B (3:14)

More of the latter, although I'll say it's not just coastlines, it's rivers, canals, lakes, anywhere where you can barge something in from the fab yards and the shipyards. So a big piece of how we're doing this is if you want to go and get a nuclear plant built today, you're not going to get a fixed price lump sum contract from an EPC firm. The cost is too big for their balance sheets to maintain. There's just too much risk. But what you can do is you can get fixed price contracts from fab yards and shipyards on large sections of prefabricated parts of the plant. Because they do that all the time in the oil and gas space. They'll do it for offshore wind substations. We've seen this work very successfully in the LNG space. So you've seen companies like Venture Global LNG were able to project finance a first of a kind LNG export terminal by designing the plant so that the majority of it could be prefabricated off site under fixed price contracts with performance guarantees from the OEMs. And if you structure that correctly and you string those performance guarantees together correctly, you can bring commercial debt financing into the picture and that we think we can apply that same playbook to the small modular reactor space. But it means we have to be very thoughtful about how we design the plant architecture so that it can be prefabricated using these fab yards and shipyards, using the form factors. They already know how to build, taking advantage of the fact that they already have labor at their sites. They already have automated welding and quality assurance programs at the site. They have huge mega cranes already erected and mobilized that can build these in excess of 2000 ton modules that could then be barged to the sites that we want to target for building nuclear power.

A (5:04)

Interesting. So I know one of the problems you mentioned several of them. You know, one of them is that the nuclear deals that, that I've seen, you know, they can take like up to 10 years from the time you Start, apply for a license and actually predict that you're going to be in commercial operation. I'm understanding maybe you can control some of the costs by building it off site if it's cheaper and take advantage of that. And I'm familiar with Venture Global, what they did. But how do you still manage the whole interest during construction that you mentioned, the long timelines that if you raise sponsor capital that they're not going to see their first dollar back for six, seven, eight years. Does anything that you're doing change the pace at which you can build as well?

B (5:54)

Yes, there's two things we're doing. So by designing it to be entirely built using this prefabricated supply chain, you do drastically shorten the build time because you can build a lot of things in parallel and you can bring them to site. And the actual work that happens on site is just an assembly of these modules. It's earthmoving and it's assembly. This worked out in Venture Global's case. They were able to dramatically shorten the timeline from the first shovel on the ground to the first production of LNG out of their site. We're going to follow a very similar playbook. But the second thing we're doing, we're going to. You think about a nuclear plant, the balance of plant, the steam turbine, the cooling tower, the interconnection, all of that is just traditional. There's anything risky about that. But you end up paying the same high cost of capital on that balance of plant when it's a nuclear plant and it sits around waiting for the nuclear steam supply system to get energized before it can start to generate revenue and start to pay back. So what we're doing is we're actually building that balance of plant first and then energizing it early with gas so that we can get assurance of a commercial operation date, which helps lower our cost of capital. It also helps give assurance of power to our offtake partner, such as data centers, who are themselves making a big capital commitment into the data center and want to know when the power is going to show up. And it also helps do a few other things like shake out some of the commissioning headaches that sometimes incur. When you go through the commissioning process for the nuclear plant, you could shake out a lot of the issues on the steam side, such that when the nuclear steam supply system shows up and we turn the valve and we convert it over from gas steam to nuclear steam, we're also able to shorten the commissioning timeline to execute on cod.

A (7:40)

What you're describing sounds kind of similar to me what people tried to do when, when people thought gas prices were going to be high and were doing these integrated gas combined cycle projects and they would build the gas portion first and then show that it worked and then have the gasification piece maybe separate and then that way they knew they at least had a gas plant if the gasification ever had a problem. So it sounds familiar.

B (8:05)

It's analogous. It gives the bank collateral, it's a lower risk investment. So it does lower your cost of capital. But it's also been something we've been getting buy in from the NRC on. So we have a top core port out with them right now that they're agreeing that this means that we could build a whole balance of plants before we even necessarily have a construction permit from the irc. So it decouples licensing risk from COD risk for the offtake, which is important.

A (8:35)

Is your licensing process the same as the other nuclear developers? Still take several years.

