The Exchanges

Q Yeah, let's, let's talk about, let's put it in megawatt terms for a minute. Um, so, Small is in reference to, yeah, it's in the eye of the beholder to some extent, right? So you, so like, what, what do you think an SMR, what, what defines small to you? And then like, what are the size of some of the SMRs that are being designed right now?

A Yeah, I mean, what I would think of as small is probably like less than 50 megawatts. You can think about like a megawatt per is like a thousand homes. So if I say 50 megawatts, you can think of, oh, 50,000 homes in America that would power. Um, that's what I would call small, but the industry started with small being like 200 or 300 megawatts, which is only slightly smaller than the original fleet of reactors that we built out, which was 506 hundred megawatts. Um, and now those very models have climbed up to 405 107 hundred megawatts, and they're still calling themselves SMRs. Um, and because some of the companies that have done that We're originally affiliated with SMRs. Uh, it's just, you know, it's, it's hard to use the word SMR for anything that's SMR for anything that's small at this point.

AI assessment note: “what I would think of as small is probably like less than 50 megawatts.”

Q Where do you look at as, like, the bastion of the next-gen nuclear in the world?

A I think the most activity that we've seen anywhere, like, once again, including with our own company, is in Poland. Uh, you know, there's, like, a confluence of circumstances there between, you know, sustained political and social support. Um, their energy security issues, you know, bordering Ukraine are ever-present. The fact that it's mostly coal, but yet still part of the EU, and so they're being, like, penalized for having so much coal. But they also want to shift off coal too. The fact that it is an incredibly productive and growing and industrializing country, uh, I'm, uh, so I'm like, I, I think Poland will probably lead the way in terms of, and they've got like four major projects on your way. Westinghouse building gigawatts of reactors out there, New Scale paired up with KGHM, the copper company, um, uh, GE paired up with Synthos, the chemical company, and then my company, Last Energy. I mean, we've announced almost 20 deals out there now that we've signed and are, are starting development activities on.

AI assessment note: “I think the most activity that we've seen anywhere... is in Poland.”

Q Can you just say more? What does that mean?

A So it was set up as a, as a single mandate organization, not a dual mandate organization. So a dual mandate organization is like the FDA. We know penicillin kills some people, but we're able to, um, look at the cost benefit analysis and say antibiotics are better than they are worse. And so you're allowed to commercialize penicillin and other antibiotics. And they're allowed to consider that. The NRC, the way it's set up, was a single mandate organization. Safety, not considering any other externalities. So if there isn't even the remote chance that one person might get injured in a million years, they are legally not allowed to push a design forth. Like, they can only say no. Institutionally, that's how it's set up.

AI assessment note: “it was set up as a, as a single mandate organization, not a dual mandate”

Q And that's just a function of the state of the science and engineering of the new approaches, or is it something else?

A I think it's something else. I mean, listen, their physics is great. Like, I am sure mathematically, on paper, everything they say will work, as they said. And by the way, we used to build these, all these, like, variety of technologies back in the fifties and sixties. Like, we built 50 different reactor types here in this country. I have no doubt that the reactor will work. It is the rest of the power plant that touches that reactor, and the components involved in the reactor itself, that when push comes to shove, When you actually build physical things in the real world, when it's not just on paper, the littlest things trip you up, and then when you surround that with the bureaucracy and the inspection of the nuclear industry, that every little thing that's off parameter settings requires years of investigations and a thousand different people checking and looking at it to make any decision moving forward, it just kills projects. So let me give you an example. If you were to introduce even one, even just one material science change, let's say that because of your reactor physics or your reactor chemistry, your normal three 16 stainless steel or three or four stainless steel doesn't work. So you go and you work with a metallurgist or you work with another company that has some other sort of steel alloy and you get it to work. You get it to work in a lab. Great. Okay. When push…

AI assessment note: “I think it's something else. I mean, listen, their physics is great.”

Q actually, maybe this is a better way to ask this question. Walk me through the NRC process as it exists today. Say, say your new scale, say you're somebody who's developing an SMR reactor, a new SMR reactor, a new system. What is a process that you have to go through? And then I guess in that context, we can say, like, where does this milestone fall along the process?

