Ep15: Inside Diablo Canyon Nuclear Power Plant | BG2 w/ Bill Gurley & Brad Gerstner

Summary

Podcast Summary: BG2Pod with Brad Gerstner and Bill Gurley – Episode 15: Inside Diablo Canyon Nuclear Power Plant

Host/Authors: BG2Pod
Guests: Jason Calacanis, Bill Gurley, Maureen Zwalnik
Release Date: September 9, 2024
Duration: Approximately 78 minutes
Focus: Exploration of the Diablo Canyon Nuclear Power Plant, its significance in California’s energy landscape, challenges facing the nuclear industry in the U.S., and comparisons with international counterparts.

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1. Introduction

The episode kicks off with Jason Calacanis and Bill Gurley expressing their enthusiasm about visiting the Diablo Canyon Nuclear Power Plant. They emphasize the plant's role in providing substantial clean energy to California and set the stage for an in-depth discussion with Maureen Zwalnik, Vice President at Diablo Canyon.

Notable Quote:

• Jason Calacanis [00:00]: “They're banging out two and a half gigs of clean power… We have to have a mix of it all for…this beautiful nuclear facility on the Central California coastal.”

2. Background and Current Status of Diablo Canyon

Maureen Zwalnik provides a comprehensive overview of Diablo Canyon’s history, operational excellence, and its significance as California’s single largest power station. She highlights the plant's contribution to the local economy and its role in delivering dense baseload power at a remarkably low cost.

Key Points:

• Construction began in 1970, taking a decade to complete at a cost of $16 billion.
• Operational since 1985, generating approximately 8-9% of California’s total energy and 20% of its renewable energy.
• Cost-efficient energy production at about $0.06 per kilowatt-hour.

Notable Quote:

• Maureen Zwalnik [05:05]: “We have the highest compliance ranking of the Nuclear Regulatory Commission… an extraordinary team dedicated to excellence.”

3. The Importance of Nuclear Energy in California and the U.S.

Calacanis and Gurley discuss the evolving energy needs of California, especially in the context of increasing demands from data centers and AI advancements. They argue that nuclear energy, with its high capacity factors and reliability, is essential for meeting these needs, especially as renewable projects lag behind projections.

Key Points:

• Shift in energy demands due to AI, data centers, and geopolitical factors.
• Nuclear energy offers a stable, reliable baseload power that complements intermittent renewables.
• Recent extreme weather events underscore the necessity for dependable energy sources.

Notable Quote:

• Maureen Zwalnik [10:19]: “Nuclear’s capacity factors… Diablos upwards of 90%. We’re available 24/7, rain or shine.”

4. Challenges Facing Nuclear Power in the U.S.: Cost and Regulation

A significant portion of the discussion centers on the prohibitive costs and stringent regulatory environment that hinder nuclear expansion in the U.S. Maureen outlines how outdated assumptions and policy shifts led to the decision to decommission Diablo Canyon, a move now being reconsidered due to evolving energy needs.

Key Points:

• Initial decommissioning plans were based on 2015-2016 energy projections.
• Current license renewals aim to extend operations beyond 2025, contingent on regulatory approvals.
• Regulatory processes are lengthy and costly, contributing to higher construction costs.

Notable Quote:

• Bill Gurley [08:14]: “There’s no argument to decommission nuclear ahead of coal. We should take coal off first.”

5. Comparison with China and South Korea in Nuclear Construction

The conversation highlights the stark cost and efficiency differences between the U.S. and countries like China and South Korea. While the U.S. faces significant cost overruns and regulatory delays, China and South Korea are rapidly scaling their nuclear capacities at a fraction of the cost.

Key Points:

• U.S. Level 3 reactors (e.g., Vogtle) cost approximately $13 billion per gigawatt.
• In contrast, China and South Korea build similar reactors at around $2.5 billion per gigawatt.
• The U.S. lacks the scale and streamlined processes that drive down costs in other countries.

Notable Quotes:

• Bill Gurley [36:49]: “The cost differential in the United States versus China and South Korea is simply enormous… 13 to 2.5 billion per gigawatt.”
• Jason Calacanis [38:04]: “South Korea is exporting their technology at the same price point as China, a shocking delta compared to us.”

6. Small Modular Reactors (SMRs) and Future Technologies

Bill Gurley introduces the concept of Small Modular Reactors (SMRs) as a potential avenue for cost-effective nuclear expansion. He contrasts them with Level 3 fission reactors, emphasizing SMRs' flexibility and lower initial capital requirements.

Key Points:

• SMRs offer a scalable alternative, potentially reducing costs through factory production and modular deployment.
• The Navy’s successful use of nuclear-powered vessels serves as a precedent for SMRs.
• Challenges include high initial regulatory costs and the conservative nature of utility companies hesitant to take risks.

Notable Quote:

• Bill Gurley [56:39]: “SMRs have been phenomenal in the Navy… but the utility companies aren’t acting like Google and Amazon with their scaling needs.”

7. Potential Solutions and Policy Recommendations

The guests propose several strategies to overcome the barriers facing nuclear power in the U.S.:

1. Regulatory Reform: Simplify and expedite the licensing process to reduce time and costs associated with nuclear plant approvals.

   Quote:

   • Bill Gurley [69:39]: “We’ve indoctrinated ourselves in red tape… to build this next generation level three plant, you gotta rewrite the regulation from zero ground up.”

2. Public-Private Partnerships: Encourage investment from large technology companies (e.g., Meta, Amazon) to finance and support nuclear projects, leveraging their capital and strategic needs.

   Quote:

   • Jason Calacanis [60:42]: “Why don’t the hyperscalers form a consortium… build some AP1000s or daisy chain a bunch of these SMRs together.”

3. Collaborative Efforts: Foster a culture of shared best practices and open-source standards within the nuclear industry to enhance efficiency and innovation.

   Quote:

   • Bill Gurley [74:07]: “Creating an IP-free world… get everyone working on the same platform to remove single source dependency risk.”

4. Government Initiatives: Launch large-scale projects akin to the Manhattan Project or NASA’s missions to drive nuclear innovation and infrastructure development.

   Quote:

   • Bill Gurley [64:21]: “Maybe this could be applied to both SMRs and level three scale out, is we could choose to do something more like a Manhattan Project or a NASA project.”

8. Conclusion and Future Outlook

The episode concludes with an optimistic outlook on the potential resurgence of nuclear energy in the U.S., contingent upon overcoming regulatory and financial hurdles. The guests advocate for continued support of existing plants like Diablo Canyon and strategic investments in both Level 3 reactors and emerging SMR technologies to secure a sustainable and competitive energy future.

Key Points:

• Extending Diablo Canyon’s license could provide immediate clean energy benefits while paving the way for future expansions.
• Bipartisan support and strategic policy changes are crucial for revitalizing the nuclear industry.
• Emphasizing collaboration and innovation can help the U.S. regain its leadership in nuclear technology.

Notable Quotes:

• Bill Gurley [77:43]: “We should quit vilifying them and start respecting the fact that they’re executing at a level above and beyond us.”
• Jason Calacanis [78:33]: “I would love to see Governor Newsom… announce that he’s going to extend the license here for another 15 years.”

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Key Takeaways:

• Diablo Canyon’s Role: As a pivotal source of clean energy, Diablo Canyon exemplifies the potential of nuclear power to meet California’s growing energy demands.
• Regulatory and Cost Barriers: Overly stringent and fragmented regulatory processes in the U.S. significantly inflate the costs and delays associated with nuclear construction.
• Global Competitiveness: Countries like China and South Korea are rapidly advancing their nuclear capabilities, placing the U.S. at a competitive disadvantage.
• Strategic Recommendations: Implementing regulatory reforms, fostering public-private partnerships, embracing collaborative best practices, and initiating large-scale government projects are essential steps to rejuvenate the nuclear sector.

Final Thoughts: The episode underscores the critical importance of nuclear energy in achieving a sustainable and resilient energy infrastructure. By addressing the challenges head-on and leveraging strategic collaborations, the U.S. can harness nuclear power’s full potential, ensuring energy security and fostering technological innovation for decades to come.

