Nuclear Perception and Prospects With The Nuclear Energy Institute

Representative of Nuclear power is the atom

On the sixth episode of Cowen’s Energy Transition Podcast Series, Maria Korsnick, President and CEO of the Nuclear Energy Institute (NEI), joins Industrial Gas & Equipment and Energy Oilfield Services & Equipment analyst Marc Bianchi. Together they discuss the changing perception around nuclear, hurdles & opportunities for growth, domestically & abroad, and the evolving policy landscape in Washington DC.

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Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Marc Bianchi:

Okay. Hey everyone, this is Marc Bianchi here from the Cowen energy team with another installment of our Energy Transition podcast where we’re currently focused on small modular and advanced reactors. I’m delighted to be joined today by Maria Korsnick, who’s the CEO of the Nuclear Energy Institute, or NEI as most will refer to them. NEI is based in Washington D.C. and represents the industry in an effort to promote the use and growth of nuclear energy, particularly when it comes to policy and regulatory matters both in the US and abroad. Maria, thanks so much for joining us. Let’s start with a bit about your background, what brought you to NEI and what’s the overall mission of the organization?

Maria Korsnick:

Sure. Well thanks for having me. Really appreciate your interest in engaging on nuclear. I’ve been in the nuclear industry for over 35 years. I’m a nuclear engineer by education. Spent most of my career in power plants, operating nuclear plants from an engineer to an operator, ultimately to different levels of management leading to the chief nuclear officer where I was responsible for five reactors at three locations. I did that for five years. My desire to come to NEI was really one of the industry operates the plants very well. Even today the US fleet has a greater than 90% capacity factor and has had greater than 90% for over two decades.

And my challenge was I don’t think people sufficiently understand and appreciate nuclear power, so I can continue to work at power plants and enjoy that work. I enjoyed it very much. But I wanted to translate that work that I understood and have spent my career doing with policy makers and with regulators and with the public to really just better recognize and understand the true value of our commercial nuclear fleet. And that’s what brought me to NEI.

Marc Bianchi:

Okay, great. And maybe what would you say is the stated mission? I guess I alluded to a little bit in the preamble there, but just, how would you describe it in an elevator pitch?

Maria Korsnick:

Yeah, really. Actually you were right on target. It’s to promote the use and growth of nuclear energy through efficient operations and effective pulse. And we do that on behalf of all of our members. We have over 300 members of NEI and that includes the whole value chain from universities to supply chain, to utilities, to new reactor developers, legal firms, insurance firms, and so really getting that full value cut for the industry.

Marc Bianchi:

You said at a really interesting cross section of all those stakeholders. It’s going to be interesting to have this conversation. I guess, as far as priorities go. And so I’m sure there’s always things that you’re working on or the top couple, three priorities at the time for the organization. Where do you think those are right now and how might that be different if at all from where was a couple years ago? I’m just curious if there’s been any change in how things are prioritized.

Maria Korsnick:

Sure. I would say maybe just a couple of top priorities off my head. The first one would be to get the recognition of the nuclear carbon free energy in the electricity market. We can talk a little bit more in your podcast because there’s a lot that has happened recently to do that. But that’s been a very significant priority for us. I think the next priority is really to put nuclear in a bit of a new light. Think about new customers, new applications, new technologies. I think the third one would be international, that we want to bring us technology to the international market.

Marc Bianchi:

Okay, super. You’ve been doing a lot of traveling lately. You do a lot of traveling all the time, right? But just lately there’ve been a couple conferences. We were at the conference in Pittsburgh together. You were in Vienna I think for IAEA. Just what are the biggest takeaways from those events, the bleeding edge discussion that’s happening out there? What are you coming back with?

Maria Korsnick:

Well, just the conversation around nuclear is really changing. I don’t think it’s too small to literally say it’s a sea change in terms of the recognition and appreciation for nuclear even over just the last few years. And you mentioned a couple of conferences accurately that we were just at and I just came back from Vienna as you said. Let’s just pick Vienna as an example. One of the things that we do on the sidelines of the general conference, which is what brought us to Vienna, is we hold bilateral meetings with other countries. It’s a US delegation and it was led by Monica Gorman. She’s currently in the White House on the Economic Council. Most recently she came from commerce, which is the reason that she led this delegation.

But you had Secretary Granholm, you had Ambassador Holgate, you had Bonnie Jenkins, you had Joe Ruby, you had the head of our Nuclear Regulatory Commission, Christopher Hanson. And so a real sort of I’ll just say show a force if you will in terms of the US government and its understanding and recognition of nuclear. And we were meeting with other countries and probably five or six years ago there would be a couple of countries, this time we had I think three days of meetings with other countries, Ghana, Kenya, Poland, we met with Finland, the United Kingdom, just trying to you recall just off the top of my head, Japan. And so the dance card is just of really filled up in terms of interest and engagement in terms of the what’s the US doing with nuclear and then what does the US have to offer to other countries around the world.

