A (6:19)

So that was a lot. So let me pick a little bit apart. So one, I don't think there's very many people in the audience who would deny or try to refute your claim that we need baseload power. And I think most, including me, fans of nuclear if we can get it to work. So why has nuclear not been successful in the last 10, 15 years in the US or even longer actually? And why are the climate for nuclear change now that you think that over the next five, 10 years there's going to be this resurgence? People call this nuclear renaissance in the

B (6:56)

U.S. yeah, I mean we designed one nuclear to solve some of the problems that you've talked about about legacy nuclear and particularly the cache valley of death as it's called, the extended period of capital expenditure with zero revenues. And that's historically been very difficult for nuclear developers. And the traditional model can fail because it has a binary outcome. Now investors must have to fund billions of dollars in engineering and licensing before seeing a single dollar of return. And that makes traditional nuclear really difficult to finance with little mitigation of the risks and project delays and overspends. So our model flips the equation and by bringing natural gas assets online early, we generate substantial early free cash flows. And that allows us to self fund not only the corporate operations, the business development, but the nuclear licensing processes. And it ensures the company remains solvent even if regulatory approvals were to take longer than expected. So we de risk the investment by turning a long development timeline into a cash flowing infrastructure business. The other difference with traditional plants is that we use the latest SMR small modular reactor technologies. And compared with the old fleet of nuclear plants, SMRs have a more standardized design. They have passive safety systems, longer life factory fabrication, quality control and modular installation. So that aims to solve the problems of traditional the traditional projects and reduces the risk and makes them more investable.

A (8:41)

Is the plan to have the smrs co located with natural gas plants or is the natural gas business generating business separate from the nuclear facility?

B (8:52)

They can be co located. We look at our sites with a number of different criteria. The sites have to be large enough to support the gas plants, the nuclear plants and a hyperscaler and the data center. So we look at sites that are around a thousand acres to make sure There is enough water for cooling available that it's close to fiber connections, to grid connections. And it's increasingly important that it's reasonably close to an urban population because people have to work there. So we look at sites that are probably no more than an hour away from a city. So all of those come into play when we're deciding which sites to look at. Also, can we have the site available for the 60 to 80 years that it will take? Different technologies require different areas. Some of the sites that are being developed with solar power require enormous areas. Nuclear and our gas proposal, there's quite a small footprint, so we can be reasonably efficient at where we locate. And ideally we'd have the gas plant and the nuclear plant pretty close to the data center. We're looking to have the gas plant and the nuclear plant behind the meter. So that means the connections have to be direct to the data center, but it can be a distance away. A corridor away doesn't have to be contiguous land. There is a latency issue with the further away that the gas plant is from the data center, the more it has to be designed to meet the conditions and deliver the electricity. The characteristics that the data center needs.

A (10:47)

How do you secure your gas turbines in today's market, given how tough we hear it is to find turbines over the next four or five years?

B (10:56)

Yeah, we looked at all different technologies and in selecting gas, the most used technology are gas turbines. And as you say now there is probably a five or six year waiting list to get into the manufacturing queue for original equipment manufactured turbines. We are focusing particularly on reciprocating engineering gensets, they are more available. And we really came to that view with our relationship with Rolls Royce smr, because that relationship pushed us to Rolls Royce sa, who run the MTU brand of reciprocating engines. And we have access to their production queue. They can deliver gensets much more quickly than turbines. And there are big advantages to having the gensets as well. These are small, they're 2.5 to 2.8 megawatts. So we need a lot of them. And we're designing housing for groups of 50 megawatts of the small turbine, the small gen sets, but because they're individual units, the availability is much easier to manage. So in the, in the n +1 profile of reliability, we can deliver that in a much easier way than having very large turbines.

A (12:24)

And how do you deal with the NIMBY NIMBYism problem? I would think, you know, nuclear is not the greatest thing to show up to the school gym and say hey, I want to get the local community support to build a 350 megawatt nuclear plant next to everybody's home. How have you dealt with that so far?

B (12:45)

Well, it has surprised us when we've been to different states. It surprised us how receptive people have been to an energy facility coming to their area. And there is much less nimbyism than we expected. We've been pleasantly surprised by the reception we've had in different states. Many states have done surveys and they've been talking to local communities about bringing energy and jobs and improving the economy in that location. And there are many areas that have a prioritized list of communities that will welcome nuclear power. So that's one issue. The states are all competing for nuclear power to come to their states. So from a political point of view, we're very, very welcome in almost every state that we go to. In terms of the trust to do with our business, I mean it's a fundamental question for the industry and it's linked with the developing credibility and trust with investors as well. Our approach has been building credibility and trust and anchoring that in transforming nuclear development from being a science project into a pragmatic, predictable, cash flow focused infrastructure platform. We address the historical perceptions through financial de risking, through execution, operating excellence, through communication programs in the community and a strict long term alignment between the company and the community we operate in. On our advisory board we have Professor Rob Hayes who is also known as Professor TikTok in that he has a very large following following his, his channel about nuclear energy and he debunks various ideas about nuclear energy. People can write in and ask questions and he, he produces a 30 second, 45 second video that answers in very straightforward terms what, what the facts are. And he'll be helping us put our communication programs together because we, we do understand that not everybody and we want to get our communities comfortable with working with us for a long, long period. As I say, these projects are going to be around for 60 to 80 years.

