E3: Nuclear Economics

25:36We talk about Vogel 3 and Vogel 4. We started construction on four AP1000s in the United States. We're finishing two of them, right, which is Vogel 3 and 4. But there's also summer 2 and 3 in South Carolina that are now a rusting heat a heap of rebar and piping and concrete nine billion dollars worth of in south carolina not only did that experience cost the rate payers and the rate payers will still be paying that nine billion dollars probably for decades in south carolina off right increasing their power bills literally for a rusting heap of concrete and steel but it destroyed the company that ordered it.

26:18The company that ordered it, a South Carolina company, the lead order of the group of utilities that ordered it, a company called Scanna, doesn't exist anymore. It was sold at a fire sale to another utility. And even worse than that, the CEO and the chief operating officer of that company who was involved in building Sumr 2 and 3 lied to the Public Utility Commission in South Carolina under oath in an attempt to keep the project alive, thinking, if you believe him charitably, we would ultimately engineer our way out of that. And we just need to keep on that path and keep on building that plant.

27:00And that didn't actually happen. We obviously abandoned the plant. They both got caught lying and they're serving time in prison right now because of that. And we don't want to talk about this, but let's just be honest, right? Because I mean, one of the things that I think all of us are probably physicists or engineers by background. One of the things that has been drilled into us is if we're going to solve a problem, we need to accurately identify the problem. And so if you want to accurately identify the problem, now imagine yourself, you're a utility executive right now. And you watch summer two and three and your colleagues, who you knew maybe even, go to jail because they ordered this.

27:33And then you imagine Vogel 3 and Vogel 4, which just Southern Company and Georgia Powers, you know, immense credit. They persevered through a decade plus of what was in, from what I understand, somewhat of an unending nightmare of getting this plant online. And it was only, depending on how you calculate the math, you know, $10 to$15 billion over budget and only a couple of years over schedule. And then you're going to say, oh, you should just turn around and do another one. That's tricky. You're trying to convince someone to do something that maybe on paper is more expensive and is riskier and more subject to cost overruns.

28:15And oh, by the way, if you do it wrong and lie about it, then you shouldn't lie. But if you do it wrong, you end up in jail. But I do love that line from James. If we're going to solve a problem, we need to accurately identify the problem. We've touched on a number of many problems that have slowed nuclear's growth and that make it so challenging to build nuclear. Dnieper reviews, the fact that anyone with access to a lawyer can sue a project to a halt and balloon costs, like that's a huge problem. The fact that our workforce isn't well-trained for nuclear plant builds is a huge problem. Long, unpredictable timelines are a problem.

28:47The nuances of deregulated electricity markets present a problem. But of course, every way to make electricity at massive scale has tons of operational problems and known challenges, and yet we built a ton of new solar farms, lots more oil and gas. So these challenges don't explain away the underlying problem or excuse them. You still need to solve them. If we want to cut the Gordian knot at the heart of nuclear stagnation, we can identify an even simpler problem at which to swing our sword. We need to fix the economics of building a plant and or provide financing solutions that make it more comfortable for an executive at a utility to order more plants.

29:23I think that's right. If you look at the landscape today, after Vogel 4 comes online, there are no new nuclear plant projects on the docket. None. And if we want to hit our emissions goals, let alone get to a point of energy abundance, we need to fix that. Paki, how do we build more large nuclear reactors? What have we started now to hear from different people about the path forward? Thanks for listening so far. Hang on, we'll be right back after a quick word from our sponsors. So unfortunately, there's no silver bullet. I think the experts that we've spoken to have offered a number of different solutions.

30:00But as far as large nuclear projects are concerned, they all do come down to decreasing the costs and therefore the risks for the utilities and their executives. There are a number of different ways that we can do that, right? Everything from the government to just insure everything and back up all projects, kind of like they do in China and South Korea, all the way to like, we need a war effort for nuclear, or we need shipyards where we just churn out large reactors and send them throughout the country. There are a number of different solutions here. The fact of the matter is we need a lot of big, boring, beautiful, large reactors if we want to meet our emissions goals and provide clean, reliable baseload power to the grid.

30:42And that's not, I think, what you and I would have said kind of coming into this, right? That it's just this economics, this cost problem that we need to figure out. It is kind of as simple as that. It's not an innovation issue. The technology is around. It works. It's just been shunted in this weird mix of historical, cultural, yes, some economic factors that we talked about in episode two. But we have a great solution here. And nuclear is in and of itself a fantastic technology. It's just been under leverage. And we need to remember how to actually go implement it. As we think through the solutions here, one of the fun parts, if we're breaking the fourth wall of figuring out how to do this podcast.

31:21And one of the fun parts of my job generally is figuring out how to explain complex topics. And this one seems like a particularly hard one, right? Like we make it sound simple with economics, but there's so much that goes into that. Do we start with financing costs specifically because they're the biggest cost? Or do we go in on regulation where the Olara or as low as reasonably achievable policy has plants spending millions, if not billions, on anything that could possibly lower the risk of radiation exposure, which might sound good in theory, but not if a lot of it is essentially safety theater.