Transcript

[Jason Calacanis]

Take Diablo Canyon. They built two nuclear reactors here. You know, this site was provisioned for six. For six reactors. I could imagine if you had four more reactors sitting here, if you could land them at the right price. You could have one reactor for Meta, one for Amazon, one for Microsoft, one for Nvidia. You could have the data center sitting right next to them. Bill, man, I couldn't be more excited to be here. We're sitting in, you know, probably your three wood distance from two nuclear reactors that are banging out two and a half gigs of clean power. We just had an incredible day with Maureen Zalnick down here at Diablo Canyon. You know, it's just this beautiful nuclear facility on the Central California coastal. It's really great to be here. When you look at this facility, you read about the positive impact on the local economy. Of course, it's the type of dense baseload power we so desperately need in California. I think you said on a previous pod, somebody showed up with the value proposition of fission today, it blow all of our minds. And here we were about ready to decommission this plant in 2016, which, as Elon has said, is incredibly brain dead. I was pretty excited to see this weekend. I was watching ESPN game day, I think it was at Texas A and M, and I see somebody holding up a sign, I love nuclear. Like college kids are now holding up signs that say I love nuclear. So it's good to finally get down here and put on our analyst hat, dig in, ask a lot of questions and be able to share it with everybody.

[Bill Gurley]

Yeah, and one thing, two things I think that are a little bit different about the podcast we're going to do today. One, you know, I think it's important to recognize we're obviously not nuclear experts. You know, we come at this from outside. That being said, the second point I would make is you and I have gone extremely deep in the past week or two and been given phenomenal access to a lot of people that have been in and around the industry for a long time. And including getting access today at what is really remarkable. I mean, just to see it up close and the scale and how well run it is, it's just super impressive. And so I qualify. I'm certain that we're going to get some feedback from some people, like, why are you guys talking about nuclear? And my only qualification I would offer to everyone is if someone comes at us with something that's different from what we said or that's additive to the discussion, next time we're up, we'll talk about it and we'll bring that into the discussion.

[Jason Calacanis]

You know, Absolutely. I mean, I think you and I talk about it pretty much on every pod. We're analysts. As analysts, the one thing we're reasonably okay at is we ask questions, we dig in, we find our way to experts, we find our way to information. And frankly, the more digging we did about Diablo and about nuclear, it's just so clear that it has to be part of the energy constellation future of the United States.

[Bill Gurley]

I think it's.

[Jason Calacanis]

It's clean, it's dense, it's the exact type of energy that we need. So why don't we kick off with a little bit of background today. We'll weave in some discussion about Diablo. We're going to talk to Marine Zwalnik. We're going to talk about China's emerging advantage here. Right. Like, why are they on such a fast path and a cheap path to nuclear? Hone in on those costs. And then some of the things that we believe we got to do in order to get the United States back on the nuclear track and maybe end with a little bit of that positive.

[Bill Gurley]

That'd be great. And one, and one thing I wanted to share with the audience. We. I think we've uncovered some really amazing documents, research pieces of research, podcasts, that kind of thing. So we're gonna put a list of those together in the show notes. And if anyone wants to follow the journey we've been on and go a little bit deeper than what we're gonna talk about today, those will be available.

[Jason Calacanis]

Maureen, it's great to be here. Maureen Zwalek, vice president here at Diablo Canyon. It's just been an incredible day. Thank you for having Bill and I here. You know, maybe just a little background on Diablo Canyon. You know, it took 10 years to build this. You know, starting in 1970, it cost $16 billion to build both reactors. It went online in 1985. It's the state's single largest power station. It generates about 8 to 9% of total energy, about 20% of all the renewable energy in the state at a cost of about $0.06 per kilowatt hour. So very cheap relative to the power that we import in the state. It's been an extraordinary day going around, and I think one of the things we'd love to start with is just a little bit of the history, your history here at Diablo.

[Maureen Zwalnik]

Well, great. First of all, thank you for coming. And it's always great to get people here that have not been here before and putting eyes on it. And looking at the facility, seeing the security around it, the safety around it and so forth. Been out here for 30 years and I've raised my children here in the community and I've had various different positions out here. We are the largest private employer in the community. And what is just amazing and just something I like to highlight a lot is the strong safety culture we have out here, the strong use of standards, and the history of the excellence in safely and reliably operating this nuclear power plant.

[Jason Calacanis]

Well, given how safely you operate it, I appreciate you letting us into the control room. No, it's just the simulator of the control room. But that was very evident today. The fact of the matter is, the history of the last 10 years has not been smooth sailing here at Diablo Canyon. Tell us a little bit about like, what took you on the path of decommissioning this two and a half gig facility and kind of where you are today.

[Maureen Zwalnik]

Great question. So, you know, 10 years ago, eight, 10 years ago, the energy equations and the need for Diablo had very different assumptions and inputs. What I mean by that, in the 2015 timeframe, 2016 timeframe, you know, we weren't talking about AI, we weren't talking about data centers, we weren't talking about the electrification goals of the state and of the country. We didn't have geopolitical things going on like the Russian invasion in Ukraine. So that has like a, you know, a squeeze on some of our supply for nuclear fuel and uranium. And so you have all of that. Then you add on the drought and the climate stuff going on and the severe heat and the wildfires. And what I mean by wildfires is that's impacting our bringing in energy to the California and affecting our transmission lines of importing in energy. So you don't have all that back in 2016. Now fast forward to 2020 August rolling blackouts, seeing just peak demands on the system and on the grid in California and really re looking at that needs analysis. Is Diablo needed given now all these new factors? You run all those and you know what we're seeing, it's very hard to pull off the largest clean energy producer, the largest energy producer in California. That's about 9 to 10% of Californians. So the projects to replace the renewable projects to replace Diablo have not made the progress that I think the state thought it would back in 2015, 2016.

[Jason Calacanis]

So this is things like offshore wind.

[Maureen Zwalnik]

Correct, Offshore wind projects and so forth. We need a mix of it all for not only California, but for the country. We need a mix of solar and wind, hydro and clean nuclear energy to meet the goals that we have of this country and of this state.

[Bill Gurley]

Yeah, I think a lot of the people in our industry have kind of been on a pro nuclear bandwagon past five years.

[Jason Calacanis]

Yeah.

[Bill Gurley]

And. And that appears now to be something that's kind of tipped across the U.S. take us back to prior to that starting to happen. What were the forces that were pushing for decommissioning?

[Maureen Zwalnik]

So the forces for the main force was the projections by the Energy Commission and other energy advisors was showing that there wasn't a need for Diablo. That was the main driver. So there were a number of things that were going on in 2016. And what was important was that we were being used for a bridging strategy to get to have those other renewable projects come online to replace us in 2024 and 2025. So here we are. Unit One's current license expires November 2nd of 2024. And it'll be really interesting to look at what's going on November 3rd and 4th with our grid had we taken unit one off. So we're right there. Right. Unit two's current license expires in August of 2025. But we've put in a license renewal application with the federal regulator, the Nuclear Regulatory Commission. Even though the state's only asked us for five, we've done that to make sure we maximize the optionality for the state. And seeing the progress of those other projects coming online to replace Diablo, it's inconceivable to me.

[Jason Calacanis]

I mean, we're just in the generating facility. This is an extraordinarily efficient operation for the production of very dense baseload power. Elon Musk recently said with respect to Germany that it's utter madness to take plants like this offline. You know, when you look at the shift over the last 10 years, you know, characterize your own view. Obviously you're an interested party here, but given the state's increasing needs for baseload power and the alternate, you know, the fact that some of these things have come online slower, I assume you would agree it would be utter madness to take Diablo offline.

[Maureen Zwalnik]

And I would and I would. From a being an engineer and a scientist who loves the world, work in facts. You know that nuclear's capacity factors. You said efficient. The capacity factors. Diablos upwards of 90%. Right. And we have had our units run at 93, 94%. You can't mess with those numbers. We're available 24, 7, 365 days a year, rain or shine. And so much needed. If you need to store some of that energy or need that energy for the high demand that we see in extreme conditions. I mean, this today, right now, you know, we're under restricted maintenance operations by the state because it's in the hundreds degrees in the majority of the state. And the demand is going to be so high. And we don't want to have what happened in August of 2020 happen again. I mean, that's about rolling blackouts in rolling blackouts. That's about people's lives, that's people in hospitals. I mean, you see the tragedies in Texas going on. Right. You know, we need to be doing something about it. So it would be utter madness. And scientifically WR that from 35 years in the industry as a nuclear engineer with confidence.

[Jason Calacanis]

Right.

