as opposed to
forty four months that has taken the less licensed application
to get approved. So that's a very very important thing.
And we're also talking about leveraging US Department of Energy
(20:38):
research laboratories to help speed speed that forward. And that
is something that we could also have. You have a
lot of resources available to sponsor and spur research and development.
We'll try to adjuss that. And we want to reinvigorate
the nuclear industrial base, and so Trump has said, let's
try to have ten new reactors under construction by twenty
(20:59):
third and he has set a target for four hundred
giga wats of capacity, adding an additional three hundred capacity
to the existing fleet by twenty to fifty. Those are
very very ambition plans, more ambitious than the preceding plan.
It's also important that we try to develop and supply
some of these nuclear power plants to support our military
(21:22):
basis and also to support the anticipated demand from hyperscalers
to power the data centers, which is in many ways
a national security issue. We've seen some progress already. There
was a discussion about Oklahm, one of the companies that
is developing an innovative advanced react to technology, was recently
given the go ahead to move forward for supplying electricity
(21:46):
very nuclear their five banguwatt reactor to a site Alsaid
Air Force Base in Alaska, and that has created a
tremendous amount of enthusiasm for the fact that perhaps the
environment created by releasing these executive orthors may speed up
the process for the commercialization of a lot of different
advanced reactors.
Speaker 1 (22:06):
So there's this government push on various fronts to unlock
the potential of US nuclear And yet I know that
you as someone who maybe appreciates how challenging this is,
how long people have been trying, I still sense a
certain amount of skepticism. I mean, just you know, as
we said before, the title of your note was Trump
pushes nuclear, but market pull is uncertain. So the market
(22:29):
pull is a really important factor there. We can all
about the market pull in a moment, but why is
it that policy push is not enough? You use this
analogy of trying to push a piece of string. Can
we just explain a little bit more why why that
wouldn't be enough? Because in some areas policy push is enough,
but why not for nuclear.
Speaker 3 (22:47):
So if you are a utility executive, the CEO of utility,
you're at the job for seven to eight years and
your compensation is largely based upon the performance of the
utility stock. And so you may a decision, an announcement
to the world that you are going to build a
large nuclear power plant. And because we don't have the
experience and the workflows and the workforce that the Chinese
(23:11):
have now in building that, Wall Street views this, Oh
my god, they're going to go and build a nuclear
power plant. Let's short the stock. Because the Wall Street's view,
at least some of the bankers that I talked to
on a regular basis, suggests that every project in the
US will be first of a kind project, as opposed
to down the pathway towards the end of a kind.
(23:32):
And that's the case that all the workers who were
assembled for the Westinghouse AP one thousand project in Georgia,
there's no second project. They're all dispersed, and so recreating
that workforce is going to be much more challenging. So
you're starting at a new site with a large percentage
of a new workforce, and it's not like a cooker
(23:52):
cutting approach like the Chinese. The Chinese will build six
reactors at the same site, so the workforce goes the
one reactor to the next reactor, the next reactor, and
each one becomes less and less expensive. And as a
result of that, they can build reactors in a short
period of time five years as opposed to ten years,
and for a one fifth of cost that we can
over there. So the utility executive is kind of saying, well,
(24:14):
I don't want to be the next nuclear power plant
builder because of the risks to the company by making
a decision to go ahead and do that. I happen
to have visited Saudi Arabia at a time when Saudi
Arabia was considering building nuclear power plants, and the reason
I visited Saudi Arabia was to understand which company in
Saudi Arabia could be the host institution to do that,
(24:36):
and the only company that I have discovered in my
travels there was Saudi Aramco. Saudis are still discussing building
nuclear power plants, but they always end up discussing them
without any firm plants. I'm moving forward. So utilities are
wary of the cost of building a nuclear power plant,
and so they're standing back and saying I prefer not
(24:57):
to be the next one to commit. Let's see if
some some of the estimates from the US government suggests
that maybe a thirty percent drop would be an appropriate
estimate for a new nuclear power plant in the US.
That takes it from thirty four billion dollars to twenty
four billion dollars or so. That's a huge cost. The Koreans,
on the other hand, are suggesting that they can build
two large reactors in Czech Republic for eighteen nineteen billion dollars,
(25:21):
so still significantly less. But in the nuclear industry, price
because of high interest rates inflation tend to rise, and
so very infrequently do you see a nuclear project in
the US or in Western Europe coming less than it's
forecast to the cost. It's always higher, and sometimes significantly higher.
The West has a terrible track record of building large
(25:42):
nuclear power plants. It's interesting the way you describe it.
You know that utilities would rather someone else goes first.
There's various idioms we could apply to that.