31:54Think like the TSA for energy. And if these costs contribute to nuclear not even being viable, we're unnecessarily missing out on a fantastic source of carbon-free energy. Totally. Or do we focus on shoring up the supply chain, which has atrophied over time? I mean, if you're only building a new plan every 10 years, that's not a great business for those vendors, and they're going to have to start charging you a lot more for the products that you need to put the plant together. Do we focus on construction? Who develops these large reactors? How do we get better at building them? It's hard to entirely blame regulators when a lot of the Vogel delays are actually, if you look at it, can be chalked up to pretty bad project management.

32:36And you got to clean up your own house first. We've had this ongoing open question with each other with guests about whether nuclear is compatible with free markets at all. In China, Russia, even South Korea, the government can say we're building more nuclear, and it just happens. Here, we have this tough mix of free markets on one hand but stringent regulation on the other that makes it challenging to build. I think we have to assume here that free markets can work, but I think maybe the best place to start is making sure that nuclear is actually on a level playing field with other energy sources.

33:07We spoke with the incredibly competent and energizing Julie Kozaraki in the Department of Energy's Loan Program Office about how market forces impact nuclear energy's ability to compete with other energy sources. Julie works with Jigar Shah, the Director of the Loan Program Office, or LPO, who you may have come across on Twitter or LinkedIn. The LPO has over$300 billion in loans and loan guarantees available to help deploy large-scale clean energy projects. Something that has consistently put nuclear at a disadvantage is an undervaluing of the benefits that nuclear provides for a resilient decarbonized grid.

33:45And so a piece of framing that we always like to remind folks, anytime Jigar posts about nuclear on Twitter or LinkedIn, more than half the comments are folks saying, you know, why are we wasting money on nuclear when solar is right here? And it's like, well, it doesn't really matter if nuclear is never as cheap as solar because it is providing such a different set of services to the grid. Nuclear does need to compete with solar paired with very long-duration energy storage. But when you look at some of the cost estimates for, you know, really long-term intraday storage that would make variable renewable generation actually on par with nuclear generation, you actually see that nuclear is likely pretty cost competitive with some of those, as I mentioned, you know, those other clean.

34:28firm options, renewables with long-duration storage or natural gas with carbon capture. I mean, similarly, although natural gas on an LCE basis, like solar or wind, is very competitive, if you are pricing in the decarbonization benefits of carbon capture, you are similarly looking at a technology that's got to be demonstrated and deployed at scale, come down the cost curve. In the case of nuclear, we at least know that we've got, you know, decades of operating experience on the reactors. If you just look at the price tag for building solar, you'll see that it does look a lot cheaper than building nuclear.

35:03However, it doesn't account for the lack of reliability or intermittency, as we discussed earlier. If you build in the long-duration storage, like batteries or carbon capture, you're looking at something much more expensive than just the solar panels themselves. And these technologies aren't fully developed or deployed yet. A very small percentage of solar farms in the U.S., for example, are coupled with long-duration storage. Most rely on natural gas peaker plants that turn on and off depending on where there's sunlight and what the grid demand is. Yeah, the undervaluing of the reliable 24-7 nature of nuclear energy does seem to be a big issue here.

35:39If we believe that reliable grid-scale power is a common good, it does beg the question of whether the government, state, or federal should be playing a bigger role in setting standards or just incentives around reliability. Exactly. And if you just left it to the free market, you might find that it all shakes out that everyone just has to keep a backup generator at their house to use during blackouts. And speaking of generators, sales are up 250 % since 2017, and the reporting on it points to grid reliability issues being the driver of those increased sales. So we've heard from Julie about how market incentives don't necessarily point to new nuclear.

36:19Now let's hear about how she sees the challenges around actually building more nuclear power plants. And the question remaining is just, can we figure out a way to manage megaproject construction such that we can bring them in reasonably on time and on budget? You know, I think that there probably is some piece around actual market reform that might be required in order to make sure that it's not just the rate basing regulated utilities who are looking at new nuclear, but that folks in deregulated markets are able to actually get compensated for and show the value that nuclear is providing to the grid.

36:57And I really hope that it doesn't take folks experiencing blackouts to realize that it is worth investing in resiliency. And I know that it is, I think, particularly because we're in a very exciting stage now where we are incrementally adding more and more renewables. I worry that there may be a tipping point beyond which each incremental level of renewables you are adding gets more expensive or more difficult or leads to less reliability. and we need as many renewables as we can possibly have. And I think nuclear is one of the best complements we have to successfully deploying renewables at scales.

37:35But it's some of those second order implications around the land use, around the transmission, around the jobs benefits that I think that we haven't, the conversation hasn't necessarily moved to what the realities of call it, you know, an 80 % truly deeply decarbonized mostly renewable system would look like. You know, the NREL Clean Future study, for example, that looked at what an all-renewables path would look like, there's sort of a very tiny footnote that says that it would require tripling the transmission capacity in the U.S. And if there is anything as difficult to build as nuclear power plants, it is transmission.

38:12Julie's perspective is so interesting here because the DOE Loan Program Office doesn't have a horse in the race. Its job is to accelerate energy transition investments by providing the cheapest loans possible to American companies working on the transition, whether it's building solar farms or batteries or specific pieces of the nuclear supply chain or even the reactors themselves. They had a$12 billion loan guarantee backing up the Vogel project. She highlighted the non-negotiable need for nuclear in the transition. And she pointed out again and again that while they're willing and ready to support these projects, the actual loan applications themselves just haven't been there.