[Bill Gurley]

Can you talk about the. How the potential timeline for Diablo? Because you mentioned earlier that the state had talked about five years, but you're applying for 20. How far theoretically could it run or how long theoretically could it run?

[Maureen Zwalnik]

Sure. So the current licenses for all United States nuclear power plants, your original license is for 40 years. Okay. Then there's a process that we're in right now to renew it for 20 more years. And just about every nuclear unit in the United States has submitted for that, except for a few of us we had previously submitted. But part of the decommissioning or the shutting down agreement in 2016 was to pull that application back. And then there's about a dozen plants that are going for subsequent license renewal applications that go 20 more.

[Bill Gurley]

So 60 to 80.

[Maureen Zwalnik]

Yeah, so go 80 years. And so the NRC has these processes because just like renewing your driver's license, you have to do on a periodicity. You want to be looking at the licenses and the components and so forth at every nuclear plant. So they have that opportunity as a safety regulator to approve those phases.

[Bill Gurley]

This is something you educated me on today. I think I was under the perception that there was some kind of finite life to one of these facilities because of something about nuclear I didn't understand. But I'm walking away now thinking that the plant is upgradable and maintainable and it's just a matter of keeping it in tip top shape, meeting all the safety standards and then reapplying for these licenses.

[Maureen Zwalnik]

Yep, absolutely. We run this station, you know, to excellence in performance, as I said, from a safety perspective, from an operational, from a maintenance engineering, everything that it takes. We are in the highest compliance ranking of the Nuclear Regulatory Commission. And we have achieved many evaluations by an industry group that evaluates all nuclear power plants in the world of excellence, performance in operation and safety and reliability. So we run this plant very well. And that's what made it such a fairly easy call from the state of California of hey, what would it take? What's the point of no return? Could you keep operating Diablo Canyon? And that was the legislation of Senate Bill 846 in September of 2022 because we're regulated by both the federal government and the state government. So the state government think the California Public Utility Commission they just approved in December of 2023 our new expiration dates, which is 2029 and 2030. State Lands Commission, you got to see the intake and the discharge. We have, you know, leases with them so that they just extended it to for five more years or up to 2030. And then state Water Resource Control Board we had to get the continued exemption for things like once through cooling that has been required because of the way our system or planted design.

[Jason Calacanis]

Just to be clear, it's up to the current governor could extend the plant's useful life for an additional 15 years beyond 2030, assuming the federal 20 year extension comes through, which you expect to come through now. Of course at any point along the way they could say we have excess power generation. All of a sudden we had a breakthrough in solar or wind and we don't need Diablo anymore. But there's an opportunity over the next two years bill for governor Newsom to extend the operating license here in the state on Diablo. Which seems to me given our present power needs and what we see inflecting up. We've talked a lot about what's happening in AI. I'm sure you've had the hyperscalers down here talking to you guys, talking to Patty at PG&E about their power needs. But if we're going to build data centers in the state of California, As I was walking around here today, I was thinking to myself, they ought to be building data centers right here. You have plenty of excess land and plugging them into these incredible power generating machines that we have. So that's the opportunity right now for Diablo is to extend for another 15 years beyond 2030.

[Maureen Zwalnik]

We will stay ready for that call if we get that call.

[Jason Calacanis]

You want to get that call?

[Maureen Zwalnik]

Absolutely.

[Bill Gurley]

What's the argument? Tell me if I'm wrong, but what's the argument for decommissioning nuclear ahead of coal? Like there's no argument, is there?

[Maureen Zwalnik]

I think it gets down to the energy policies and how you define renewable versus greenhouse gas free. And Senate Bill 350 I believe is the number from 2015. And at the very end of that bill they changed the word greenhouse gas free to renewable and excluded nuclear and large hydrogen. So you need a mix of the. Yeah, I mean legislators. Yeah, which is fine because again, that's what was known in 2015 timeframe. Very different equation and formula that we are navigating through with all the things I mentioned earlier.

[Bill Gurley]

Well, that's why I go to some of the smartest people in our world, whether it's Elon or Patrick Collison or Steven Pinker is not in our world, but a very smart individuals. They're all, they would, I think they would all argue you take coal and gas off before you take nuclear.

[Maureen Zwalnik]

You take, I would say and to reverse it or flip it is just go after as much carbon free as you can. Work on that. You know, the latter part there. But again, going for the 20 or applying for the 20 year license renewal application, which is the NRC's process, that's what they approve. So like in the state of New York, Indian Point was a plant which applied for the 20 year license renewal. NRC process, got that approval and then the state decided, hey, we have enough renewable and that and we don't need the nuclear power plant. And after about 10 years or so. I don't have the exacts, but I mean that is, we are governed and regulated by both the state and the federal government.

[Jason Calacanis]

It's hard to believe. It's hard for me to see a future. Okay, when you have China, who's adding six to eight new fission reactors per year, it's going to add upwards of 25 or 30 over the course of the next five or six years, is expected to surpass the United States in nuclear power production by 2030. You've been around this for 30 years. The United States has been preeminent in nuclear technology. We built most of our plants in the 70s and 80s. By the 90s, we basically had stopped building new plants. We were talking about decommissioning all of the plants that we had. As you look at the political environment today, not just in California, but you spend a lot of time around the world, right, Advising, interacting with your operating peers in lots of other countries. Where are we in terms of that pendulum in the United States swinging back and forth, you're clearly more optimistic than you were in 2016 when they passed the legislation or you ended up the agreement to shut down Diablo. But is there hope? Is there a Future for shifting the gears back into expanding fission baseload power production in the United States.

[Maureen Zwalnik]

Absolutely. And I think Diablo Canyon is the case study. And what I mean by that on a micro level, what I call that when I consider the need of what Secretary Gronholm and COP28 has said, that we need triple the amount of nuclear for our environment, environmental and climate policies. So I say micro level for Diablo Canyon because what we did in a year and a half, two years is what is needed to keep that pendulum swinging and the momentum needed to build out traditional, more nuclear and preserving the current 94 units we have, if we count the new Vogel 3 and 4 that came online, which is outstanding. Right. And so we can't have any of the current 94 shutting down. Let's preserve that. There are some other initiatives. Palisades, a plant in Michigan that they're looking to restart and they're really looking at a. Of the stuff we did, we call it team pivot or pivoting from decommissioning and getting that call from the state in 2022 to continuing to operate. And that's hiring over 300 people in an efficient, speedy time working communicatively coordinated and transparent with our regulators on what needs to be done. Just lots of examples there that I think can be used on a macro level to keep that momentum going that we're showing that can be done here at Diablo Canyon.

[Bill Gurley]

One thing, another thing I learned today that I was really impressed by, I wonder if you could share with the audience, Maureen, is that there are both national and worldwide communities where you share best practice with other operators. And I'm thrilled to know that that's true. I didn't know that that was true. Can you, can you talk more about that?

[Maureen Zwalnik]

Yeah, absolutely. In fact, we're here at Diablo Canyon Simulator and that came after the unfortunate event at Three Mile island in 1979 and also the formation of the Institute of Nuclear Power Operations. And I think what you're asking about is a fundamental thing in nuclear, in our nuclear industry is anything that happens anywhere happens to all of us. And we're a culture of continuous improvement, a culture of self aware and self correcting. And we want to learn from. So we share information. You don't see that between the airline industries. I heard an example recently, even with hospitals, even the same hospitals in different units, we value that something happens with a certain motor or a pump or a generator or human performance item. It's called operating experience. We all own that. We entered into a system called corrective action program, get the learnings from it, make adjustments we need to, to how we oper, operate, train, do maintenance and so forth. And that's just a continuum as we seek excellence in again, safe and reliable operations.

[Bill Gurley]

That's right.

[Jason Calacanis]

One of the things Bill and I are going to spend a lot of time talking about today is the cost differential around the world from building Vogel versus what they're building AP1000s for in South Korea, as an example. When you think about the state of the supply chain in the United States, when you think about that talent network that you know that you're a part of, right, that you have to go tap into when you want to hire people, there's a certain amount of that that we got to tap into just to keep the 94 reactors online. But if we want to start building more reactors, more Vogels, and we want to drive down the costs of scaling up up these level three and now advanced nuclear reactors, do we have the talent? Do we have the supply chain? Do we have the capability? What needs to be done? What do you wish was different today?