Speaker 1 (25:53):
One would be the US nuclear industry faces a bit
of a chicken and egg problem. I would prefer to
say that you need a critical of projects.
Speaker 3 (26:02):
There are ideas circulating around where there should be some
sort of mechanism among US utilities to share risk and
perhaps to form consortiums so that you have access to
a project that's going through the construction phase, but you're
not on the hook for the entire cost for doing so,
and so by sharing that risk, you may have a
(26:23):
fifteen to twenty percent risk for the cost overrun. But
by doing so you start the process and perhaps the
third or fourth project you'll be able to have a
better higher confidence on what the cost will actually be.
And there's also mechanisms to isolate the cost of the
nuclear components from the construction cost, so you can offer
the utility a fixed cost contract for the reactor, pressure
(26:45):
vessel and associated nuclear commitment, and then put it on
the utility to manage the construction costs, so that you
have partially a fixed price contract and a construction contract
with the utility itself will manage and that will tend
to sort of take some of the risk way from
the large deployment risk that is slowing to US utilities
from buying Nuco. No Nuco's under construction in this country.
Speaker 1 (27:08):
I mean, it's really interesting this idea of the sort
of the high risks of project overruns, and so if
it relates to the project scale, it seems almost you know,
from what you're describing, that private sector will inherently struggle
to make this market happen. And you know, in the
US is it is the archetype of capitalism. It is
(27:29):
an inherently a country that relies on the private sector
for innovation and development, and maybe this technology, because of
the scale of involved, is not well suited to.
Speaker 2 (27:40):
Thrive in that environment.
Speaker 1 (27:41):
Now, obviously, the next generation wave of technologies are not
so big in scale, which might mean that it's less challenging.
But there are private sector organizations that do have a
certain amount of scale that goes, you know, way beyond utilities.
We think of utilities as big, but tech companies they
are another proposition entirely. And you mentioned and already the
demand pull, and you mentioned hyperscalers. Do you think they
(28:04):
can help untangle this challenging puzzle? And they certainly have
incentives to do so with the need for power for
AI and how do the executive orders from Trump sort
of enable those organizations to play a more leading role
in the development of nuclear in this country.
Speaker 3 (28:19):
So before the Trump executive authors, there was a note
I wrote and I guess December and November of last
year reflecting the fact that Amazon had participated in a
Series A or B or C investment in x Energy.
And there is also Google committed to purchase three hundred
gig ors the capacity of chirostud reactors. So you do
(28:41):
have hyperscalers, large data center companies coming in saying yes,
we have an interest in this technology and we're supportive
of that. But the question has to be is how
much money are they investing in the company itself versus
how much are they committing in a power purchase agreement
for that and so, or how strong is that commitment
(29:01):
and how quickly can the vendors mobilize the technology. Some
of these companies have yet to go through the licensing process,
so there's still licensing risk and construction risk for a
first of a kind. So the large hyperscalers are circling
the area looking where to place their bets, and we
see companies like Amazon being a leader in that effort,
(29:24):
and I would be curious to see how Meta, Microsoft
and Google will sort of follow in placing bets on
various nuclear companies.
Speaker 1 (29:32):
It's so interesting because it's almost for those large tech companies,
it's the opposite challenge that say the utilities face. The
utilities don't want to go first, they don't want to
move too quickly. They want someone else to do the
work to bring the costs down. The problem that the
large tech companies face is they need power sooner rather
than later. Is this technology ready enough? And maybe they
are less averse to investing in first of a kind
(29:54):
and being the first mover on some of these But
actually there's some of these nuclear technology developers are not
far enough along in the development process and the process
of getting licensed to meet their needs. And so do
you think the executive orders could help address some of
that of that challenge?
Speaker 3 (30:11):
Well, the executive officers address the NRC reform, they're creating
an environment that's uncertain with regards to the tax incentives
that are going to be available to the advanced nuclear
power industry. It's something that's in discussion right now even
as we sit here talking about nuclear power right now.
But I think the fundamental thing that the Executive Orders
(30:32):
done is giving government support to the industry, or vocalizing
government support. How that can be monetized is very very
important issue. China and Russia are leading the commercialization of
nuclear power because they have very strong support from the
top The Russian government is very interested in nuclear, as
is the Chinese government in very interested in nuclear We
(30:52):
have not had a significant because of our nature, because
of our capitalist system, we tend to not have such
strong from the top down support. Perhaps this is an
opportunity through the Executive Orders to demonstrate that yes, we
have it, and we're starting to see some indication of that,
specifically with the rapid announcement of the fact that Oklow,
a project that has been languishing for two years, all
(31:15):
of a sudden has been announced that now they had
the go ahead there that one's selected. So the nukea
industry moves forward like molasses. Hopefully the Executive Orders will
create an environment where we move some of the uncertainty
and gives a clear path we're going forward. What's also helping,
quite frankly, is the fact that there's been such a
Definius demanded interest in large combined cycle turpins, that the
(31:37):
backlog for that is now extending to the point that
perhaps you may not be able to get a guest
turbine soon enough to meet your requirements. And so if
you can have a very fast track for an advanced reactor,
perhaps that might be an option that becomes increasingly more attractive,
even though the technical readiness is perhaps not there, and
the technical risk and the regulatory risk still.