38:52As we talked about before, there are no new large-scale nuclear power projects on the docket right now. She and Jigar Shah, who she mentioned, who runs the DOE's Loan Program Office, have both repeatedly called out the private sector for not bringing them enough projects. There's a really good episode of Jigar on the Decoupled podcast where he just lays into the nuclear industry. You know, he just says, you guys need to actually start building because we're here to provide you the loans, but no one's showing up to come get them. It was crazy in that, right? Like, I mean, we'll put the link in the show notes and the resources doc.

39:27But I've never heard a government official, you know, in a conversation with kind of somebody representing the private sector, just kind of so clearly say like, hey, I think all of you are overcomplicating this. We are here. Fill out the applications. I know it's a lot of pages, whatever, but we're here with billions of dollars waiting for you guys to get your act together. Come and get the money. Yeah, right? It's sitting there and it's waiting. I will say this. Before the IRA, which came out last year, there were so many subsidies for wind and solar. I think the number there is about like 27 times as much as nuclear for nuclear being actually much larger percentage of our grid, right?

40:08And finally, for the first time, there are now some subsidies for nuclear. So we're starting to level the playing field. It's not quite completely equal, but I'm hoping that, again, it's these types of incentives that might start to move the needle here. Yeah, and the cool thing about talking to Julie was that because she sits in her seat, kind of inside the federal government, they can talk to all of the industry executives and figure out what's actually holding them back. And they actually recently surveyed the executives on why they weren't ordering more projects or submitting more applications to the LPO.

40:38And one thing came up more than anything else. We often hear utilities and other customers say that they need to go to their boards, their shareholders, and their public utility commissions to get permission to move forward with new nuclear projects. And I think that as grateful as we are for the perseverance of the folks at Southern Company on Vogel, the cost and schedule overruns at Vogel have had a strong cautionary effect on a lot of folks. And I think that we have heard a couple of things. One was a you know, very compelling answer to the question during the researching of the liftoff report around what would it take for you as a utility to move forward with new nuclear?

41:25And the response was effectively cost overrun insurance. And they said that, look, you know, we are looking for the government or some third party to help share in what they see as potentially, you know, almost unbounded cost overruns. And a very interesting draft structure was basically, hey, if we as a utility were to move forward with a$2 billion reactor, we could cover up to 50 % of that overrun, so up to$3 billion. And we're like, past that, could we maybe split it 50-50, such that if the total cost were to run to$4 billion, God forbid, the government could perhaps, or a third-party insurer or some other party, first-loss capital, could help provide some level of forgiveness on $500 million, such that the total cost to ratepayers would be$3.5 billion versus$4 billion.

42:10And so I think some of those more innovative risk-sharing measures are often what I hear from utilities and other customers that they say they will need to move forward. Because as huge as LPO's potential loan authority, you know, over$300 billion, it is debt that has to be repaid with interest. Very, very competitive interest. But often hear from folks that effectively debt may not be enough, given that we are looking at first and early of a kind projects where we don't have that cost certainty. So I think that moves into some more creative risk-sharing mechanisms might be what it takes to break through that stalemate that we're at right now.

42:47It's free markets with a backstop. Julie told us that given the size of the numbers at play, the federal government would have to have a large role to play in overrun insurance, which would likely require legislation. This is a reason that popular support is important. Call your representatives, folks. But she and others we spoke to also said that we should do what we can to minimize overruns in the first place. The most resounding refrain there was that we need to build lots of the same reactor over and over again. Probably the Westinghouse AP1000, which we just used at Vogel, which is a 1 ,000 megawatt reactor.

43:23And we need to keep building it so that we get better at it and we come down that cost curve. And we need to start now, while we have the workforce that just got trained on the Vogel project looking for work. Julie talks a little bit about that workforce. A huge component of the nuclear supply chain is going to be the workforce that we need to deliver that. And that's not just nuclear engineers. That is a number of skilled craft and trades folks. And it's going to be tough to be able to make a compelling case to folks that they should move their career towards training in those industries if we can't point them towards a clear path with a lot more nuclear in our future.

44:01And I think that one thing that we are particularly grateful for the folks at Southern Company and Georgia Power for are upwards of 13 ,000 people went through and were trained up working on Vogel. And I really hope that there is soon a path for those folks to be working on new nuclear projects such that we can take advantage of the workforce we've trained up here in the U.S. Nick Torrin talks a little bit about the workforce coming out of Vogel as well. I mean, we just built these Vogel Reactions and that team of people who can build AP1000s. And now the AP1000 design is complete. Like it's actually been built.

44:35It's actually turned on. So it's very much de-risked, both technologically and regulatory. But like just getting someone somehow to like say, oh, yeah, I want to take that team of people and that supply chain and build the next big one. But like having seen how much of a struggle it's been, I feel like that would be the best bet is to just somehow, I don't know, get some consortium of utilities. which is how we did it in the old days. I mean, we did 10 different utilities, small utilities, built the first PWR at Yankee Row. And so, like, just getting, I don't know, somehow coordinating an effort like that to say, like, let's just build the next big light water reactor, I feel like is the most, like, sure thing, wait.

45:14And it's really getting those, you know, the serialized construction is where you start seeing benefits and overall costs. So Nick is proposing two important ideas here. First, he suggests pulling together a consortium of utilities to share the burden of developing a new reactor the way they did at Yankee Row. If you're not familiar with Yankee Row, I'll forgive you, I wasn't either. It was one of the first commercial nuclear power plants in the U.S. It came online in Massachusetts back in 1960. Back then, since pressurized water reactors were such a new technology, 10 small New England utilities came together to form the Yankee Atomic Electric Company.