B (8:41)

So we're following, we're only focused right now on light water, small modular reactor technology specifically so that we can enable debt financing earlier into the process. So we're using proven technology with proven fuel that has an existing supply chain, known capacity factor, known operations and maintenance processes and schedules. And that means that we are also following a very traditional licensing path. So we're pursuing a Part 50 process with the NRC construction permit followed by operating license. It's how every nuclear plant in the US except for Bogle has been licensed. It is also right now one of the more popular licensing paths even for the advanced reactors. So we're confident that we're going to see a very speedy timeline on the licensing side. But even so, it means that we can energize the valence plant before that licensing process comes to completion.

A (9:31)

Do you have any plants actually that have broken ground yet or you're still in the licensing phase? Development phase.

B (9:37)

We have a site that we've taken control of earlier, earlier this year that we've started geotech analysis on and we've got a number of other sites in the pipeline that we're beginning to secure as well. We've been able to begin the licensing process on that site and for our plant architecture in a site and reactor agnostic way. So we can get buy in from the NRC and from some of our partners on the aspects of our plant architecture that allow this prefabrication approach to happen and allow us to simplify the civil infrastructure that further reduces capital costs and is often one of the sources of scheduled delays in traditional nuclear construction.

A (10:17)

Because you're using this modular approach, does that mean you have a few or only one size of plant that you're aiming to build, at least initially? And if so, you know, how many megawatts are you looking at?

B (10:29)

Yeah, so as I said, we're focused on the light water, small modular reactor vendors which come in very specific sizes. They're usually ranged between 20 to 300 megawatts per unit. Every site that we're targeting, we want to start with a, with a small tranche of nuclear deployment so that we can get everything proven out without having to ask everybody to commit to a 30 billion plus CapEx project. We can keep total CapEx in the range of 1 to 3 billion for the first tranche, but then we're picking sets where we can deploy many units in a row to really realize that learning curve and drive down operating costs through economies of scale of operating multiple units on one site.

A (11:11)

Are you at the point yet where you can disclose your cost per kilowatt for construction? Because one of the other big factors in nuclear is the solar, wind, gas. You can argue about the benefits and CO2 emissions and all that, but historically they've been a lot cheaper per kilowatt than what the last few nuclear plants have been built in the US at. Do you have a range that you're willing to share?

B (11:42)

Yeah. So we've gone through a pre feed analysis with our number of engineering partners and what's giving us confidence is the combination of that analysis with some of the data that we've seen on recent nuclear builds abroad relative to the us so just to put numbers on it for everybody, we saw Vogel come in at about $15,000 a kilowatt. That's approximately what we're seeing out of the European projects like Hinkley Point C as well. But we're seeing prices as low as 2 to $3,000 a kilowatt, $4,000 a kilowatt. With the Chinese plants and the South Korean nuclear plants who have been. I think what that underlines is that it's not. There isn't something exotic, there isn't an exotic material that a nuclear plant is made up of. It's steel and concrete. Most of the cost is in the methodology of construction. Right. So a third of that can end up being just the capitalized interest on debt. Over 40% can be the indirect EPC costs of training and relocating those 10,000 workers, setting up a nuclear QA process in the field, dealing with all of the contingency friction, performance bounds between all the different trade, you end up with a really low productivity factor on labor in the field. If they're not familiar with the site, they don't know where their tools are, they don't have automated processes set up like you do get in a fab yard or a shipyard. So the delta we see between where nuclear has been getting built when we do the stick built construction versus a more streamlined workforce in the China and South Korea case, gives us confidence that there's cost reduction. And then when we've gone through our prefeed and applied these methodologies from our fab yard shipyard partners and the methods we've seen in offshore wind and offshore oil and gas with, we're confident we can get the first unit in in the neighborhood of eight to ten thousand dollars a kilowatt. And then each marginal unit we add to that can quickly get to the $5,000 a kilowatt target. And at that point is where we can start to apply a learning curve. And I think we'll surprise everybody on how much lower cost nuclear power could.

A (13:45)

Get at $8,000 per megawatt cost. Is that something that in today's power market is financially viable or you need to partner with the utility to get it in the rate base and have like a longer term plan, do some kind of build transfer agreement or how.