A Yeah, so if you want to build something, you can go between, ah, there's two different schemes that you can go, ah, in front of the NRC for. The part 50 or the part 52, and these are just two different licensing paradigms that have been set up, um, you know, over, over the last few decades. And in order to get a license, you have to submit a license application. It is at minimum, in the U.S., it's at minimum four years, ah, worth of work. No one has done it for less than one billion dollars. No one has spent less than one billion dollars in licensing fees and gotten one of these. And actually, no one in the entire history of the NRC has gone through the whole process from start to finish and turned on a reactor. In 48 years, not a single entity has gone through this process.

AI assessment note: “there's two different schemes that you can go, ah, in front of the NRC”

Q And so, given that, you would think, okay, well then, Problem solved. SMRs. Let's build smaller stuff that is modular, right? So, but as you just said, we're not building any of that really yet. Why is that? Is it just the market is new and we're not at that stage yet, or is that taking longer than it should be as well?

A Well, let me further divide up what the market actually looks like into all of the, let's say, next generation projects. So you have, you know, I think what we've been referring to as SMRs, and this would be the category of, like, the GE X 300 project, New Scale, Rolls-Royce. These are all traditional technology, for the most part, ah, but at the 300 or 400 plus megawatt scale. And then you've got maybe 50 different projects That are usually smaller, though some of them are also up to a gigawatt in size, that use some sort of advanced, quote unquote, advanced technology, some different combination of fuel, chemistry, moderator, coolant, componentry, and those are your different categories. The ones that are most realistic, even by their own admission, by the way, to be built in the next five to 10 years, are the ones that use the traditional proven reactor technology and don't introduce some sort of physics Chemistry or material science innovation. And then all of those others, by their own admission, probably won't come online until the 20, mid-twenty thirties, if ever.

AI assessment note: “The ones that are most realistic... are the ones that use the traditional proven reactor technology”

Q Okay, so why, why, how is the momentum building?

A So, um, social and political support for nuclear has never been stronger. It is coming out of the woodworks, like from all different angles. People have never even spoken to anyone from the nuclear industry, like are putting their like political and like careers on the line in support for nuclear. I think it's been, it's probably a combination of social forces and, but most of this had a tipping point about two years ago where all of a sudden it became like part of the zeitgeist, it became in vogue. To say you were in support of nuclear. I think a lot of this has to do a lot more with energy security, and then even potential like climate concerns as well, where people are just not seeing the progress that they were promised across other technologies, and they're seeing many of the downsides, and are all of a sudden like naturally, you know, like Revisiting, you know, with their, their pre, you know, their, their previous notions, their misconceptions around nuclear, and just giving it a tabula rasa, like, okay, ready to go, why don't we re-explore this? And then once you hear, like, one or two people in your ecosystem say it, a few forward, like, thinking, you know, leaning people that you affiliate with, maybe on a few other topics as well, it becomes more, like, okay for you to then say it in the public sphere, and then this builds and builds and builds upon itself, and yeah,…

AI assessment note: “a lot of this has to do a lot more with energy security, and then”

Q Alright, so what's gonna happen? Like, paint me, you know, most likely next five, 10 years in nuclear development.

A Yeah. So I'll tell you what we're doing, and then I just hope a bunch of people will copy us, and then it'll just accelerate how this all plays out. What we're doing is we're taking that standard design, no new innovation on components, um, no new change to material science, physics, chemistry. Like, we learned our lessons from, like, industry professionals who know about operating power plants, and then we just shrunk it down as small as we could, so we could build it actually modularly, Build it in a factory setting. You know, there'll still be cost overruns on the first few units, but because we've reduced the capex to under a hundred million dollars, those are like tolerable overruns. And then as you get better and build more, the costs come down and down. And then you get into a habit of building thousands of really small, in our case, 20 megawatt power plants, and then you get to increase the power. After you've proven yourself, after you've built a 120 megawatt power plants, you can build a 102 hundred megawatt power plants, and then maybe even a 102 gigawatt power plants. And so this is like our, like, defibrillator to the industry. This is our plan To resuscitate an industry that is, you know, like hanging on for dear life, and get everything back on the right track.