45:52They pooled resources and shared risks. They each contributed their own expertise. They banded together to have a stronger voice with the regulators. They actually jointly managed the project, which I can't picture working with 10 utilities today, but 1960 was a different time. And they secured better financing with their collective balance sheets than they would have alone. Plus, they achieved economies of scale by building one large reactor instead of 10 small ones. It seems like it would be hard to pull that off today, but I like it. Yeah, I do too. It addresses a lot of the challenges that utilities still face today.

46:25And while those risks should have probably been mitigated over the last 63 years, they really haven't been. It's almost an admission that we need to go back to the beginning to then go forward. But we do have a little more momentum now. And this is where Nick's second idea comes in. He thinks that we should just pick up a design that's been approved and the team that recently built it at Vogel and just keep building them over and over, getting a little bit better each time. That's what he means by serialized construction. And that rhymes with how Julie is thinking about addressing the problem.

46:58I asked her what the world looks like when we order the same reactor five or ten times and how we get to a place where we have the confidence to make those big orders again. And she pointed to a shining example happening overseas. That world is South Korea because South Korea did exactly this. They picked one design, the APR 1400. They stuck with it, they got really good at it, and they brought the cost down, I mean, on the order of$2 ,300 a kilowatt. But what's key is that you really have to get up to exactly, you say, that critical mass of, call it, 5 to 10. And that's important for a number of reasons, because it, first of all, helps you build up the supply chain confidently that we talked about earlier.

47:40It gives you enough at-bats to actually come down the learning curve. It is interesting that in the U.S., you know, I think we're going to have a bit of a tension between the fact that we need a number of designs to succeed at scale. And we've got to try out a number of designs. But ultimately, there is likely going to have to be some consolidation of designs such that we don't have onesie twosies of different designs proliferating. And I think it's important to note that there are different market niches such that, again, multiple and quite different designs will need to be successful. Because if you think about traditional electricity scale generation, that's going to be a quite different set of technologies potentially from the high temperature heat that you're providing in industrial settings, where it's a very different business case around the high temperature heat and steam versus just electricity.

48:33What will be really critical here is the private sector moving forward and identifying what designs they feel most confident in and hopefully working together. Because the easiest way to get up to that, call it five to 10, is to pull together a buyer's club. And that doesn't necessarily just have to be utilities. And I hope that also you have a number of tech companies, for example, who just have such enormous needs for clean 24-7 power. And even if they're not interested in being in the business of operating or owning reactors, that there might be a way to match some of that cash and demand from the tech companies to be able to help pull some of the utilities and other project developers over the line.

49:20And the last point I'll make there is just that I think that another piece of the nuclear ecosystem that might be missing to ensure that we can deliver on some of that promise is this developer model that for a number of reasons, including huge tax credits, renewable portfolio standards, etc. One of the things that allowed wind and solar to take off at scale was a developer model where folks were able to take on the risk, manage the construction and hand over an asset to a utility to operate. And historically, we have had utilities lean in and take that role. And, you know, another lesson from the Vogel experience was that, you know, I remember folks at the site saying, you know, we wish Southern had leaned in earlier to take on this owner role versus the technology vendor looking to provide that.

50:06Obviously, Westinghouse is an incredible technology designer, has a great design. Historically, it's been utilities taking that owner project manager role and identifying if there could be, you know, a developer model where folks are willing to take on that construction risk, learn all those mega project lessons and develop those assets to risk averse utilities or other customers who don't necessarily, you know, industrials, tech companies, other folks, I think could be key to unlocking a huge amount of that demand. In order to ride experience curves like the one the solar industry has gone down, we need a way to benefit from the experience we're getting.

50:42First, by actually starting to build the reactors and then setting up a model that ensures that the entity that's doing it, whether utility or developer, is actually plying and building on that experience by building multiple. For his part, James Krelinstein thinks that we just need some bravery to kick us off, but agrees strongly that the tech industry has a role to play here. if different than the one Julia proposed, and that we actually need to get a developer model in place to compound the learnings across different projects. What I would like us to see is more of the focus of the smart, younger, sort of disruptive thinking people working on not building new reactor designs, but actually on doing the financial engineering that is necessary in the current ecosystem that we live in to actually allow a new build to happen, but also to be doing something like stuff like software development for ensuring new nuclear power plant builds are actually on time and on budget.

51:44And there's all sorts of places where you could talk about from everything from CAD to build the information management, supply chain management, but also really getting a developer model really deployed for the nuclear industry. One of the biggest problems that we have is that if you're a utility that orders an AP1000, OK, you're going to go to Westinghouse. They're going to provide the nuclear steam supply system. You're going to go to Bechtel that is going to manage the construction force, build the turbine island, and do a lot of the actual system integration that is necessary. But you don't ultimately have a developer who's going to just sort of take it from there.

52:21You're going to have to build up your own shop inside your utility to basically manage the construction, manage those contractors. Just like when you're building a renovation on your house, right, you need to manage your architect, manage your contractor. That's a full-time job. And what we found in my historical analysis of what's gone right and what's wrong in nuclear power plants is, yes, having a good vendor for the nuclear steam supply system, super important. Yes, the best contractor and architect and engineer, super important. But if you don't have the good management structure as the actual ultimate customer and off taker of that plant, you're not going to have a successful build.