And so just time and time again just to appreciate the volume, if you will, of the nuclear conversation. It’s definitely being turned up and it’s being turned up because people are really interested in understanding a solid game plan for how do we mitigate these effects of climate change. And then just how do we ensure that we have highly reliable, affordable electricity going forward. And from whichever direction you come, nuclear is the answer.

Marc Bianchi:

I think it’s pretty widely accepted that a lot of the renewed interest in nuclear has come from the events that transpired in Europe where there’s a renewed focus on energy reliability and energy security, both of which that are addressed quite well by nuclear. But how much do you think the increased interest is also coming from just progress on the small module or an advanced reactor side where now with these designs you can only need to develop a 300 megawatt project versus a gigawatt plus type project? Previously you can have it in six years, which is a pretty short timeline in nuclear terms and you’ve got pretty good certainty on your costs. Those are pretty attractive developments. I’m curious how much you think that has driven the interest versus the reliability and security points that I made earlier.

Maria Korsnick:

I think it’s both really. And so the energy crisis I think has really brought a lot of people’s attention to energy security matters, who you get your energy from matters, who you do business with matters. And so I think that’s really crystallized a lot of thinking. And in addition to the points that you’re making, nuclear just used to be big and we were these gigawatt size plants and off on some site that you were aware that energy was produced over there. But just at arm’s length perhaps let’s say. And with these innovations that we’re talking about that you mentioned SMRs, there’s also micro-reactors, all of a sudden nuclear has more tools in the toolkit. There’s the large ones and that’s interesting and I think we’ll still be helpful and useful to many that want that large gigawatt size reactor.

But now you have sort all those in between, if you want the midsize or if you want the really small. So whereas before, I think nuclear was a bit dismissed in some cases because, well, let’s pick Africa, they don’t even in some places in Africa don’t have a mature enough electric grid that if your answer was nuclear, how do you even use that? But now all of a sudden nuclear can be an answer. And so I think as you bring these other opportunities to the market, these other innovations, it’s just cast a new light on nuclear where it wasn’t potentially an answer and now it is and a very reliable answer. And the more you look into it, not only is it more reliable, but it creates a more affordable energy.

Well that makes a lot of difference, because as you know, the ethics of energy really drive the economy. And so if the challenge is that we’re going to decarbonize, well, we have to figure out how to do that the right way and an affordable way.

Marc Bianchi:

Without a doubt. Sticking on the conference theme, so COP 27 is maybe the next big one on the horizon. Well there’s going to be the event in D.C. And you can talk about that. But with COP 27 on the horizon, what would you say would define success there? What are we going to come away from there and say that was something that happened there that we feel like it was a success and if that doesn’t happen it’s not necessarily a failure, but we just really were bummed out that didn’t happen at COP 27?

Maria Korsnick:

When I was at COP 26 in Scotland and I’ll be going to COP 27 in Egypt. And so I guess a bit of it I would say when you say what’s best, I look at it not only for that meeting but also the trend. How have things changed? I would say as you look over the last three or four years even, nuclear was a bit to the sidelines. COP was a little bit more embracing to renewables and that was of more of the prime conversation. And so one of the things I look to for success is, how’s that nuclear conversation going? Is nuclear more prevalent and more relevant in conversations? Because COP is bringing together people that are knowledgeable on the climate and what it’s going to take. And so that is the place that if you’re really serious about climate, that you should be having a conversation that includes nuclear.

And so that’s one of my ways of judging. Is nuclear still on the outside or is it working more into the mainstream conversation? A small sample. We were last year and we had a small boost about nuclear, but there was many, many different technologies and different countries that had larger pavilions let’s say for whatever it is that they were talking about. Well, this year nuclear and we’re working with the IAEA, we’re teaming together with the IAEA to have a pavilion at COP. So that’s just one small example of nuclear establishing itself, rightly so, out there amongst others, and not sort of, off to the side. I think that’s a big part of it. Nuclear should be in the main conversation.

Marc Bianchi:

Maybe you want to mention this event in D.C. So we’ve got the ministerial coming up and IAEA is hosting a financing summit around that.

Maria Korsnick:

That’s right.

Marc Bianchi:

Just maybe talk about what happens at that event in D.C. and then why there’s a financing summit happening alongside it, what’s the expectation and the goal with hosting that event?