[Maureen Zwalnik]

Well, that's a great question. It did take a Herculean effort to get the human resources and the other resources we needed, but we did it. We had a mantra around here, what needs to be true to hire the people. We need to restart up our senior reactor operator license classes to get operators trained and qualified and proficient. Can be upwards of three, four years. What do we need to do that? But we did it. But on a macro level, on a bigger scale for the US and on supply chain, I can't emphasize enough. It's a collective effort and you have to also fold in there the financial part of it and the regulatory model of it. It we are a highly regulated industry and that's good. We're running nuclear reactors and nuclear power plants. But there were ways that we were able to put in more innovation or processes or tools to navigate through a 3,000 page license renewal application, for instance. So there needs to be that kind of thinking, that kind of breakthrough thinking. How do we get there? And I worry sometimes that there might be a group over here trying to do it in a group over here, and then they're competing and then it's just not gonna come to fruition. Like how do we do that on a national energy policy level to move forward? I'm very encouraged by the civil nuclear credit program that we qualified for by the doe, the Advance Act. I mean, it's a bipartisan discussion now. So I think that's been A huge step. So I have hope, but you need to have that breakthrough and what needs to be true thinking to collectively get that done.

[Jason Calacanis]

Another thing, Bill, that was amazing to me today. I've heard a lot about nuclear waste, spent fuel rods. And we had the chance to go by the safety facility where you store these spent fuel rods. And there were two things that struck me as pretty extraordinary. One, and maybe you could just share, like what is the space required for the spent fuel rods in the United States? And this is, given that we have a moratorium, we could reprocess 90% of this, but we don't correct like France does. So even in the case where we don't reprocess any of these fuel rods, I think you said you gave an incredible fact about the total space that would be occupied from all the spent fuel rods from all 94 of the nuclear plants. And I just thought sharing that information. Interesting.

[Maureen Zwalnik]

Yeah, absolutely. So absent of having a federal facility to take all of the spent nuclear fuel from all the commercial nuclear reactors, each of the individual utilities or sites have their own independent spent fuel storage installation. We all have an acronym, istasi that you saw today. I took you up there and our pad has enough capacity for all 40 years of the original license. And we have enough for 60 years collectively on site of over 60 years, including the spent fuel pools, the wet storage. You roll up all of that footprint and you got to see it's very small. And you take all of the over 100 units in the United States, it would fit in the size of a football field up to the goalposts. And that's the total of the spent nuclear fuel. Now you start reprocessing that and you have again, a federal policy change from the Carter administration to allow for reprocessing like France does. You can get, you hear numbers between 80, 90% of isotopic use, of being.

[Jason Calacanis]

Able to use it again, that's extraordinary single football field. And we could actually reprocess 90% of that.

[Maureen Zwalnik]

And that would help a lot on your supply chain question with where the market is right now with enriched uranium product and so forth.

[Bill Gurley]

One thing I would just highlight is really, I was blown away by the operational excellence. You can see it in everything that's going on here. And I do think Diablo was this kind of massive turning point for the industry, for the nuclear industry in the US There was so much, I think people were committed to decommissioning this thing that many of us believe is the cleanest, most resourceful source of Power you could have. And, and as you stated, now we have a lot of momentum, bipartisan support for the industry writ large. So anyway, I think we all owe you thanks for what you guys have done here. It's pretty impressive.

[Maureen Zwalnik]

It's an incredible team out here that are dedicated, committed to those excellent standards. They're community members, they teach Little League. We contribute so much with volunteer hours. There's so much pride out here and there's generations of people out here and their footprint, which is you can't walk around San Luis Obispo and say you work at Diablo Canyon and say, oh, do you know, I mean, it's just, it's incredible.

[Bill Gurley]

That's great.

[Jason Calacanis]

You know, I also recently listened to a podcast with Patty Poppe, the CEO of PG&E. I know her, it was great. Your boss, your boss for Everybody else, the CEO of PG&E. And it was great to hear her support for Diablo Canyon. It was great to hear her support for, frankly, a lot of innovation, whether it's grid innovation, whether it's two way charge and discharge with cars, whether it's undergrounding of power transmission lines, which we talked a lot about today, leads to higher efficiency, lower cost to retail customers. So it does feel like there's a lot of upside and Diablo's kind of the tip of that spear. Thanks for having us. We're certainly going to put the word out to the governor and others. I would love to see this place extended for 15 years. It's the type of optionality that we need in the state. And frankly, a huge portion of the incremental bid for power is coming out of Silicon Valley. Right. Power is the primitive for AI and that's why China is heads down in this race. And they're taking our technology, right, and they're improving it. And it's high time, I think, that the United States got back on board. And with leaders like you at the front of the pack, I think we're in a good place. So thanks for being with us today.

[Maureen Zwalnik]

Thank you for being here. It's been a great day.

[Jason Calacanis]

Before I kick in with a little bit of background, I do want to thank the incredible team at Diablo, Maureen Zawalnik, who is one of the incredible leaders here, and a startup founder, Trey Lauderdale. After we talked about nuclear on pod 6, he reached out to me, said, hey, I think there's incredible opportunities here to make it even more efficient leveraging AI. He's got a partnership here with Diablo and so thanks to them for having us down here. It's been a Great day.

[Bill Gurley]

And to give ourselves a little bit of credit, one advantage you have as an outsider is, is you see things with a fresh set of eyes. And so maybe for the audience, we will uncover a few tidbits that they will find useful as they think about this.

[Jason Calacanis]

Yeah, I mean, listen, I have to say that I'm embarrassed how little I focused on this issue up until a few years ago. The truth is the United States has been a global leader in nuclear power for 50 years. Okay. We commissioned our first nuclear electricity generating plant in 1957. The majority of American plants are built in the 70s and 80s. We have 94 plants today online, representing 31% of the world's total nuclear energy production. It's 20% of total US power production and nearly 50% of US clean energy production. It's large, it's at scale. We've been leaders. The problem is that it represents the effects of investments and efforts and an installed base that largely stopped in the 1990s. Right. China's on track, on the other hand, to bring on more capacity in the next 10 years than we've brought on in the last 40 years. They're expected to pass us in terms of total power generation from nuclear by 2030 or thereabouts. Our supply chain is atrophying. However, there does seem to be some growing bipartisan recognition that we got to get this back on track, and that's a key reason we wanted to come down here today. So as you look at this, Bill, what are some of the things that we ought to just set as a baseline about nuclear?

[Bill Gurley]

Well, one thing that I would say is super important, especially because we have an audience that includes entrepreneurs. We're going to talk first about level three fish. Yes, yes. There's level four, which is a different type of cooling technique. There's one plant in China doing that. There's SMRs, which are small modular reactors, which a lot of startups are excited about. And then there's obviously eventually fusion, which is a big unknown about the timeline. But for the next window until we stop, we're just talking about level three fission, which is a big scale out discussion. That's what's operating here at Diablo. That's what's operating in the majority of nuclear plants around the world. So, you know, a couple of ways you could go through things. First of all, you know, we have been through this roller coaster of emotional beliefs about nuclear energy.

[Jason Calacanis]

Right.

[Bill Gurley]

And many people tie that way back to association with the bomb and this inability to think about these two things separately. We had the Three Mile island incident, Chernobyl, Fukushima, and all these things have an impact on people's perceptions of nuclear. I would argue, based on the research I've done, the healthcare impact of all three of those disasters is tiny compared to the healthcare impact of coal or other technologies that nuclear competes with. But people's perception, the media overplayed those things as well. And it's only been recently that the public sentiment has started to swing back in favor of nuclear. Most of the brightest people in our industry, you know that. Elon Patrick Collins. I see a pro nuclear bias and I'm a huge fan of people like Steve Pinker, who's one of the great thinkers in our world. He's got a huge pro nuclear bias. But a lot of people weren't on that page. Now more and more people are on that page.

[Jason Calacanis]

I mean, what's amazing is even in Japan where, you know, after Fukushima they took all 30 nuclear reactors offline, I think they have 75% approval rating for people wanting to put those reactors back online. Because I think there's a recognition in the world, okay, that it's clean. It's the type of dense always on nuclear power that you need. And the facts are just undisputable. It's safe.