53:03And the problem is, is we don't have a way to scale that in the United States because each utility is relatively small, right? It's serving a geographic area. It's not a national utility. So you can get even build a couple of them like Southern Company just did. you're not going to be able to immediately translate those lessons learned to a totally different, you know, region, a thousand miles away, there's going to be a totally different utility. And that lack of us being able to scale that developer model, that's where we really need to be working here is actually making sure we don't have another Vogel in summer and making sure we have a actual model that is conducive to less to capitalizing on the lessons learned.

53:47So I feel like I'm a little bit on the outside here. You, Julie, James have all mentioned this developer model. I'm familiar with a real estate developer, a solar developer. Just for the avoidance of doubt here, what is the developer model in nuclear? Yeah, it's really just someone who's going to bring everything together and be responsible for the project beginning to end. So this is everything from the vendors, like dealing with Westinghouse, buying the reactor from them, right? And all the other material, the concrete, just helping source all of the things that are needed to build. it's it's the actual crews themselves everything from like the engineers to the welders to to all these you know hundreds if not thousands of people needed to build a plant and then it's definitely the financing the bankers um how you get all that managed and then project management overall make sure this project actually stays on budget and on on timeline and is this like in real estate development where the person is just saying, I own the project.

54:50So hey, utility, I'm going to be responsible for this. I'm going to make sure it gets built on your site. I'm going to the banks, I'm going to the bankers, but I'm also putting the cash up myself and it's on me. Or are they more of the role of the project manager on anything, even including the things that touch finance, but they're not actually putting up their own money? It's definitely a hybrid and there's probably a few different flavors for how this plays out. But developers are definitely skin in the game, taking their own risk here. If you think about a solar developer, for example, they're here to make some money, but they're also going to put up some money to go into the project to make it happen.

55:23They're also going to get loans from banks and hopefully at favorable rates because they have a track record, for example, doing this. So they're putting it all together. They're putting some skin in the game, but they're also going out and getting loans, getting financing from elsewhere. I think the core point that I think Julie and James were trying to make here is that utilities just don't have the skill set to be this project manager, this financier, you know, overseeing a massive construction project like this, because this is not what they do in their day to day. And if it's something they're only going to do on average, what, every 40 years, 50 years, you know, if you worked at the utility, you'd do this once in your career.

56:02And we all know the first time you do something is certainly not going to be the most efficient way to do it. You know, you're not going to know what you're doing. And so the benefit here is that a developer is going to go from utility to utility, from place to place, and run their same playbook and get better and better and better at it and more efficient at it. The developer model just seems to make so much sense. It's like kind of how any other industry in the world would do it. The point that you make about a utility that does other things and sure has done gas plants and has done coal plants and whatever.

56:33It's not like this is the first time they've ever built a plant. But nuclear is its own unique animal. There's all the regulatory stuff. And so it does make sense that you have somebody who just does this over and over and over again and gets better and better and better at it. I just said a word, though, that I thought that I would be saying a lot more and that I thought that we'd be hearing a lot more from people, frankly, which is the regulators or the NRC, the Nuclear Regulatory Commission, or NEPA, the National Environmental Policy Act. These are the things from the outside that I thought if you said, go to 10 people in the nuclear industry and say like, what needs to change?

57:10Their answer would, I would have thought would all have been like, we need to get rid of the NRC. It would have been like the Vivek Ramaswamy approach to this whole thing. Like get rid of the NRC. NEPA needs to go. Like we'd be fine if we just didn't have this regulation in the way. And like practically none of the answers that we've gotten have included regulation. And like, maybe it's, it's certainly not as big a part as I thought it was. But is there like some hesitancy? Like it has just been so long in the nuclear industry that people have been bummed out about how the regulatory process works that like they just don't want to put blame outside themselves anymore.

57:48It just seems absolutely crazy to me that you can have this thing that can delay projects like and make them go twice as long and have full security teams and Lara like you know as low as reasonably achievable radiation like all these things that clearly make it more expensive and slower to build. And nobody's talking about that. Why do you think that is? I don't know. I think it's probably just out of vogue now. Like that was, this has been the answer for too long and people want to be contrarian and come up with something else, right? No, but in all seriousness, I actually do still think there is plenty wrong with the way that nuclear is regulated.

58:22And it is, it is absolutely contributing to cost. I don't think anyone would actually disagree with that. I think people honestly just probably got a little sick and tired of talking about it because nothing's changing. I should say that said, Congress is actually pretty aware of the NRC and the slowness there. There has been some regulation, for example, just a couple of years ago about basically commanding the NRC to come up with an advanced nuclear framework, for example. So people are aware of it. It's definitely an issue. I think people have just been unaware of all the other stuff going on, the financing questions, all the construction challenge, just like the poor project management because we haven't done these in decades, right?

59:07So I think it's more just like, let's round this out. Let's balance this all out. There isn't just one thing to blame, unfortunately. There really are just several pieces that are all compiling to making this just a real economics issue. It does make sense to say, like, to get to the point where you're not going to the regulators or you're not going to Congress right after having done Vogel and had all of these overruns, like, above and beyond anything that is the NRC's fault and saying, like, look, it's their fault. I think it's a lot more credible if you can get five, ten, whatever number it is, projects under your belt and say, like, we are good at this.