Maria Korsnick:

Thanks for mentioning. Well first let’s start with what the event is and it’s called the Nuclear power ministerial. So it’s an international event, IAEA ministerial. This event happens every four years but it’s never been in the United States before. I think it’s very significant that it is in fact in the United States this year. But it’s an international event, so you’re going to get energy ministers from around the world attending this event and we expect very high attendance. And like in any IAEA events there’s going to be a main stage, where there’s going to be obvious conversations with government officials of different countries represented. And there’s also some significant events that are happening on the side.

And so we’re going to be hosting some of those events. And the event that you mentioned that we created is a financing summit. This is going to happen the day before, which is the 25th of October, is the financing summit and the ministerial is the 26th through the 28th of October here in D.C. And the idea that we had on bringing this financial summit together was really one of that nexus of, hey listen, we have all this international folks showing up for the ministerial and as I mentioned earlier, one of our priorities is in fact getting that US technology and that recognition that the US can play a strategic role around the world. Well, let’s bring those two ideas together.

We’re going to have representatives globally, in fact some on our summit. Rafael Grossi who’s the director general of the IAEA, he’ll be making some remarks and then facilitating a panel that includes other energy ministers as an example, but we’ll invite many folks from the financial community. And so it’s going to be a mixture of what’s going on. So new providers of technology, new developers, talking about SMRs and micro reactors as well as having that international influence. We’re really looking forward to it. We’re working with Guggenheim, we’re working also with JP Morgan as we pull this event together.

Marc Bianchi:

Really looking forward to going to that. I want to shift the conversation over to talk about perception a little bit, because there’s a few categories of perception that nuclear deals with. There’s the public perception which we’re going to talk about, and then there’s also the private market or investor perception that’s out there. And when I think about the public perception, there’s maybe some misconceptions among the public about the issues around safety and waste, but then there’s maybe some other more legitimate concerns around construction timelines and cost. And that’s when it comes into the discussion around how investors think about this stuff. But what do you see as the biggest hurdles that need to be overcome around perception and how’s that scorecard looking over the past couple years?

Maria Korsnick:

Thanks for asking. Well, there’s a lot to unpack there. In terms of public perception I would say one thing that we have routinely seen is that people that are around current operating nuclear plants have a high level of favorability about nuclear and the nuclear plant. And so what that tells you is that folks that understand it or have people that work at the plant and understand what’s going on there are left with a favorable impression. I think that’s very positive and general for nuclear to say, if you get closer to it and if you understand it, that there is a higher favorability for nuclear power. I think that’s something to be built on. You mentioned safety and waste, we don’t really hear so much about safety anymore, I’ll be honest. I think people appreciate that everybody is invested in the safety of operating these plants. I don’t hear that as so much a concern.

You do hear about waste in terms of the challenge around, well, geez, it’s out there and what are we doing with it? But there again, what I find is when you explain it and we talk about the fact that after 50 years of operation you can take all of the nuclear waste that’s been created and it fits in a Walmart store, there’s just a different appreciation for the volume of that waste. And yes, it’s something that needs a long term solution, and yes, we’re working with the government on pulling that together. But I think that also begins to put the waste conversation a little bit in perspective. That is an ongoing conversation. I think legitimately about saying can nuclear really be an answer? I think it does come down to cost and schedule.

I think people want to have a better line of site, hey, if I sign up for that project, A, is it going to go full to build? Is it going to happen on schedule? Is it going to happen on budget? And honestly we have a reputation on that from a nuclear perspective, that there’s been challenges in the past. I think that’s a reputation that we have to really earn. We have to demonstrate and show that in fact nuclear can be built on time and on schedule. I’ll point to other countries, South Korea for example, the UAE has recently completed a build and they’re continuing out on their final unit. But those have demonstrated on time and on schedule. I think there is opportunity for the US to demonstrate that we can do it too.

Marc Bianchi:

Great. I have a few more questions on perception, but just while we’re on the waste discussion, just how do you see this playing out, the long term solution for high level waste, what does that ultimately look like, do you think?

Maria Korsnick:

I think right now the waste that we have is safely stored where it is, but it’s spread out a bit. It’s at wherever the site is that it was used in the reactor, so it’s like 62 different sites. It’s very safe where it is, but it’s not really efficient necessarily that we store it in that way. I think the first step on waste is consolidating it and that’s where the Department of Energy is working on right now. Their pathway to a consolidated interim storage, which is a consent based process that they’re following. I think that’s going to take several years, but I do think that we’ll be able to land into a consent based sighting process, which will again pull this waste together instead of having it sprinkled about to the number of sites that it is.