B (14:04)

Does it work at that price, depending on the financing terms, that actually is viable for the right industrial commercial offtake partner. Now what that means is that that's not the price we want to be at forever. That's the price where we would start. And the promise here is that by signing up for that first tranche of power at that price premium, you're unlocking project finance for nuclear longer term. So with that first deployment, and part of that is the reality with small modular reactors, is that there are fixed costs you have to incur. There's environmental site permitting, there's control room radway system, a lot of geotech analysis that goes into that first deployment, a lot of non recurring licensing and non recurring engineering that goes into that first unit that gets. So part of this is cost accounting is how do you account for that? So we're actually putting all that cost on that first unit. And it's when you then add the marginal units that you're able to get a much lower cost per kilowatt. And so part of this is about showing to the off taker if you're committing to the second and the third tranche, this is how we can get to a blended PPA price that is competitive with new build unabated natural gas and eventually new build renewables. Part of this is because you get a much higher capacity factor on nuclear power. You're not getting the price volatility on the fuel because fuel represents a very low fraction of the long run average operating cost on a nuclear plant as compared to a natural gas plant, for instance, you're getting firm capacity. So it is also reducing some of your transmission interconnection costs if you're going to compare it to a renewables project. But it's really about how do we get this built in a standardized way and how do we contract for it and manufacture it in a different way that can then get you down below the $5,000 kilowatt mark. I think you can, I think you can get well into the $3,000 kilowatt territory. And at that point, especially if you can lower your cost of capital, this is very competitive, not just in the U.S. but many other power markets as well.

A (16:11)

How do you get comfortable? Well, I'm making an assumption here first based on your construction strategy and you're analogizing the Venture Global, which a lot of people in the audience will be very familiar with. I'm assuming there's no single point of responsibility. You don't have like a lump sum MPC contract for the cost. I'm assuming then that requires you to put in, especially for project number one, put in a fair amount of contingency into the deal which hopefully you don't have to use. But I think anybody who's going to finance the deal is going to require a significant amount of contingency there. How, how do you get people comfortable? If I'm right that you got this large, you don't have a single point of responsibility. So you need this big buffer. And then how does that factor into your $8,000?

B (16:57)

Yeah, you will need that large contingency on the first one Venture Global did on their first project. So the way that, you know, we're factoring that in, I think into that number. So when you look at the financing model like yes, this is going to be, you're going to need a power price premium on the first unit. Say it's in the neighborhood of 150 bucks a megawatt hour. That isn't actually crazy. Compared to some of the offshore wind PPAs we were seeing get struck on the east coast that have, you know, that were with utilities in states. Right. Those, some of those were north of $180amegawatt hour. We're confident we can do a PPA below that price for that first trunch that factors in the necessary contingency. Yes, you'll need a certain amount of risk equity from the right partners who want to see the category of nuclear unlocked for project finance. But there's a lot of appetite for that right now, and we can draw a straight line path to how we can get the cost below $100amegawatt hour pretty quickly.

A (17:54)

One of the other factors. I'm moving away a little bit from just the pure finance side, but one of the other reasons I personally think have led to the lack of new nuclear. The US is kind of the NIMBYism. Who wants a nuclear plant in their backyard or even in their neighborhood or even in their county? How do you get people comfortable with that? That's not something that's really specific to what you're trying to do, but it's. The entire nuclear industry is kind of stuck with that problem.

B (18:33)

I would say. Nimbyism from my years at Exelon, nimbyism is not a unique problem in nuclear. It's a problem for wind and solar. It's a problem for transmission. As we're seeing right now, it's a problem for building any kind of energy infrastructure.

A (18:45)

Really.

B (18:47)

One of the aspects we liked about our plant architecture is that it really minimizes on site construction, both the force, the magnitude of it, as well as the time, how many workers you have on site, which really reduces the burden for neighbors. We've also designed our plant architecture so the nuclear island is entirely below grade. So it's much more out of sight, out of mind for the surrounding environment. And unlike projects like offshore wind, that can have a lot of challenges with NIMBYism because you're taking up a big chunk of the horizon of people's viewshed. We're targeting places we get to choose where to put this. We don't have to go where the wind is. We don't have to go where the oil and gas is. We can put a nuclear unit kind of roughly anywhere where it'll be accepted. And the power density allows us to pack a lot of megawatts in that location. So we've been very selective about our first sites in our pipeline that have very supportive communities for nuclear power. So, you know, if you go to a county that already has a nuclear plant, it's. You're not going to find a community that's more supportive of nuclear power. There's a lot of room to add More capacity to those sites. I would say there's also certain states and you look at states like Texas, Virginia, Georgia, really attractive states for nuclear power. They've been very vocal, the governors have been very vocal about trying to attract more nuclear capacity to those states, more data center infrastructure to those states. And I think we have a contracting structure with the data centers and with other industrial off takers where we can also mitigate some of the transmission challenges and some of the retail electricity rates that they've been having, challenges that they've been having because we are ultimately what we're doing is we're unlocking a power generation source that provides the firm capacity that everybody needs to help manage the grid, to help minimize some of those T and D and balancing costs. And we're able to finance it with a direct industrial offtake like a data center. In fact, our first site that we're looking at is a co location opportunity and we'll be making very minimal use of the grid with our data center partner.