59:43We want to bring this cheap, clean energy to the rest of the country. Look at how much we've improved. And, like, here is the bottleneck. This is the last 50 % that we want to take out of this. Now you really need to help us because people love getting this cheap electricity. I don't think they have maybe that leg to stand on right now to go fight that fight. What's interesting is that the only person we spoke to who banged the drum on making specific policy changes and using regulation as something that really was in the way was Fossil Future author Alex Epstein, who you met on the last episode.

1:00:15Maybe because he comes from outside of the nuclear industry, he's willing to put more blame on the regulators and propose a solution. So, but one thing I've been looking at lately is, you know, what parts of the nuclear code are worse. And one of the things that's come up in, at least in my initial research, is that parts 50 and 53 are a lot of what's at issue. So part 50 applies to all nuclear and, and it's, it involves things like LN, like linear threshold, just making it prohibitively expensive to build this stuff. And one of the things that's at issue right now is part 53 is trying to set potentially new standards for new nuclear and have a different kind of risk model.

1:00:57So instead of having the goal be minimize nuclear risk infinitely at all costs, actually do a proper relative risk assessment. So look at, well, what's the risk of this versus other things? And then part of doing a proper relative risk assessment is not only that it's relative to others, but that it actually is based on science. But that would require jettisoning LNT in particular. So the idea would be to change part 50, but maybe the most, or a really crucial battle is as they're thinking about rules for part 53, how to make them reject a lot of what is in part 50. So at least the new nuclear has a shot at doing things.

1:01:42So that's, And I'm talking to some Congress people and there's a lot of interest in it. Alex's proposal makes a lot of sense. Let's get rid of the do anything possible to reduce any risk of radiation without weighing this against the alternatives. What's difficult is that anyone who gets close enough to the minutia of Part 53 language is probably working in the nuclear industry themselves. And they're likely trying to ingratiate themselves with the NRC, not be overly critical of the existing regulation. Whether driven by a complacent nuclear industry focused on regulatory capture or just a stagnant industry without much of a lobbying arm motivated to push for change, there hasn't historically been much of a push for NRC reform.

1:02:25I'm not going to get the exact quote right, but it's something along the lines of like once a regulation goes into place, like it's there forever, it's impossible to turn it back. And so I don't think that's going to be the first. The ratchet, the regulatory ratchet. The regulatory ratchet. it. And so I doubt that'll be the first thing. I hope that's a thing that happens sooner. I actually, in the conversations that we've had, I think my favorite idea that I've heard in our conversations, maybe with anybody, certainly with you, is just like, we have all of these coal plants being decommissioned over the next few years.

1:02:56And you have this labor force that's going to be out of work. You have these facilities that aren't fully plug and play, but certainly better adapted to nuclear than just a totally greenfield site. And I think because these people are going to be out of work and because they're like kind of sympathetic to Congress people around the country and because these coal plants are spread out. My grandfather was a coal worker. I actually wonder if coal plants that are scheduled for decommissioning are the answer here. We have almost 30 % of coal plants today, which amounts to about 60 gigawatts of power, which that's the equivalent to basically 60 gigawatt scale plants, are scheduled to retire by 2035.

1:03:37So about 10 years from now. This is an opportunity that's ripe for nuclear. There's a lot of infrastructure already in place, especially those transmission lines, which actually, as we know, are some of the hardest things to permit. But you also have other, the cooling facilities and other infrastructure there already in existence. And then, as you mentioned, you have the workforce there that's about to lose thousands and thousands of jobs. They are certainly not afraid of having a power plant in their backyard. It's not going to be like, I doubt there would be any sort of NIMBY movement against this, right?

1:04:10In fact, this is actually a cleaner version of power. I think the big question will be, why will these questions not go natural gas, right? Which are cheaper and easier to build. So this is, I think, what we're up against. I think there's a lot of potential here. And I wonder if it really is about government incentives here. The utilities or the developers who are working with the utilities need to be incentivized to build clean, firm power, not just another natural gas plant. And we do know subsidies work. I mean, we saw solar and wind developers benefit pretty, pretty greatly from tax credits and other subsidies that actually made that renewables build-out possible.

1:04:50And once we develop this know-how on building nuclear and we can ease people into that with some of these subsidies, I wonder if that maybe is what gets the flywheel spinning again. Yeah. I mean, I love that one. I think for all of the reasons that you said, it's practical, it's palatable. We need to replace that energy somehow, and we need to avoid killing towns and putting the people out of the work, and nuclear could solve all of that. I also, what I really like about it is, you know, we've talked about the diffusion of popular support, that there's a lot of people who kind of like nuclear, but this could be a constituency that is like a small group of local people who really, really want nuclear because they want jobs and they want their towns to be cleaner and they want to be part of building the future.

1:05:36So this feels like the right constituency to maybe push for nuclear to replace it. Before we wrap up, we've heard a bunch of practical ideas today and we'll kind of go over them, but I want to give some air time to some like big, bold ideas, whether from private industry or the government. Nick Torin, for example, thinks that we should build reactor pretty much gigafactories. My other favorite idea is to build a factory of large reactors, a shipyard factory. So basically, and this has been seriously considered to the point that they actually bought and installed the world's biggest gantry crane in Jacksonville, Florida for a reactor gigafactory that was going to make four gigawatt scale PWRs per year on floating platforms, deliver them by floating them out.