Ultimately we do need a long term repository. Finland just open their long term repository. Again, it’s something they worked on for many years at a consent based process, found a site that was suitable and have just pursued that and to the point now that they just recently opened it for business, and ultimately we’re going to need that as well. Now this new conversation around advanced reactors, it also changes the conversation a little bit around waste. And that’s because now there’s a renewed interest in recycling and reprocessing. And so I think you’re going to hear about that over the next few years. I don’t think it removes the need for a long term repository, but I do think it places the waste into a different context where it shows that it’s necessarily waste, it’s just not useful to the current reactors, but this waste is useful and can be used by their style of reactors and some other needs.

I have a company that’s a part of NEI, that is just interested in some of the components that are in used fuel for their business and they’re making probes. Some of these probes will go in outer space, some of these probes will go very deep in the ocean, but they are using some of the components in the waste as part of their power supply. And so there again, I think people are going to begin to see, it’s not waste as in trash, it’s just waste. It can’t be used by the current reactors, but there are elements of this that are useful and useful to others. I actually think the waste conversation is going to change a bit over the next five to 10 years and I think that’ll be helpful. I think it’ll help us dial it in to what is a potential from a reprocessing perspective, and then what is the appropriate storage process.

Marc Bianchi:

That makes a lot of sense. Maybe going back to the perception stuff a bit, the way I categorize it, we’ve got all these legacy nuclear assets that are out there generating and running well, but then we’ve got all these small modular advanced reactors that are maybe the future of it. How aware would you say the public are of these new designs?

Maria Korsnick:

I’m not sure the distinction from the public’s perspective, in other words to some of the public I think nuclear is nuclear and so I’m not sure how much that it’s going to matter, but I also want to share that this picture that you painted of the future, I see all of this technology living and working together. The current technology that we have, I think you’re going to see many licensed renewals. And so we have plants that operated now 40 years going to 60 years. Now we have designs that are going from 60 years to 80 years. Nothing magic about 80, could very well be that some of those designs will go 80 to 100 years. And so I think they bring solid, reliable service and will continue to do so. I think we just recently pulled of our members and I think it was over 90% had intended to go that license extension from 60 years to 80 years as an example.

We’ve had a few already do it, but I would just say the line will quickly form. And so that’s going to happen in parallel with some of these new things if you will, coming onto the market and being built. And so I think that’s really our future. It’s not so much, these old ones, these old ones are going to shut down and go away and just sort the new ones are going to come up. Because these plants are built solid. These are infrastructure type things. I don’t know, think of the Hoover Dam or some of these things that you just look at and say, wow, that’s really stable, that’s really solid. Our plants are built like that and they’re taken care of like that. They’re maintained.

I worked at a plant near Rochester, New York called the Ginna plant and if I were to tour you in that plant today, we would walk around and I would describe it like this is a teenager, and this plant was put in operation in 1969. These plants are maintained extremely well. Components are replaced. There’s a high degree of focus and attention placed on keeping these plants very well run. And so I don’t want people to judge plants based on years of age, we should really judge these plants on how well that they’ve been cared for. And that’s why as I look to the future, I see these plants continuing to operate and very safely operating, and in addition to have these new technologies come in. Because these newer technologies as you get smaller, what I actually see playing out for nuclear, is nuclear becomes a bit more approachable.

You’re going to start pairing say a small modular reactor next to a supply facility. Maybe that’s Dow Chemical because you want that small modular reactor, maybe not for the electricity, you might want it for the steam and you’re using the steam in your process. So now you see more nuclear being co-located with some of these facilities instead of just that large gigawatt size plant off in the distance. Same thing for micro-reactors. Micro-reactors are going to like ends in some more of the remote locations, but remote locations where they need energy and you’re going to have the opportunity for this, almost think of it as a battery, it’s almost like a nuclear battery. It’s going to be able to run for 10, even 15 years without needing to be refueled.

Marc Bianchi:

And importantly probably displacing diesel, which was-

Maria Korsnick:

Absolutely.

Marc Bianchi:

… the incumbent there. One final one on the perception side and it relates to the fuel cycle, with the events in Russia and Europe, I think investors or people are concerned about the supply certainty of uranium and enriched fuel. So much of it comes from Russia and from Kazakhstan who could arguably said, is maybe aligned with Russia. But just how do you see that playing out? How much of a concern? Is that near term? Do we ultimately go back to having our own self-sustaining supply of enriched fuel in the US, just what happens there?