Speaker 1 (32:00):
I'm sort of reminded as we talk about this conversation
of that famous American movie, The Field of Dreams, which
originated the famous phrase, if you build it, they will come.
Speaker 2 (32:12):
Have you seen that movie? Yes, so you know what
I'm referring to. It's a good movie. You should check
it out if you don't know what I'm talking about.
Speaker 1 (32:18):
So it seems like this US nuclear renaissance is a
bit of a dream right now.
Speaker 2 (32:25):
You know.
Speaker 1 (32:25):
You look at what is possible, and it could be
so good for the power section in this country. It
could create jobs in the country, and so the government
is in this position of trying to build the right
environment within this framework. As we've mentioned, of a company
that is inherently driven by the private sector create the
right environment so that these projects, these technologies will come.
(32:47):
So I was saying, it reminds me of the field
of dreams. I'm left with this thought, if you build it,
they will come. Maybe that's what these executive orders are
part of. And again, this is not a partisan issue.
In quite the same way, the previous administration was also
very pro nuclear. It seems like successive US governments are
trying to figure out how to build the right environment
to allow the US to capsulize on the progress that
(33:10):
has already made in the next generation of nuclear That
is my takeaway from all of this. Interesting to see
if you think that's a bad way of thinking of
it or does that make sense to you, Chris.
Speaker 3 (33:19):
I think it makes a tremendous amount of sense. But
I'll introduce one final complicating factor. There are five pathways
to putting nuclear electrons on the grid. There's large reactors,
which is problematic in the US because of the big
deployment risk. There are small reactors that we see moving
forward in Canada and hopefully in the US. Then you
(33:41):
have advanced reactors, the reactors that offer some innovation and
a fast reactor, high temperature gas reactor a molten salt
reactor that are technologically different and perhaps won't be more
quest competitive and safer. And then you have the microreactors,
which are very small reactors can be deployed in the
back of a truck, and the lorry in an airplane yourself.
(34:01):
And finally, the biggest confusing factor perhaps is the advent
of fusion. Okay, so if you are looking to buy
nuclear electrons, there's a big shopping list, five different pathways,
different timelines, uncertain courts, different technical readiness lists, different types
of risks. So it's a very confusing landscape for the
(34:21):
utilities and hyperscalers to operate in right now. And it's
going to be fascinating to see which one of those
many many companies that are participating will cross the finish
line generate reactors or respond to your field of dreams.
Speaker 2 (34:34):
If we build it, they will come.
Speaker 1 (34:36):
Well, you know, thinking of the field of dreams. You know,
in that movie for those you haven't seen it, Kevin
Costner builds a baseball field and a bunch of ghosts
of famous baseball players show up and start playing baseball.
I don't think the film ever addresses which of the
Ghosts one at baseball. But this is a little bit
like from Kevin Costner's point of view, it didn't matter
which of the ghosts one, but for the ghosts, presumably
(34:58):
as competitive baseball players, they wanted to have been the
one to win. So maybe the government here is Kevin Costner.
So long as somebody wins, that's a good outcome. And
for the ghosts, well, they've got to turn up to
the field of the dream and compete, but at least
they have an opportunity to compete. Chris, this has been,
as always a fascinating conversation. I hope that there's more
development so we have an excuse to bring you on
(35:19):
again because I always enjoy talking to you. But thank
you very much for joining us today.
Speaker 2 (35:23):
Thank you, Tavi.
Speaker 3 (35:24):
It's always the pleasure.
Speaker 1 (35:34):
Today's episode of Switched On was produced by Cam Gray
with production assistants from Kamala Shelling. Bloomberg NIF is a
service provided by Bloomberg Finance LP and its affiliates. This
recording does not constitute, nor should it be construed, as investment,
a vice, investment recommendations, or a recommendation as to an
investment or other strategy Bloomberg ANNIF should not be considered
(35:54):
as information sufficient upon which to base an investment decision.
Neither Bloomberg Finance LP nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in
Speaker 2 (36:05):
This recording, and any liability as a result of this
recording is expressly disclaimed
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