[Bill Gurley]

Well, and this goes back to that statement. I think I actually stole it from Josh Wolf at Lux, but that if this were discovered today, people would be like, oh my God, climate change is solved. Yes, but we let it go through this place where it was associated with these negative things that I don't think were accurate. But now hopefully we're moving to a place where people are open minded. So you could also look through a bunch of different countries. So France is, most people know this 75% of their energy from nuclear. They, they've been the one that stayed in there the longest, leaned in the hardest. You have Germany, which I think people think of as the ultimate disaster, where they've taken all their plants, they've decommissioned everything, and because of some of the things that have played out in the European market, they're now a net importer of fossil fuel energy.

[Jason Calacanis]

Disastrous. They got sold a bill of good by the Greens. Merkel decides to shut down all the nuclear power plants. You can see how it just falls off a cliff and goes to zero. And instead they're getting fossil fuel produced energy. They're less secure, both from an energy perspective. I mean, remember at the start of the Russian invasion of Ukraine, we had all the conversations as to whether or not people were gonna freeze in Germany during the winter, et cetera, because they had taken all these plants offline.

[Bill Gurley]

Unbelievable. And one thing we've learned through this process. Process is, you know, one of the silliest things you could possibly do is decommission, because you've already paid for the damn thing. Once you turn one off, as Marina share with us, it's a lot harder to bring it back. We're gonna. We're gonna see if that can work. Right. And so anyway, and. And. And there's a fourth country we should talk about. So you already mentioned China. Yeah, one of the amazing. Well, let me dive deep on China, and then I'll mention the fourth country. So. So this is publicly available data, so people can go get it. We recently brought on two new plants in the U.S. vogel, 3 and 4 in Georgia, and the total cost of that was about 30 billion for 2.2 gigawatts, it turns out over $13 billion per gigawatt. The plants in China that are the equivalent level three fission plants right now are coming on board at 2.5 billion per gigawatt.

[Jason Calacanis]

Right.

[Bill Gurley]

So 13 to 2.5.

[Jason Calacanis]

Right, right.

[Bill Gurley]

And that's a shocking delta.

[Jason Calacanis]

Yes.

[Bill Gurley]

And one of. I would say the single most surprising thing to me of all the discussions I've had in the past two weeks with everyone that's in this industry is how few people are shocked by that.

[Jason Calacanis]

Right. Well, let's talk about that a little bit. When you look at the cost differential, which I think is one of the biggest problems today with U.S. nuclear, and I want to decompose as to why you think there's such a delta, but let's just talk about what it is. Vogel had a bunch of stuff as they were going through Covid. So let's say that that is more expensive than what, a run rate, AP1000. This is the type of Gen 3 nuclear reactor that they're building in South Korea, in China, and at Vogel. Right.

[Bill Gurley]

Since you mentioned Korea, that's the fourth country. So let me just real quickly go there. So Korea. So a lot of people look at the China data, and they go, oh, that's China. You know, authoritarian government, like. And they're able to dismiss it because it's different. South Korea is a democracy. A friend of the United States. They're at the same delivered price point as China, and they're doing it at scale, and they're starting to export their technology.

[Jason Calacanis]

Yes.

[Bill Gurley]

So in some ways, just because I think it's easier for Americans to wrap their head around it as a data Point, the South Korea data is more interesting than the China data.

[Jason Calacanis]

Right. So let's talk about it. Let's break this down a little bit, because both the South Koreans and the Chinese. Right. Are building on technology that they procured from the United States from Westinghouse under tech transfer licenses over the course of the past 20 or 30 years. Okay. Now they're building a lot of indigenous technologies on the back of that technology, and yet building the exact same technology, even though it was invented here. It costs us, give or take, four times as much as what they're spending to build in South Korea or China. So give us your best guess. What are the big buckets that are costing this cost differential in the United States and whether or not there's anything that we can do about it.

[Bill Gurley]

And I want to come back to later, I'll answer your question, but I want to come back to the built on our technology thing because I think there's some important things to talk about there. So I went out and talked to a whole bunch of people, and I was able to talk to one individual who had worked both in the regulatory part of our government and at a producer who I think had a really good lens on all this. And I'm gonna leave him anonymous. But he brought up four things. So the first was regulatory. So the separate federal and state environmental permitting processes in the US is onerous, lengthy, probably 10 years for a nuclear power plant. Expensive. Most people don't know this. You have no reason to know this, but the NRC is a fee based regul. You literally pay per hour to have them come regulate you.

[Jason Calacanis]

Right, right.

[Bill Gurley]

And so those costs are extremely high. The second thing is litigation. So multiple special interest groups, particularly environmental groups, will sue to stop any development whatsoever.

[Jason Calacanis]

Right.

[Bill Gurley]

So there's no chance of a deployment or an attempted deployment without fending off, you know, inbound litigation that you have to deal with in the US the third is passage of time without us doing anything. And so everyone talks about learning curves. We're so far off the learning curve because these two new plants were the first in 30 years. So there's no repeatable process which you now have in China in there. And then that's all before you look at other things, I would say labor, cost of steel, cement, those things can be higher here than there. And so it's a whole big litany of stuff added up. And none of those factors apply in China.

[Jason Calacanis]

Right, right. If we could boil that down, the way I kind of got my head around it is one, if you just look at the length of time. So now they're building these AP1000s in South Korea and in China in about seven to eight years.

[Bill Gurley]

And in the United States, I think.

[Jason Calacanis]

Six years, maybe as fast as six. In the United States it's not 10, it's more like 12 to 15. Okay, so it's taking us twice as long to bring one of these plants online. Time equals money.

[Bill Gurley]

And you and I talked about this. But a modern, large multi gigawatt fission facility is a large piece of infrastructure.

[Jason Calacanis]

Exactly.

[Bill Gurley]

It's not like you're building a, even a rocket engine. It's more than that. It's just, you look at the South.

[Jason Calacanis]

Koreans or the Chinese building a highway, an airport, a hospital, a school, a subway station. A subway station.

[Bill Gurley]

Have you seen these videos? Go on. If you haven't, go on YouTube and look at China's new subway station. Unbelievable.

[Jason Calacanis]

And so the U.S. you know, the first thing is just our regulatory environment causes it to take a much longer period of time, and time is money. Secondly, then we don't have a scale up or scale out operation going on. Right. Two facilities over the course of the last 20 years compared to six to eight of these in a repeatable process coming online. In China, that means supply chain, that means talent chain, that means that regulators are constantly talking with the operators. You know, you just have the type of system that you need to drive down costs. And in fact, if you look at these Gen 3 and Gen 4 reactors coming online, even in the United States, they always cost more in that first plant. But by plant five, it was cut in half. By plant 10, it was cut by 70%. Right. So cost comes down as you ramp up scale production. Think about, you know, the roadster was a lot more expensive for Tesla to build. Right. Than the Model 3 once you are producing a million of these cars. So we need to get to a place where we also have scale production. And then the third, what everybody tends to focus on is kind of this labor differential. I would put that in the third bucket, but it's like a third, a third, a third. And this adds up. It seems to me the first two we can tackle, you can consolidate the regulatory environment in the United States so that you reduce the time to bring one of these things online. And I also think that if you clustered some of these, if we wanted to get back to building more of these reactors, there's no reason to think that if we had a scaled cluster of reactors, five to ten reactors that you wanted to bring on over a ten year period, of time that you wouldn't drive down the overall cost of the reactor.

[Bill Gurley]

Perhaps there's not a lot of proof points of us building either at a federal or state level, big projects at very low cost. In modern history there were some, there's famous things.

[Jason Calacanis]

But if you think about infrastructure, most of it is one off, right? You build a bridge somewhere, then you build a bridge in a different city. And it seems like the other issue is the South Koreans are not only building them for themselves, they're building them for export. Right. And again, that just gets back to the scale mentality of building these plants. But to be clear, the idea that we're going to bring the cost of building one of these things down by 70%, which is kind of the target needed to make this competitive in the open market with gas and everything else, I think is very, it's hard to see.