AI assessment note: “So I'll tell you what we're doing, and then I just hope a bunch”

Q And you're saying in the new nuclear sector, because there is nuclear getting built in the world, but it's, you're saying it's traditional reactors. This is like, what's China building, for example?

A You know, they're always building nuclear. So at any given time, they've got like, I don't know, 10 or 20 things literally being built underway, and I think they announced that they want to do hundreds more, and they probably will also. And then you've always got like 30 projects or so, I think maybe, you know, 50 now, technically, on paper, where there's literally cement being poured You know, uh, equipment being installed. Vogel, after, you know, 1015 years, is finally coming online in Georgia, here in the U.S. Uh, you know, across the world, you, you, you, various states of gigawatt-scale reactors coming online, finally, usually after 1015 years of construction. I mean, that is the main problem with the nuclear industry. People can, you know, wage all these criticisms or say that, oh, it doesn't get built because people don't like it. It's not true. The only reason that we don't have 10 times as much nuclear As we do today, both installed, but also being built, is simply because the way that we have decided to build them is terrible. Uh, just overly complex construction, like, awful financial incentives, usually the backing by governments, which the industry insists upon, ends up removing all, like, true commercial incentives, and makes these projects just drag out forever and ever and ever.

AI assessment note: “at any given time, they've got like, I don't know, 10 or 20 things”

Q stuff. I'm sure you have, have your own. Can you walk through, at some point, Congress or the President said to the NRC, we need you to overhaul your process because, for exactly the reason you described, nobody's ever gone through it, end to end, it costs a billion dollars, uh, and we need nuclear. So, what, what was that Directive, and then what has the NRC done in response?

A Yeah, so the, so this is a weird thing, because most of these types of agencies sit in the executive branch. When the NRC was created in 1975, it was actually set up as an independent agency, so the president can't really tell them to do anything. Um, so it has to be Congress. Congress passed a law saying they had to clean up their act, because once again, And once, and by the way, as I say all this, I just want to say, I'm not criticizing the people at the NRC. The people are smart and great, and I've spoken to a lot of them, and I think they're, you know, and they mean well. All my criticisms are against the institution itself, and a lot of these same critiques could be, um, um, held against many government institutions, not just the NRC uniquely, but we'll focus on the NRC here. Uh, so, yeah, Congress set them up. Independent agency. President can't tell them what to do. Congress has to tell them what to do. Congress told them to expedite it, and they didn't. Instead, they, it was already, they wanted them to streamline it, especially for these newer reactor designs. And they took all of the old regulations, the regulations that drive up the costs to ten billion, or to one billion dollars, make it take 10 years, and then they added 1200 pages of new regulations.

AI assessment note: “Congress told them to expedite it, and they didn't. Instead, they... added 1200 pages”

Q But we're not because, and even forget the US regulatory stuff, right? Say globally.

A The industry incumbents, starting in 1968 and working all the way up to 1978, Because of the way that the market was set up, They weren't allowed to get paid based on cheap and efficient power plant design. They actually got reimbursed more if they would build it slow and expensive because the way the market was set up on this cost plus model. And so that went on in this country till the nineties. But what you saw from 1968 to 1978 was a tenfold increase in price for the exact same product delivered because that was a tenfold increase in the profit that the companies were allowed to make. Make if, if the public utility commissions essentially lock you in at a fixed, um, a fixed profit, uh, like, let's say, like, five percent or 10% of whatever you build. So that, that is how market incentives and market design influenced the behavior of the incumbents, and then it got out of control by 1978. By the way, this is the year before Three Mile Island. Uh, 200 contracts were canceled, so the nuclear industry was absolutely destroyed, and then the industry actually transformed From companies that build power plants to companies that sell safety systems to existing power plants, cannibalizing their economics in that rent-and-seeking behavior. And so, all you have now, all the incumbents, the people with the IP, or the people theoretically with the IP or the knowledge to build these plan…

AI assessment note: “And so that went on in this country till the nineties.”