Maria Korsnick:

It is a concern in that Russia with the unfortunate events that are playing out in Ukraine, and our hearts go out to the Ukrainians, have really demonstrated that they’re a bad actor. I think anybody that’s doing business with Russia is taking a look and saying, really, do I still want to do business with them? And whether that’s building reactors or buying fuel, and we’re doing the same thing. Right? And we’re looking at that, and if I would break the fuel into, first you need the uranium, then you need to convert it and enrich it. Getting the uranium part that’s really available in several places around the world. And as you mentioned Kazakhstan right now a lot of countries purchase from them because low price, but there’s other places.

Canada has a lot of uranium. Australia just to name a couple of other allies. It’s not really the purchasing of the uranium, it’s the conversion and enrichment and it’s those services right now that Russia is providing. And so absolutely, we in the United States need to invest in our front end of our fuel supply. Years ago we were a large percentage of the marketplace for conversion and enrichment and we aren’t today. And so that’s something that we’re working very deliberately on with our government, with our suppliers, because now is the great time to focus on that. We just talked about all of these potentials for SMRs and micro-reactors. Well now’s the time to fix the front end of the fuel supply so that when we’re into the 2030s we’re able to really scale up and get ready for a high production of many different power plants.

I think the unfortunate case that’s playing out in Ukraine actually is an opportunity to really crystallize our thinking around the fuel supply and we’ll end up using that crisis as an opportunity to put this attention on the US fuel supply and really improve our conversion and enrichment capabilities. Now on the positive, we talked earlier about the fuel cycle, and again, you load these plants for 18 months to two years worth of fuel. So when you say, is it an immediate concern? Many of these plants are loaded now for 18 months, two years. It’s something that we have to address. It is very important that we have a continuous supply of fuel and this is where our attention is right now.

Marc Bianchi:

There was 700 million in IRA for HALEU, which isn’t the fuel that the existing reactors use, but is there enough federal support to stand up enrichment like LEU enrichment in the US, what’s out there that could help and what more is maybe needed in terms of government support?

Maria Korsnick:

We’re actually looking for more government support and attention on the low enriched uranium. And so you mentioned the 700 million for the High-Assay LEU, and that’s a part that’s not enough either, but that’s a good start as we look broadly and holistically and that’s what our Department of Energy is doing. They’re looking at the entire fuel cycle, both low enriched and High-Assay LEU, and we’re having those conversations with folks on the hill. And we’re going to continue to campaign for that. We were actually hopeful that we were able to get something in the continuing resolution and now we’ll be looking forward to potentially other opportunities for this year.

This is a strategic investment by our government for the US industry. And so we do very much want to make sure that it’s clear how important, and it’s not just for the US if you think about it, we’re talking about that international component of bringing US technology to other countries and those other countries are very, very interested. Well, it also needs to come with, and I have some fuel supply for you. Right? It’s not just us looking at US needs, it’s us being relevant in the worldwide marketplace. And part of that conversation is fuel to run the technologies that have been invented.

Marc Bianchi:

Great. I want to switch over to talking about demand outlooks and demand prospects. Public utilities are a portion of your members and I’m sure you talk to them all the time. I’m curious what you’re hearing from them in terms of interest in signing up for some of these small and advanced reactor designs. One of the worries that I have following these companies and looking at the timelines for their deployment is, if I were going to buy or sign up to buy a reactor, I’d like to see the first of a kind work and be an operation before I sign up. How are those utility customers dealing with the chicken and egg there of wanting to see proof of concept before signing up?

Maria Korsnick:

Sure. Well, let’s talk a little bit about the demand. As you mentioned we represent the utilities and we had the chief nuclear officers and we asked them, hey, behind closed doors what are you talking about within your company relative to nuclear going forward? We said we wouldn’t share it by company but we would just look at it in the aggregate. So what came back to us is they’re interested in 90 gigawatts of power from nuclear between now and 2050. So just to put that in perspective, we have about 90 gigawatts today. That’s going to be essentially doubling the amount of nuclear capacity that we have in the United States. Now, we talked, before we used to make these gigawatt size reactors, but if we’re going to do that with small modular reactors just in round numbers, let’s say 300 megawatts, if you want 90 gigawatts, well, that’s close to 300 small modular reactors. Just to give people an idea of the volume.

And so that’s the feedback that we got from the chief nuclear officers and we’re actually looking at that to try to step back and say, okay, now that’s just for electricity and that’s just people that are in the nuclear business today. So now you step back and say, okay, well those people represent 40% of the marketplace today, people that own nuclear plants in the electricity market. Essentially that’s a sampling of 40% of the electric market. It’s only going to go up from there if other people are interested and that’s just electricity and now you have people that are interested in steam. That’s what Dow Chemical, their recent announcement wanting to pair with a small modular reactor.