[Bill Gurley]

And this is a good point, the landed price points in Korea and China are very similar to the landed price points of other renewables and things just on a capex bill. But ours isn't because ours is 3 or 4x the global best. Right? I want to talk, I'm going to go back to the South Korea thing because you brought up the IP issue. I'm not convinced that it's helping us any to sit around and cry about whether China or South Korea used our ip. And if anything, I think, and I've mentioned this on the pod before, I think this and any Chinese mentality is a little nuts because if you look at low cost EVs, if you look at their subway stations, if you look at they're leading us in many areas and we have this holier than thou attitude that America is the best and that we're the leader and we're being passed. I would say landed cost of energy is the data point you should measure most. And if they're 4x where we are, I would say we should have the alarm bells ringing, going what the hell is going on? Why are we so far behind? And I think it's a little bit of a crutch to lean on and say, oh, they built it on our technology. One of the things I learned about the Korea situation, so they're trying to export it. Westinghouse, who was the company that originally designed Level 3 fission in the US is suing to try and prevent them from delivering to Czechoslovakia. And you know, we talked to Maureen about how the different nuclear plant operators all share and that we're kind of all in this together. Right? And if climate change is A global problem and we all want it solved. Like we should want everyone to win. We shouldn't be jealous that China is doing that. And so for me, I ask all the AI bots, you know, do you think there's any chance we would license something from South Korea?

[Jason Calacanis]

Right.

[Bill Gurley]

They all said, no, there's no chance we would do that. And that's the kind of a mental blocker like Trump derangement syndrome or something like, if Korea could help us deliver a planet, 2.5 billion per gigawatt.

[Jason Calacanis]

Right.

[Bill Gurley]

Why wouldn't we want that?

[Jason Calacanis]

Right.

[Bill Gurley]

And so I just, I mean, we.

[Jason Calacanis]

Invited TSMC into Arizona to help us build chips.

[Bill Gurley]

I know, but if you have this attitude they totally, then you don't get into that Right. Mindset. So I just think that's an important kind of thing to think about. We would all be better off if nuclear energy were cheaper for everyone on the planet. Right. And a lot of the political disagreements that lead to war, a lot of people believe are tied to energy cost and energy availability. So you might reduce that as well.

[Jason Calacanis]

I think one of the reasons we're so focused on China is what started this conversation for you and I was when you model out the need for data center capacity over the course of the next five to 10 years, you realize for the first time in really two decades, the US's need to grow its baseload power generation is going to go up significantly, significantly faster than it has over the course of the last two decades.

[Bill Gurley]

And this has become a standard topic of discussion and Wall street, everyone's talking.

[Jason Calacanis]

About energy, reliable, always on energy. Right? In fact, most data centers want to build right next to the source of energy. That is the primitive to AI. And we do believe that AI supremacy really goes to national security. So the reason I believe that we're seeing finally some bipartisan movement in Washington and around the country, frankly on this issue, is people realize how inextricably these things are tied together. So the reason I'm worried about China taking the lead in nuclear is not just that they have more nuclear power plants in the United States, but what it enables them to do down the line around AI and everything else. Because if you are the low cost power provider in the world, then you're going to be able to build bigger data centers that power bigger AI clusters, et cetera. And I'm not certain that that leads to better AI, but there's a reasonable enough chance that you don't want to give them that unilateral option.

[Bill Gurley]

I think even if you don't take that lens. You say to yourself, if we can't fix this problem, but other countries can, maybe through being imported by South Korea, then it becomes a competitive weapon for those countries. And just as you might put a manufacturing plant in Mexico or Vietnam or Czechoslovakia, there's no reason why a data center can't live there as well. And quite frankly, it's easier to drop a fiber optic cable from Mexico to America than it is to move goods by truck.

[Jason Calacanis]

So should we be trying to build, you know, cooperate with the Mexican government and build AP1000s just over the border in Mexico?

[Bill Gurley]

I think we should be open minded to the fact that the world needs this technology and that if they get it, it's good too. If Czechoslovakia gets it, it's good too. This was my main point about like, I just don't think having an attitude that oh, that's ours, or I don't even don't love the, the it's a race and they're winning. I, I think everyone should be winning in this area. Like once again, if you care about global climate change, like it's a global problem, everyone should. I mean it wasn't that long ago that with this same kind of anti China attitude, we sat here and said, oh, we're going to clean up our pollution, but look at those guys. And we're pointing our finger. Now we wake up and their landed cost of nuclear energy is one fourth of all. And like, who are we pointing the finger at? Like, you know.

[Jason Calacanis]

Yeah, I think there is, I was reading, I think I got the name correct. Professor Brunger from mit. He's the director for the center of Advanced Nuclear Energy Systems. You know, he said China is now the de facto world leader in nuclear technology. Right. And it's not because they're smarter, they're better, but it's simply because they made it a national priority that they were going to build these plants. And when you do that, you innovate. And when I look at the moratorium that has largely existed in the United States over the last two decades. You tell me if you had the Elon Musk of the United States working on fission over the course of the last two decades, we would be light years ahead of where we are from an innovation perspective. And maybe that's a decent segue way to talk about what some of these Gen 4 advanced nuclear reactors look like. Because you and I again are talking about Generation 3 or Generation 3 plus reactors. The AP1000 is kind of the standard reactor that's being built Today. But whether you're talking about TerraPower, these alternative sources of cooling that are being built, I think we have five or six or seven of these that are authorized under kind of the developmental regime in the United States that are hoping to come online over the course of the next five to seven years. For the first time in four decades.

[Maureen Zwalnik]

An American company broke ground on a next generation nuclear power plant in the.

[Jason Calacanis]

U.S. the company behind the new technology is TerraPower, and it's backed by billionaire Bill Gates.

[Maureen Zwalnik]

Nuclear power is carbon free, which means.

[Jason Calacanis]

It doesn't emit the greenhouse gases scientists link to climate change. And Gates is building a plant in.

[Maureen Zwalnik]

Wyoming at a cost he estimates will be $10 billion.

[Jason Calacanis]

TerraPower's new reactor uses liquid sodium rather.

[Maureen Zwalnik]

Than water for cooling, which the company.

[Jason Calacanis]

Says makes nuclear power cheaper, safer, and more efficient. If we all agree that the 94 reactors that we have currently online, we should keep online. The question I have, Bill, is, is should we be looking to build more of the Gen 3 fission reactors or should we leapfrog and be, you know, there seems to be a lot of energy, at least in Silicon Valley and, you know, in Washington, Bill gates behind these Gen 4 reactors. Where would you spend your time?

[Bill Gurley]

So, I mean, my first reaction would be it shouldn't be an either or. Like, we should be doing both. And I think that's what's happening. So that's fine. I would also say, say, if one of the big issues for both level three and for what we could call the futures technologies is utilities having the gumption to put the capex and invest if you study. And I heard this from multiple people that I talked to. Utilities are inherently conservative.

[Jason Calacanis]

Yes.

[Bill Gurley]

Like Wall street investors think of them as these stable things you buy that don't move around a lot, but just have to.

[Jason Calacanis]

The CEO of PGE recently said, who owns Diablo recently said on a podcast they have no interest in investing in SMRs. They said, we're going to let Risk Capital invest in small nuclear reactors, and if they work, then we'll consider it. But we're not going to be the Risk capital.

[Bill Gurley]

It's both of them. And maybe that's changing. When I first heard about Constellation Energy Group, which operates a bunch of nuclear reactors here in the us I reached out to them and they said, I asked them, are you doing anything new? Are you innovating? Are you doing a new plant? They said, no, no, no. Like, we just operate these old ones now. There's a rumor that they're talking to Three Mile island about restarting that and so maybe these changes in attitude are going to tip them in. If I say this with a ton of confidence, even though it's unprovable, if, if these utilities could snap their fingers and have fission level three online at competitive rates, Korea and China price points, I think they'd be turning them off. So there's a huge difference between 2.2 or 2.3 and 13. Like there's just a huge difference. So if that problem were solvable, I think they'd be investing more. But I don't know if that's solvable.

[Jason Calacanis]

I really don't, to answer my own question or perhaps push you a little further on that. So if you listen to Gates talk about the reason for alternative to Gen 3 power plants, as they effectively said, the Gen 3 design was a massively complex engineering solution to the safety challenges of the plants that came before it. Okay. And so rather than designing with perhaps elegance, right, like passive coolant, they came up with very complex and expensive engineered solutions to those problems. Now, the great thing about the engineered solutions is they work, right? We know they work, they're repeatable processes and we've driven down the cost in some of these other places. But if you look at the Gen 4 reactors, they're much more modular. Some of them can be produced in factories. A lot of them have sodium or alternative, you know, mechanisms for passive cooling. Is that perhaps, you know, again, when we think about the cost of driving down these plants, it does seem to me that we can't magically snap our fingers and make labor costs in the United States go down. We can't snap our fingers and make, you know, say we're going to scale this up and make all the regulatory stuff better. So a leapfrog would be just build a smaller, simpler plant.