A (15:16)

How does the cost per megawatt hour nuclear compare to gas or solar? Obviously it's great, it's baseload and all the other benefits that you can tout and you have been touting about nuclear but we haven't really talked about if it's cost competitive.

B (15:35)

Yeah, that's an interesting question. And we look mainly at the levelized cost of electricity and we look at turbines compared to gensets, to the reciprocating engine gensets and the reciprocating engines are cheaper than turbines, they have a slightly bigger operating cost. But at the end of the day, the levelized cost of electricity is very similar. And similarly with nuclear, the cost profile is very different. The levelized cost of electricity can be within the range of turbine power. So we're very excited that although the capital costs are very different, the operating costs are different, and when it comes to being able to deliver energy, the the costs can be very competitive.

A (16:27)

And one of the problems we've seen with the few nuclear plants that have been attempted over the last 15 years or so is cost overruns and delays. How do you manage that? And who's going to be bearing that

B (16:42)

risk in your plants in terms of concrete steps to mitigate cost overruns and schedule delays? Now we use all the lessons learned from the legacy failures and we systematically reduce the risk at each stage gate decision point. So our approach is that we have three levels for risk management of risk transfer of risk sharing and mitigation. So this is based on best practice from continuing analysis of failure studies of live development of concepts with the DOE and the Loans Programme office of experienced risk management specialists and industry stakeholders. So the risk transfer means putting the right risks with the right party. Risk sharing is to align incentives to widen the capital base and risk mitigation. We systematically reduce risk at each stage gate. So I can give you some examples of how we mitigate these risks mainly in contract strategy and design approach. So in site screening we spend a long time evaluating and screening sites and prefer retired coal sites and existing industrial zones that enables us to reuse existing transmission systems, water infrastructure and that reduces upfront capital costs. We like de risked designs based on more proven technology based on factory built modules that improves cost quality, cost predictability and quality control. And we allocate development spend per site pre fiddle to complete front end engineering studies and de risk projects before any major capital is deployed. And we'll use hybrid EPC contracts. And the EPC contracts are particularly important because a fundamental flaw in a fixed price EPC model is the illusion of risk transfer. So a project's inherent risks can't be eliminated, they can only be allocated. And for a first of a kind project, if we try to transfer all construction risk to a contractor, it creates an unmanageable liability for that contractor. So when the liability exceeds the capacity, the contractor's capacity to pay, the only viable option is bankruptcy and problems that put the burden back on the owner. So we're intending to use hybrid target cost fiat risk contract models and open book accounting and owner audit rights to catch issues early. And we want to ensure risk sharing with incentives and without deterring contractors. And that's one of the key lessons from the major recent failures. And the other lessons are to avoid incomplete designs, to have mature supply chains, to avoid poor change management, and to structure, take or pay agreements, tick or pay power purchase agreements that share cost overruns and delay exposure. So we're building all of these lessons into our business and it improves the bankability of the projects.

A (19:52)

Let's talk about the bankability. How do you plan to finance these projects and do you need DOE loan guarantees or direct loans to be able to make these deals work given their size and the long useful lives?

B (20:10)

Yes, bankability, it's a function of predictable revenues and costs, risk allocation and risk mitigation. And as you said, these projects are very large and require multibillion dollar investments. So we will be using a mixture of debt and equity financing. Yes, we'll be working with the government debt de risking through the DOE loan guarantee program and the federal Financing bank and export credit agencies. And really the very positive support that the administration is giving to the regulatory environment that also helps the bankability and tax incentives are in there as well. Today, SMR projects benefit from an investment tax credit and they're the best protection against cost overruns because they're based on the full cost of the project and they're transferable. So bankability is improved by the technology and that helps in terms of risk and also the strongest demand in growth for decades, driven by the hyperscalers. It also changes the bankability equation. So our model is a dedicated project delivery platform and we're trying to change the traditional capital at risk into quantifiable components that are suitable for institutional investment. And the more we can define those, the more bankable each element is.

A (21:41)

All right, so let's conclude then on the equity side, I opened up saying you guys are planning a spac. Maybe you can give us an update in terms of your plans to raise equity and go public and just kind of your thinking in terms of why going that approach as opposed to either trying to raise money through strategic investors or large PE funds. What's the benefit to you and why choose going public?

B (22:10)

We're very close to our public listing through a merger with Hennessy7 and we're not just another pre revenue startup. We've been working and building the business for four years and we're an execution focused energy platform. And we chose the de SPAC trajectory because it provided the most certain and efficient route to the capital markets and it allows us to hit the ground running. So we're, you know, we're solving the immediate energy crisis for, for data centers, for hyperscalers, for industrial operators by delivering the early gas as soon as 2028 creates the cash flow and infrastructure necessary to support our first SMR operations in 2034. And we're backed by strategic partners. We're not just building reactors. We're building a diversified future proof energy portfolio that supports the US As a global leader in energy security and AI innovation. So the nuclear story is just beginning. We're going through the public listing so that we have the best access to the capital markets and we have the partners and we have the roadmap to lead the story for decades to come.

A (23:23)

All right, well, good luck with the listing and we know we need the power, so good luck after you're listed with Building Thousands of Megawatts.

B (23:31)

Thanks very much, Toad.

A (23:34)

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