I would say 300 is the low end if you really start looking at all of these other pieces that are trying to come together. The demand, the pent up demand, let’s say, is very large and now we’re just talking United States. I just talked earlier about all the different conferences that we’re attending. This same level of interest is playing out in other countries. It’s an amazing amount of potential demand. And so our challenge I really don’t think is if we’re going to build and when we’re going to build, it’s can we keep up with this level of demand.

Marc Bianchi:

When do you think we start to get a lot of these announcements, is this something in the next two to three years we could see, if there’s 300 plants, how many of those would we hear about in the next two to three years? Investors want to know now what’s the time?

Maria Korsnick:

I do think you’re going to start to see fingerprints and if you’re going to say, well Maria, what do you mean? What’s a fingerprint? I think you’re going to see construction permit go into the NRC. People that are going to say, I want my approval to construct this particular design. I think you’re going to see site meds, that people are saying, well I’m not ready to build just yet, but I want to get this site or that site cleared if you will, and ready for a build. I think you’re going to continue to see different technologies put their paperwork in, if you will, for approval of a new design or a new reactor. I think those are all absolutely going to happen over the next two to three years. Again, I think with the kind of demands that we’re talking about, you’re also looking for a handoff.

And what I mean by that is you got some companies out there that are making decisions to close coal plants. They’ve either announced broadly that they’re going to close them or in some cases specifically, and they’re naming their plants and they’re naming what year they’re going to close those plants in. I think they’re looking for, now wait a minute, if I’m going to close this coal plant, then what? And we talked earlier about nuclear adding to a just transition. You close these coal plants, those are a lot of people that don’t have jobs and in some cases whole communities have been formed just because the coal plant was there. That’s definitely the case of the plant out in Kemmerer, Wyoming where the natrium plant’s going to be built.

And so the opportunity for this nuclear plant in the vicinity of where there was a coal plant, well, gosh, you have all these jobs and there’s a huge transfer of jobs between coal and nuclear. We like to make light of it a little bit to say, well in nuclear we boil the water a little different. But once you turn that water into steam, it’s power plant, just like it was a coal plant. So there’s a very high degree of transferability, I’d say greater than 75% of those coal jobs can transfer into nuclear jobs. Anyway, for lots of reasons you’re looking at this demand, let’s be smart about what I’m going to close this, I want to then in relatively quick succession be able to transfer those jobs to this new technology.

Clearly there is a very high degree of pent up, if you will, interest in nuclear and sometimes they don’t call it nuclear. They’ll say they want a carbon free load following resource or they want some round the clock carbon free attribute. All kinds of different ways to just come out and say, well nuclear answers that call. It’s the only largely scalable carbon free source that we have today.

Marc Bianchi:

You mentioned the 90 gigawatt number that came from utility members. How much of that is what we were just talking about with the replacement, right? Because DOE had this whole study about all these coal plants that could be repowered with nuclear. How much of an overlap in the Venn diagram of opportunity is there between the 90 and I think it was 300 gigawatts of coal if I remember correctly?

Maria Korsnick:

That’s right. I think there’s a high degree of overlap. I think really what it says is maybe no one study is perfect, but what we’re saying is it’s definitely not four or five reactors, however you slice it, it’s hundreds. Okay? It’s hundreds. Because again, we just ask the electric sector, you looked at that DOE report and I do think that came out like 300 gigawatts versus this 90 gigawatts. And so however you slice and dice, it’s a very, very large volume that’s needed. And when you go and step back again a minute when you start saying, I need a high volume of electricity and I need it carbon free, that’s when you have to look at that partnership between renewables.

Wind and solar clearly have a part to play in all this, but when you start having these massive amounts of gigawatts that are needed, the volume of that build, the volume of that transmission, if you try to do it just with say, wind and solar, it’s really cost prohibitive. And that’s why we really have to seriously take a look at what’s the best way to do this. And it is that partnership between a carbon-free backbone like nuclear energy and then add in the wind and solar where it makes sense and batteries where it makes sense. But that right sizes it for the customer.

Marc Bianchi:

I want to shift gears a little bit on the future of technology. There’s several small and advanced reactor designs out there. There’s some high profile ones that have won demonstration program money that we know about, but there’s dozen it seems like different designs out there in various stages of moving towards commerciality. How do you think this plays out? Do we over the next 10 to 15 years settle down into a handful of designs that get built or do we go to one design or do we have 20 different designs, which sounds like a number that’s too high. I’m just curious how you see the market evolving.