[Bill Gurley]

Yeah. I mean China, there's a, there's a new plant in China I probably can't pronounce. Right. Shidao. That is level four. But it came on at a price way above Vogel. So like.

[Jason Calacanis]

Yeah, but any new plant, any new thing, any novel thing is going to be a lot more expensive on unit one than it's going to be on unit two.

[Bill Gurley]

You know, they used to call, I've heard people refer to modern day semiconductor investing as a sport of kings.

[Jason Calacanis]

Right.

[Bill Gurley]

Because you're 50 million to first tape.

[Jason Calacanis]

Right.

[Bill Gurley]

If that's a sport of kings, this is a sport of emperors. You may be multi billions to first revenue. And so good thing we have Bill Gates, like emperors that want to make this stuff work. Yeah, let's dive in on SMRs for a second. So I'm sure the at least high level pitch you would hear from all of the SMR vendors is one of the reasons that level three fission is so expensive is it's a huge infrastructure project and the US isn't good at those anymore. And if you could build this thing in a factory and then ship it and deliver it where it's used and there's talks of oh I could take an old coal plant and put a SMR in there, several of them and now the transmission lines are all in the right place and I get and to what you just said and then I can repeat it then the first unit might not be competitive but the hundredth unit might be because I could get into more of an automation factory thing and get out of this infrastructure build problem that we're no good at in the US that is the argument. I think another super valid argument is the Navy. And one of the links we will provide is a 92 page PDF on the miraculous success of the naval nuclear program which are in essence SMRs.

[Jason Calacanis]

Exactly.

[Bill Gurley]

That already exist on 100 different different vessels.

[Jason Calacanis]

Right.

[Bill Gurley]

Some submarines, some carriers in the U S Navy and the track record is phenomenal. The costs are pretty interesting especially since they've never been applied to a commerce at a commercial level. And so there's reason to believe in this. The problem, I think the overwhelming problem is that the utilities aren't really, they're not acting like say Google and Amazon are buying Nvidia clusters where oh, we're going to put them up and they're more conservative. They want the startup to bear most of the risk. There's an agreement called a power purchase agreement where the utility says oh yeah, I'll buy it from you if you can deliver it to me at this price. Where they know their margin and the startup's completely on the hook for whether they can get there or not. And we've already had one colossal miss with a startup called NuScale that had one of these agreements in place and they got you know, time to, to qualify and the, the, the utility went I'm out and NuScale had to start laying people off. And, and it's just tough. And the other tough part, the NRC which we haven't talked much about but the regulatory commission here in the US is fee based and all the people that are playing in this market I've talked to say you're probably 60 million to first approval just on fees the startup's going to pay to the NRC to tell them what they're doing is okay. Once again, sport of emperors.

[Jason Calacanis]

Yes, well, and that brings us back to why did you and I really amp up this conversation? Because of Nvidia, because of Meta, because of Google, because of Microsoft. The power needs that they have.

[Bill Gurley]

And maybe those companies are the ones that need to come.

[Jason Calacanis]

I mean, if they're spending $250 billion a year on capex associated with AI, that is emperor level spending.

[Bill Gurley]

And maybe they need to be the ones underwriting the risk on the smr.

[Jason Calacanis]

And I also think what they can do, Bill, how about this? Why don't the hyperscalers form a consortium, okay? And they go to Washington and they say, hey, we'll put up X amount in order to build some AP1000s or daisy chain a bunch of these SMRs together. Right? I'm talking about a new type of project and partnership with Washington D.C. where there's a mutual need. They have the capital, public private partnership to get this going. Because honestly, as I sit here today, take Diablo Key, they built two nuclear reactors here. You know, this site was provisioned for six. Yeah, for six reactors. I could imagine if you had four more reactors sitting here, right. If you could land them at the right price, you could have one reactor for Meta, one for Amazon, one for Microsoft, one for Nvidia. You could have the data center sitting right next to them. It does seem, by the way, I.

[Bill Gurley]

Ran some math on the Diablo dollars, just because it's interesting. So in the mid-80s dollars, the plant was built for 5.5 billion. So right around 2.4. Unfortunately, in today's dollars, that's 6.4, but 6.4 is still half of 13, which is Vogel. And so, yeah, just interesting.

[Jason Calacanis]

I mean, you know, again, we know the reasons why they're not coming online at that price. So the question is whether or not you can change those dynamics through some of the things that we talked about. I do think these Gen 4 reactors, there's room. I like you believe it's an all of the above strategy. We should have the large Gen 4 reactors, but we also should do this small modular stuff. We basically have 100 floating SMRs in our naval fleet. Just imagine if you just took those ships and dropped them on land and set some transmission lines up against. And what's great about those reactors is, you know, again, part of what we need to do is get the flywheel going on the marketplace, which not everybody needs, not every situation needs 1.5 gigs.

[Bill Gurley]

That's true.

[Jason Calacanis]

Right. 100 megawatts out of a small nuclear reactor may be a perfect fit for some of these smaller solutions.

[Bill Gurley]

Well, let's talk about possible solutions, not that we get to decide. And I'll start with on the level three side and then let's go to the SMR side. But the first thing that popped in my mind when I see how far behind China and Korea we are is like I said, I'm shocked. No one's shocked. But if someone inside of Washington is like, oh, my God, we have to fix this, the first thing that comes to my mind, and maybe this could be applied to both SMRs and level three scale out, is we could choose to do something more like a Manhattan Project or a NASA project. And you hinted at this already, where you get the best and brightest people, you put them somewhere on the side, you give them the ability to do things they couldn't do before. Right, but like reimagine the NRC from the ground up, you know, you give them a goal like the Manhattan Project and NASA had to deliver nuclear at a competitive rate in the U.S. right. You know, and come hell or high water.

[Jason Calacanis]

Yeah.

[Bill Gurley]

Now, we haven't done one of those things since those two that I mentioned, but we were pretty successful when we did those, you know, And I think when you have an industry that's this important to the country and this highly regulated, it is kind of an exception where you say maybe the free market's not doing it.

[Jason Calacanis]

It's pretty clear to me that because of the regulation, which again, I'm sure we could regulate this industry better. But you're happy. The industry has a lot of regulation. Okay. It's incredibly safe. But given that burden of regulation, it does drive up the cost relative to alternative solutions. And the United States is just incredibly lucky. We have an abundance of natural gas. So left purely to market forces, if you don't subsidize any of this stuff, we wouldn't have any solar, we wouldn't have any wind, we wouldn't have, you know, we're not going to have the investment required to bring on these new plants. So I do think it has to be a partnership where the government is willing. Now, listen, what we're doing in the IRA with chips, we've decided building chips in the United States is a strategic priority. You and I have debated whether or not that will be successful. We happen to both be on the same side of the agreement that that's going to be very challenged in the United States.

[Bill Gurley]

But the United States in the recent week, including intel stock price, but The.

[Jason Calacanis]

United States government is absolutely committed to that. I think nuclear is at least as important.

[Bill Gurley]

But they didn't go as far as we're talking about. They just did loan programs and stuff. I'm saying if you did a Manhattan Project or NASA scale thing where you're trying to redo everything, not just provide loans or incentives. And by the way, there is I think an imperative, just as a quick side to at least make sure nuclear is not disadvantaged relative to wind and solar. It has operating efficiency and this durability and this always on piece that make it so much better than those. And right now I think it actually has less incentive programs and I'm not sure that's smart.

[Jason Calacanis]

If you look at, I saw this mashup the other day on Twitter, it's Trump and Biden and Elon and Bill Gates. Folks on both sides of the political divide, right? The one thing that's very clear right now is that both sides of the political divide have come together on this issue. Take nuclear power, biggest source of clean energy. There's no question that there are benefits. Our nuclear energy sector produces clean, renewable and emissions free energy.

[Bill Gurley]

In Germany, they closed the nuclear power plants. They have to keep coal burning. They said no to clean energy and they said yes to fossil fuels. We in California, we have a nuclear power plant called Diablo Canyon nuclear power plant. 9% of clean energy. So why would we shut it down?

[Maureen Zwalnik]

There's a new effort to increase the amount of energy obtained from nuclear power. It's a better form of energy because it doesn't have greenhouse gas emissions.

[Bill Gurley]

It's crazy to shut down nuclear power plants. I can't emphasize enough. Please do not shut down the nuclear power plants. Please reopen the ones that have been shut. This is total madness to shut them down.