A (20:44)

What about for your capital itself, for your debt and equity? How do you raise that?

B (20:51)

Yeah, so right now we are backed by venture investors like Engine Ventures, Nat One Ventures. We have a large, however, we have a large pension fund who directly invests as well, who does a lot of project finance and other types of energy infrastructure. And we've been building relationships with a number of the traditional infrastructure funds who have been involved in projects like Venture Global LNG's project, both on the project equity and on the project debt side. So we are structuring the company, we're structuring the approach, the contracts to put together a financing package that traces a line to how we can bring debt financing into nuclear much earlier than some of the other projects there again talked about. We could of course go to the lpo. I think the LPO is a great option, assuming it's still available. But we want to design something that does not depend on government guarantees, that does not depend on a rate base that can ultimately be attractive to commercial finance. The same way we build wind, solar and natural gas today.

A (21:52)

All right, trying to wrap things up a little bit in your world. There'll be over the next five to ten years a bunch of these being built and maybe a few of them even online, at least one or two of them online already. What type of changes do you think need to be made either to people's mindset or to policy to give the nuclear industry a better chance of succeeding that you think are both potentially feasible to get adopted and, you know, or Maybe some that are even being under discussion right now.

B (22:26)

Yeah, I think it's important to recognize that right now is probably the best time in the last 70 years for nuclear power to be developed. We've ever seen more demand pull from multiple places, states, utilities, data centers, other industrial customers. We're seeing enormous load growth across the US for the first time in a quarter century. So there's a moment to strike right now. But I think it's important that we don't just try to do things the way we've done them before. We aren't just trying to psych ourselves up to do another large civil engineering project that requires mobilizing 10,000 skilled workers at a time where skilled labor is at an all time low in terms of supply and availability. And you'd be, you're competing with data centers for that skilled labor. I think we've got to take the lessons learned from other large energy infrastructure projects like how we've been successful at building LNG export terminals, how we've been successful building other offshore oil and gas projects. And we've got to apply those learnings to how we build nuclear power and how we finance nuclear power. I think one of the things that venture investors always like to talk about is where is their 10x improvement? Where can I really surprise the market and disrupt the incumbents? And you often need sort of a 10x improvement to be able to realize that there aren't a lot of energy technologies where you can realize a 10x improvement. We squeezed the juice, we've squeezed the efficiency, the margin out of gas turbines, out of wind, out of solar. Nuclear is still a place where there's a lot of 10x opportunities for improvement both in terms of capital cost on a dollar per kilowatt basis, but even part of the technology and utilizing the fuel in doing higher efficiencies with some of the newer advanced reactors that are coming out. I think everyone's going to be surprised at how quickly we can get nuclear plants built when we approach it in a smarter way using a prefabricated model. I would encourage the government, policymakers, utilities, everybody who's interested. There's a lot of people circling the hoop on nuclear power right now, but we need to make sure that we aren't making the same mistakes of the past. We've got to try. We've got to actually, I think have a few different shots on goal on how to look at building nuclear plants a different way.

A (24:48)

If you have success, anything like the guys that started up Venture Global has, we'll all be lucky to have you back on the podcast, because you won't. You'll be too big for us. So anyway, I wish you. Wish you success. It sounds exciting and I'm a fan of nuclear, so I hope to see a few of your projects operational in the next few years.

B (25:09)

I really appreciate the opportunity to talk about what we're doing, and I think it's good to have it's good to have supporters for nuclear power. It's an important technology for the world right now.

A (25:21)

You can find us online at www.projectfinance.law or send us an email at currentsordonrosefullbright.com Please rate, review and subscribe on Apple Podcasts, Spotify, or your professional preferred podcast app. Our show today was produced by Emily Rogers. Stay ahead of the Currents.