Maria Korsnick:

Thanks. Well, one thing I’ll point out between the United States and Canada right now, there’s 20 pilot projects that are underway that will show fruition or significant progress by the early 2030s. Just to give you an idea of volume, that’s a lot. It’s really an opportunity I would say for investors right now, they’re in the cat bird seat where you have of 20 different pilot projects that are playing out. It’s going to give an opportunity to watch and see, understand the regulatory process, understand the project management of it, the build on time, on schedule kind of thing. I don’t imagine these pilot projects are going to be perfect each and every one, but that data point that they create you know is going to be at the high end upon which it’s only going to get better. The schedule’s only going to get better, the cost should come down.

So from an investor perspective, you’re going to look at this and say, okay, look, this is a book end and if I’m comfortable with that book end, wow, it’s only going to get better from there, because they’re going to get better at building and more efficient at doing it. I wanted to get that out there that just to have an appreciation that there’s that many different pilot projects that are underway. I think also as an example of just sort how chalk full this innovation pipeline is, with all these things that are going to be coming to the marketplace. I do think it’s going to be multiple designs and I know on one hand people are like, oh my gosh, could you guys just decide already and just come out with one or two? Makes a lot more sense. We’ll focus on one or two.

But I’m just going to go back to the demand. This demand is immense and I would just tell you the pie is big enough. It is big enough for multiple designs. And also it’s going to depend on what you want. Some people really aren’t interested in the electricity, they want the high temperature steam. There’s going to be some designs that that really makes sense for. There’s some designs, when I say high temperature steam, we’re talking like 600 degrees centigrade steam. That’s very high and that’s higher than what the plants produce today. Okay. But if you’re not interested in the high temperature steam, the current technology that we have today, the light water technology, is fine.

And so because there’s going to be different needs, your need might be hydrogen, you can produce hydrogen with the plants we have today, you might be able to produce it more efficiently with one of these that are going to be invented. I think the need matters in terms of what your design feature is, that you’re interested in. And I think as a result of that, I think the multiple designs are going to make sense. I think also it’s going to give a chance for the marketplace, if you will, to sort shake it out a little bit and say, well this was designed for this niche. Is it working? We designed this for the steam and is that market maturing? Does that make sense? The other thing I guess just to appreciate with nuclear, you also don’t have to pick, you could make electricity during the day and hydrogen at night.

You could do high temperature steam during the day and electricity at night. And so I just think having that flexibility with this asset, I think it’s going to be very interesting in terms of where people want to cite these and how they want to use them. It’s just really an amazing time right now for nuclear. Again, I reflect back on my career and there has never been a time with this level of innovation and opportunity for nuclear, not only here in the United States, but around the world. Incredibly exciting, incredibly exciting time. I think that demand is going to be large enough for several designs to survive.

Marc Bianchi:

Yep, makes sense. Especially as you think about the different applications, high heat versus power, whatever it might be. I want to talk about the IRA, Inflation Reduction Act. There was an investment tax credit in there that is pretty meaningful. If you can check all the boxes, you can get 50% of the cost of your plant covered in a credit, which to me seems like a game changer. It’s not gotten a ton of attention. I’m just curious how you’re thinking about that, are you guys scratching your heads as to why that hasn’t got as much attention and what might it take for there to be more focus on it?

Maria Korsnick:

I’d say where it matters, I think it is getting a lot of attention. Let’s just talk about some of the numbers that we just quoted, that 90 gigawatts and some of these other studies that the DOE had done. That’s before the IRA. Okay? If people were already starting to look at nuclear before something such as this 50% investment tax credit that you talked about, can you only imagine what would happen after? I think, again, what we are looking at before I think is the low end. And I think this IRA, I think you’re going to see the volume again increase even more in terms of an opportunity for nuclear. Companies can be a little bit shy when they’re talking about nuclear. I’ll be honest, the investment community is not always so favorable. When people talk about maybe I’m going to throw my hat in the ring and pull a nuclear plant.

I think what you’re seeing right now is companies being really tentative about how much they want to talk about it. But I can tell you behind closed doors, I’m being asked to come to boards of directors and I’m being asked to come and present and create conversations. I can tell just from my own schedule and my own requests that are coming my way, that there’s a hunger and a thirst for people to understand what are the possibilities, when are they coming out, when can I know more? I think they want to build that level of confidence before you start talking about it. A point to Virginia, I think the Virginia governor just came out recently and talked about a desire and a drive for building SMRs in Virginia. And so when you’re having governors really come out and saying, hey, pick me, I’m interested in it, we’re seeing that quite a bit.