[Jason Calacanis]

Total madness. Think about where we were. Just like Maureen shared with US Today, just 10 years ago, I mean, there was a moratorium. They were decommissioning plants. So I think we do have a lot of forward progress and I think we need to come up with that statement of principles, no more decommissioning. Bring online the plants that we've decommissioned that are easy enough to bring online. Right. Figure out whether or not I think there's a startup maybe called the nuclear company that's trying to build six or seven of the AP1000s. Maybe there are some companies that we can get behind that are going to go cluster, build some of the Gen 3 reactors. Maybe there are things the government can do to streamline that process, provide some credits, make that process work, then I think letting the market work by removing some of the regulatory burdens. We've already done this through a lot of legislation at the federal level to let these Gen 4 reactors at least come online, experiment, see whether or not they're going to work. That feels like a pretty good solution.

[Bill Gurley]

I think it's tough. You know, on the NRC front, two of the links we're going to provide are a presentation from the head of the NRC and a podcast with the head of the nrc. And one thing that becomes very apparent is he considers it a win that we've gone from a negative reduction to just keeping everything online. And we're sitting here staring at China going, why aren't we doing this? So they're just not in that mindset and they've been around a long time. And I think red tape is red tape. And I just think that you're probably at a place where you might want to send a bunch of people off in a room and zero base it.

[Jason Calacanis]

Well, I think this is, I mean, again, again, companies get built where markets are created. There's a lot of growth domestically in China, so there's a lot of this stuff coming online.

[Bill Gurley]

But they don't have the history of red tape that we have.

[Jason Calacanis]

I agree with that. In South Korea, they're exporting. Well, we have export controls in the United States which are preventing a lot of these companies from building and exporting. So again, we could change those export controls and perhaps build a domestic export industry for nuclear. Why do you do that? Because it builds the supply chains, it builds the resilience that benefits you domestically.

[Bill Gurley]

I'm a little skeptical.

[Jason Calacanis]

Shocking.

[Bill Gurley]

I uncovered this document from the Idaho National Laboratory, I think it's called, which is a separate nuclear arm of the US government from the NRC. And they recommended 30 things to change about the NRC. And I'm sitting here thinking, wow, that's a lot of things you would change. And people can go find this document. But my guess is even if Congress got behind this document and said you should change these things, what would Happen is over five years, they changed 20% of them. They wouldn't change all of them. And I don't think the impacts we're at a forex cost, I don't think you get there. And so, you know, I mentioned this earlier, but Josh Shapiro, the Pennsylvania governor everyone praises because this bridge went down on I95 and he got it back up in 12 days.

[Jason Calacanis]

How'd he do it?

[Bill Gurley]

Well, he took all the regulation and Lawsuits out, he spent the table. And so we have to recognize that one of the reasons we can't build infrastructure and the California high speed train thing is where it is, is because we've, we've indoctrinated ourselves in red tape both with regard to regulation and litigation. And if you want to go build this next generation level three plant, I think you've gotta rewrite the regulation from zero ground up, like make it thinner and tighter. And two, I think we've gotten to the point where we gotta say, this is so important. You can't sue these people like the government's doing that.

[Jason Calacanis]

And that to me seems, seems perhaps even more important, Bill, because in South Korea, their national regulation and the regulatory body that oversees it all is modeled on the US okay, so that to me doesn't explain why we have this massive price differential. But I do think the litigation environment, all the other things, the fact that we have this dual level of litigation. And then ironically, here at Diablo Canyon, you say, why? What was one of the leading forces that caused this place to get decommissioned in the first place? It's groups like euphemistically called Friends of the Earth, who sue them at every different stage, who turn public support against them. Ironically, if you decommission Diablo, you know what the state does, it imports more coal produced. We know this, you know, and yet Friends of the Earth are, you know, are lobbying for this.

[Bill Gurley]

And that doesn't exist in China, right? So to a certain extent, you know, you built your own problems.

[Jason Calacanis]

Well, listen, I would much rather deal with the downsides of, you know, a free system where, you know, you have the market competing. But I will say that when you have this much regulation, right, the government has chosen to be involved, you no longer have an unfettered market. Right? So market forces break down. Clearly they've broken down here. And I think now we see the strategic priority to get behind this. It's been a heck of a learning.

[Bill Gurley]

Let me riff on one other thing you said before we wrap up on the SMR front. I like your idea of these people getting together. We've talked about Facebook's open compute project where they open sourced all the elements of their data center. And we heard from Marine that a lot of these operators get together and share best practices. And it strikes me that creating an IP free world for these people to live in is beneficial to the utilities. It should give them more confidence in what they're doing. I wonder if I ask all the AIs, has anyone tried to commercialize the learnings of the Navy and as such said no. Everywhere I looked, no. And so maybe there's an opportunity there, right? The government, why not take.

[Jason Calacanis]

That would be the coordinating function. If the government could create kind of that open source standard for the AP1000, right.

[Bill Gurley]

Or for the SMR1 maybe by leveraging what's been done in the Navy and maybe getting these hyperscalers behind it and maybe that's a mini version of a Manhattan Project but boy, it seems like there's an opportunity there. And the reason, and people will, will be very upset that as a capitalist I'm suggesting this, the reason to make it IP free is to get everyone working on the same platform to remove single source dependency risk and to get the utilities confidence that this thing's going to be successful and going to go forward and get everyone behind it. So do the Linux of SMRs.

[Jason Calacanis]

And by the way, again, this is about buying time, right? Like if we telescope way out and I think Elon's thought about this as much as anyone. He said ultimately the sun's the source of all of our power. Right. The problem is we don't have the technologies today to store it as efficiently as we need to in order to provide all of our energy. Okay? So I don't know whether it's 25, 50, 75 years but we're going to have to bridge these technologies technologies. We have a clean energy that we invented that currently is powering is 20% of our total base load power, 50% of our clean energy. If there's one thing I've taken away from what we've studied over the course of the last 10 weeks is that we have 94 plants in this country and we should not be decommissioning any of them. They all have much longer useful lives than I ever thought about. At 60, 70 years old they still run safely provided that you do the proper maintenance. And all this stuff, stuff to these plants which frankly is new news to me and I think terrific news and it's also very clear that we can build more. I mean Vogel, yes we had big cost overruns, but we have the capacity in this country to build more of these Gen 3 reactors. We have a lot of vibrancy and activity going on on the Gen 4 side. We've got a lot of bipartisan support now in Congress and so I come out of this a little bit more optimistic. But in the state of California we are sitting here at $I would love to see Governor Newsom in the course of the next 24 months. Announce that he's going to extend the license here for another 15 years. I mean, this seems to me to be a crown jewel of California's leadership on things like AI, our ability to produce this type of energy. It makes no sense. Take this off the table and let's get to working on, on what we need to do next in order to reduce our dependency on fossil fuels and frankly drive up the power generation in the state that we're going to need to power the economy and AI.

[Bill Gurley]

Yeah. And I would urge those that care that if you want to really meaningfully keep up with China and Korea, that one, we should, should quit vilifying them and start respecting the fact that they're executing at a level above and beyond us. And then two, consider some type of Manhattan Project like approach where you get out of the current environment, you get a lot of smart people thinking from first principles. You may be borrow from what the Navy's done and consider open source or IP free solutions to get everybody on the same page.

[Jason Calacanis]

Yeah. Well, next week or the week after we'll be back to regular programming. But this is one of the things you and I wanted to do. We wanted to take some deep dives on some topics that interested us along the way. So thanks.

[Bill Gurley]

And I would encourage people that disagree, and I'm sure many will, to reach out.

[Jason Calacanis]

Oh, you're going to hear from them.

[Bill Gurley]

I know, I know you're going to hear from them. Share your point of view and we will bring that data into the discussion.

[Jason Calacanis]

But on the flip side, I want to see more of those Games Day posters saying I love nuclear. I love to see people energized around the topic. I love to see the presidential candidates talking about the topic.

[Bill Gurley]

I'm headed to Ann Arbor this weekend where I suspect game day will be.

[Jason Calacanis]

Will we see some more signs so.

[Bill Gurley]

Maybe I can quit the sign? We'll see if I have time to do that.

[Jason Calacanis]

All right, man, have a good time. Great scene.

[Bill Gurley]

Take care.

[Jason Calacanis]

Bye. Bye. As a reminder to everybody, just our opinions, not investment advice.