1:06:20And they got a license from the NRC in 1982 to build the first eight of them, which is a story nobody's heard. And like that kind of thing, they were interested in that for, you know, again, that's like large modular reactors. Henry Ford comes to the AP1000. That's a really interesting idea. And like, if we wanted to get really serious about decarbonizing quickly, that's the kind of thing we should be looking into. It's like bringing Henry Ford factory production at shipyard scale to floating reactors. And the fact that it's been licensed before in like a fairly modern regulatory regime sounds crazy because it's the 80s, but that's fairly modern in the nuclear world.

1:06:58I love that from Nick. I mean, gigafactories are obviously super expensive to set up, but we know the federal government has the money to do it. I mean, we just spent$400 billion on the Inflation Reduction Act. And imagine how many gigafactories you could get for that amount. But in all seriousness, we know the government does have levers that it can pull to encourage the development of industries. And if it feels something is important to the country, it will back it up. I mean, we saw this for the renewables build out with the tax credits there and the CHIPS Act, what we're trying to do right now for reshoring things like silicon chip manufacturing.

1:07:34We also talked to the Andreessen Horowitz American Dynamism partner, David Ulovich. he's an investor in a lot of those hard tech kind of, you know, American reshoring type of activities. We talked to him about this exact topic and he thinks that the federal goal also can play more of an active role here in accelerating nuclear. And I think that would be an incredible place for government to play a role. And they can do that in the form of legislation, in the terms of, in the form of funding, in the form, and I don't think it's just tax credits. They need to just be more directed and more proactive.

1:08:10Like I said, like a nuclear version of the CHIPS Act, a changing to the way the DOE and the NRC operate by mandating a certain number of licenses be granted per year, or that a certain number of new designs be granted per year or categories of designs. I mean, I think those are all, there's all kinds of options. In fact, there's probably lots of really good ways to do this. And there is some of this happening already, but I think we could 10X it or 100X it. And I think that would be a great place for government. I think a terrible place for government is when they do things that constantly reaffirm and just go back to the incumbents.

1:08:50If they were to go back to like Weyerhaeuser or somebody and say, okay, you're the anointed energy provider for the country, I don't think that would be a very good outcome. I think what we really wanted to see is exactly, actually I think COVID was a good example of this. You want to see something where a framework was created and says like for the vaccine for COVID, it's like anyone who comes up with a vaccine that's workable, we will guarantee you the revenue. We will guarantee it. Like, you know, if you look at what happened in Europe, they went into full bureaucracy mode. You look at what happened in China, they went into full authoritarian mode.

1:09:21Like we went into full capitalist mode. And we just said like, like let's just like let everything blossom and see what works. And then we will support anyone that makes something work. And I think with energy, you do the same thing, whether it's fusion, whether it's fission, whether it's solar, whether it's battery systems, whether it's energy transportation, you just say like, let's let them all go and let's see what happens. USA. I love that answer personally for a couple of reasons. First, it combines the government's might with the entrepreneurial spirit that makes America such an engine of innovation and implementation when we do it right.

1:09:54And it does it by flipping how we think about nuclear, not as something to be approved when the NRC feels like it, but something that the NRC has to approve every year. Regulation isn't bad. It's a necessary part of capitalism. And in nuclear's case, it's made it super, super safe and super reliable. I mean, the reason that plants run 99.9 % of the time and they're so safe is in part due to the regulation. But the regulatory process has to be sped up to both unlock innovation and bring down construction timelines. Second, it focuses on the thing that we're trying to do here, change the narrative around nuclear.

1:10:32Pro-nuclear is an atrociously obvious position, and we do need to figure out all the very practical steps that need to be taken to bring down the cost of nuclear build-outs. But narrative can be the neutron fired at the uranium atom to catalyze a chain reaction. It can spark the energy needed for people, politicians, utilities, entrepreneurs, and developers alike to go out and do the hard things required to secure an energy abundant tomorrow. It reminds me of what Josh Wolf was talking about. More than anyone we've spoken to, he thinks that despite nuclear's growing popularity, popularity is still the biggest lever that we have.

1:11:07It's almost like oil and gas companies and Putin sigh up the world into hating nuclear energy, and now we basically need to sigh up them back to about being excited about it. And I think we're on our way. When we asked Josh about the biggest remaining hurdles, here is what he said. The practical one is really popularity, because politicians and their self-interest want to get elected, they need the popularity of the people. And if something is not popular with people, they're not going to talk about it. So that's number one. Number two is capital markets and debt financing. But if you can reduce the regulatory restrictions on this, if you can increase the popularity, what happens when you increase popularity, and it's true of any sector in any market, particularly new ones or newly discovered ones, is people release capital.

1:11:51They speculate that lowers the cost of capital that increases more experimentation. Yes, you get more failure, but you also get more progress. I asked Josh about how if he were the director of the CIA, he'd actually start a movement that forces change in Congress and the NRC to get more reactors built. Well, the two animating factors for anybody, particularly if you were an intel operative, are motivated greed and motivated fear. So the fear piece appeals more to a nationalistic instinct. It's something that in recent testimony I gave before Congress, China is building very aggressively in nuclear.