And what I mean by that is if 10 years ago we would’ve had even 10 bills that had anything to do with nuclear power working through state legislatures, I’d say that would’ve been a big deal. Today we have over 100 bills that are working their way through state legislatures, that have some nexus to commercial nuclear. There’s so many ways that you can look at this to just say there’s a thirst and a hunger and people are really wanting to understand and know more. They want to learn a little bit more about these designs, but they realize they need that reliability, they need it carbon free, they want the jobs, they want to just transition. You put all that together and you come back and you say, well that’s your nuclear power plant.

I think the IRA is only going to up it. Now you mentioned, well, hey, how come we’re not hearing so much about it? I would actually say that’s a positive. And what I mean by that is, for so long people have gotten their own little personal tax credit, we got wind tax credit and you got this tax credit. And one of the things we’ve asked for is the technology neutral tax credit. If you bring to the market the thing, in this case it’s carbon free, then you should be availed of the tax credit. And so it’s not a nuclear investment tax credit, it’s a carbon free tax credit. It’s just that you’re hearing more people talk about when they think carbon free, they think wind and solar instead of when they think carbon free, thinking nuclear and hydro and wind and solar.

That has a little bit more education to come, but I actually take it as a compliment that we wanted it to be technology neutral and then demonstrate that nuclear contributes to it.

Marc Bianchi:

We had Jigar Shah on the head of the loan program’s office for the DOE and their authorization was just increased pretty dramatically. I’m curious how you see that office helping nuclear and the build out, this 90 gigawatts and beyond, just from your perspective, where do they fit in?

Maria Korsnick:

Well, I think they’re key in a couple of ways. First of all, one of the things we talked about is, oh my gosh, if you’re going to have this high demand, what do you need to do to get ready for that? One of the things you got to get ready for is the supply chain, and we have to figure out how to get that supply chain up and ready in advance of getting that 100 orders come in, let’s get that supply chain stoked and going. I think the key role for the loan program office is to help get that supply chain area up and running. But just look at what’s happening right now. Right? There’s inflation concerns, interest rates are rising. This is a key place for the loan program office to operate where they can provide some low interest loans as part of this. And it’s even more critical when we’re in an environment of increasing interest and just when the cost of money goes up. It’s hard when you’re building things like this.

Marc Bianchi:

Outside of what we know about what’s been passed, is there any legislation that’s either being drafted right now that is really helpful or anything that maybe should be passed in the next two, three, four years that would really be a game changer that people should be looking into and thinking about?

Maria Korsnick:

Well we are very interested in the mansion rich legislation. This legislation has been really focused on international front and really helping our companies compete in the international marketplace. I think that’s a real key part of this whole equation. As we mentioned, not only is it important that we’re looking at building here, but also exporting that US technology. In fact, there was one assessment that said the opportunity, it’s like a $1.9 trillion opportunity for US companies in the international market. It’s a huge market and one of the things that this legislation will provide will really assist in that.

You mentioned it already, but we have to get the fuel supply in the United States figured out. We have to bring it home, we need to have US technology and we need to build it here for both the low enriched uranium and the High-Assay LEU. And I think that’s going to be key to come across legislation in the very near term, quite frankly.

Marc Bianchi:

Okay, great. Well maybe just wrapping it up, investors are constantly wondering what are the catalysts, what do I need to watch out for that’s going to change the investment outlook here. As you look out over the next 12 to 24 months, what do you think are the key announcements that will come from the industry to give investors confidence that everything’s on track with what we’ve been talking about here? Is it like portfolio announcements from the utilities? Is it progress on NRC licensing? I don’t know, announcements about fuel supply? What are the couple things that you think we could hear about in the next 12 to 24 months?

Maria Korsnick:

I think you’ll hear announcements on fuel supply. I think you’ll hear announcements on people putting in construction for approval. I think, again, you’ll hear people putting in site permits to get future build, but they want to get a site that they have confidence in, that they can put that nuclear plant. I think you’re also going to see utilities come out and be a little bit more direct about their nuclear plans. In fact, I just saw a headline from Duke Energy that had talked about sort their nuclear and future builds and they included SMRs in theirs. That’s an example where before I think they had talked about needing a zero emission load following resource and now they’re saying they need small modular reactors as part.

I think Duke’s leading the way. I think you’re going to see other utilities likewise come out and give a head nod that as they look at their future planning they’re looking at including nuclear. I also think you’re going to hear potentially some international announcements where in that international announcement you’ll see that they’re selecting US technology. I think all of that can play out over the next 12 to 24 months.

Marc Bianchi:

Super. Well that’s probably a good place to leave it. Maria Korsnick, CEO of NEI. Thank you so much for joining us. Really appreciate the time and look forward to chatting again soon.

Maria Korsnick:

Great to be here.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowen Insights.


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