1:12:31And you'd say, well, that's great. It's good for the environment. And it is. I'd rather see China build nuclear than continue building coal as they are because they've become the world's largest polluter. And so coal bad, nuclear better. But one of the things that China is doing is exporting that technology. And they're exporting it to effectively states that will become increasingly dependent on China. Now, why do we care about that? It cost us about$20 billion to build the most recent two gigawatt power plant in Georgia. So call it$10,$11 billion per gigawatt. China is doing it for$2 billion, for a tenth of a cost.

1:13:07And so if you're sort of almost like a vassal state and China says, it says, hey, we'll lend you the money, we'll debt finance it, and we'll build it for you. Now, you're dependent upon them for the next few decades. You've got to pay back that debt, where they're going to shut off your electricity. You're dependent upon them for the fuel and the servicing and the maintenance and all of that. And so all of that is, I think, something that national security concerns should care deeply about. So that's one aspect. And that's sort of the fear aspect. The greed aspect is you just need typically one story for people to rally around, one narrative of success.

1:13:44That could be a public company, it could be somebody that made an investment in existing utility, like Exelon Chicago, or somebody that is just seeing runaway success, that suddenly people galvanized around. And then the third thing I would do is just what the agency and intel community did during the Cold War is look at the mediums of influence and start to get really interesting, attractive people. So those would be, you know, little messages inside of books. We have a whole genre of climate fiction. You'd want to sort of sprinkle in some pro-nuclear sentiment there. You'd want artists perhaps to galvanize around a big concert series where they're promoting elemental energy, almost like a Live Aid kind of event.

1:14:33You want some of these influencers, which I didn't even think she was real, but Isabel, I think it's Bamako. And it's just like, yeah, it's just amazing. And so what she's been doing is great. And we have new mediums to attract attention. And those are the vectors that I'd be playing on, sort of neutral influence, positive attraction of greed through markets and then institutional and national sentiment around fear, particularly as China is exporting nuclear reactors to African countries and South America. And just to be clear, this podcast, Age of Miracles, is not a CIA PSYOP. Or is it? So maybe it does come back to narrative in a more important way than maybe I wanted to admit, or at least I wanted to go explore everything else.

1:15:21I think the points of Josh make make a lot of sense, even kind of on their own. But they also tie back into a lot of the things that we've talked about before. I think these are movements that are needed in a lot of cases. Certainly the developer model is somebody responding to an economic opportunity, but to change regulation, you're going to need popular support. I love Julie's idea of having insurance for cost overruns, but if you want the federal government to do that while they are getting more supportive of nuclear, asking them to do something that's putting more federal budget at risk to support more nuclear demands a lot of popular support.

1:15:56If you can get cost overrun insurance in place, then you can get utilities or developers to order more plants. You can order them over and over and over again and kind of come down that curve and then get to the point where it's cheap enough that you don't necessarily need the government to play an active role anymore. I do think that we're in this spot now, though, where we're a little bit stuck and we need something to unstick us. And maybe that popular support and changing the narrative, as Josh suggests allows us to get a thing that we need, like just the one push that we need to set the flywheel off from the government in order to go down that cost curve.

1:16:33We spent a lot of this episode talking about economics, but it's funny. I wonder if it is this narrative vector that could come in and be that paradigm shift to actually get the flywheel going. Is it, again, the people who are demanding their coal plant be turned into a nuclear plant or the people who are out there asking for NRC reform or something else that can just catalyze some of this. You know, it could be that the narrative change is really what allows this to move forward. Maybe in conclusion here, where has all of this led us? I think we're realizing that nuclear is neither impossible nor inevitable and that it actually exists in this in-between space.

1:17:18And it's about what actions people take today. And again, going back to the narrative, is it perhaps, you know, going to come from that direction that allows us to catalyze the flywheel moving forward? It's about the policy that gets set, the decisions that utilities make, the risk that entrepreneurs are going to take or even new developers and the collective voice of people that are all going to impact how this plays out. The big takeaway for me and an important lesson that I think can be applied to a number of hard tech industries is an unsexy one. After that initial spark, whatever gets that flywheel going, and I think narrative's a part of that.

1:17:55I think government has a role to play. I think developers and entrepreneurs have a role to play. We also just need to get better at the things that we already know how to do by practicing. Pick a design, figure out the right developer model, and practice over and over and over again. Build 10 of the same reactors until we get really good, and then build more. Export the reactors and our expertise in building them around the world to the countries that could benefit most from nuclear. But you can't take the techno-optimists out of me that easily. A lot of the folks we've spoken to so far have been on Team Large Reactor.

1:18:28They've colored the way that we look at the world. They've convinced me that we need to go big. But there's an awful lot of capital and an awful lot of smart people who believe that we can innovate our way around all the mess by designing and building lots and lots of advanced and small modular reactors. We're going to need a mix of large and small reactors, existing designs, advanced designs. So far, we've focused on large reactors, but over the next couple of episodes, we're going small. We'll talk to the people trying to build the future, the nuclear entrepreneurs with fresh approaches to old problems like reactor design, fuel sources, and paths to regulation.

1:19:18And if you're feeling really generous, tell us what you think in the comments. Plus, we have a ton of resources and references in our resource hub if you want to go deeper. And we've linked them all in the show notes below. See you next week.