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Everyone is talking (again!) about a coming revival in nuclear power. What needs to change to make it happen? | More from New York Climate Week
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A
Hello and welcome to the Energy Gang, a discussion show from Wood mackenzie about the fast changing world of energy. I'm Ed Crooks and we're at New York Climate Week talking to business leaders, investors and policymakers about the biggest issues in energy today. Now the hottest topic here this week is how to meet the huge demand for electricity coming from data centers. One option that a lot of people are talking about is nuclear power and that's what we're going to be discussing on today's show. Here's what's coming up.
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There's three things that allow new nuke to be built. Policy support, a customer that wants to take on a contract and then an EPC that wants to build it. We know that there's policy support, we know that there's customers that are willing to pay north of $100 per megawatt hours for current operating nuclear. And now we need to figure out who's going to backstop this risk and actually want to construct this and pursue it.
- [00:53]
C
It's a big build out tens of gigawatts of renewable generation but that generation necessarily needs to be complemented by other resources and that' where certainly advanced nuclear would fit within this broad category of what we call dispatchable emissions free resources. They could take many forms but in our view advanced nuclear is the central pillar of the zero emission electricity that could encompass several gigawatts if not more of new technologies, a data center.
- [01:21]
B
When it ramps all these deals, we're going to have a little bit of power in 27, we're going to have a lot more power in 28. The the real inflection in power demand is 2030 to 2032 and that's what we're really playing for. And being that we're in 2025, we still have time to start building today.
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A
Got power? At Hythium we make sure the answer is Always yes. Recognized seven times as a B&F Tier 1 best provider and ranked top two globally for battery shipments for 2025. Heathium delivers safe, reliable and profitable energy solutions and that keep the clean energy transition powering forward. Let green energy benefit all trusted worldwide. Built to last. Discover more at www.Hythium.com and let's talk energy that works for good. So we're going to start with what's happening in New York State. New York was seen as one of the emblematic examples of a short sighted turn against nuclear power when the Indian Point plant shut down after 59 years of operation in 2021. But in June the state said that it plans to build one of the first new nuclear plants in the US In a generation. Kathy Hochul is New York's governor, said we must radically increase supply starting now. That was a few months ago. So have things really started? Is nuclear development in New York truly underway? To find out, I was delighted to welcome to the Energy Gang Doreen Harris, who's the president and CEO of nyserda, the New York State Energy Research and Development Authority. Hello, Doran. Welcome to the show.
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C
It's fantastic to be here. I'm a huge fan. And it's finally landed. It's the highlight of Climate Week.
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A
Very kind of you to say so. Thanks very much indeed. We are very pleased to have you here as well. So the key thing I want to talk to you about here is nuclear development and New York's plans for that. But perhaps before we get into that, could you talk a little bit about nyserda, what your role is, what is the mission of the authority, and also perhaps tell us a bit about yourself. Something we always like to do with people when they come on the show for the first time is talk to them a bit about the route that they've taken in energy, how they got to the roles they currently hold. So. Well, should we start with nyserda? Tell us about nyserda. What do you do?
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C
Sure. Yes. So NYSERDA is a public benefit corporation. It's the New York State Energy Research and Development Authority. Our job is multifaceted. On the one hand, we conduct a number of planning activities on behalf of the state, so we're the state's energy office. But we also deploy over $2 billion a year in various programmatic activities meant to really spur the energy transition, whether that be through innovation or through deployment programs. Solar, wind, nuclear, et cetera. So we're celebrating our 50th year. We were born out of the oil crisis of the 1970s, and we've had a chance to sort of reflect on what's the same and what's different. A lot of the themes exist today that existed at that time.
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A
Indeed, yes. It's remarkable, isn't it? As they say, history doesn't repeat, but it rhymes. And certainly, as you say, compare where we are now to some of the energy issues we've faced in the past. Some pretty clear rhymes there. And as I said, tell us about yourself then. How did you get to that role as president and CEO at nyserda?
- [04:28]
C
Yes, so I actually have had this job for over five years. I was appointed in early 2020 moved on from Acting President and CEO to, to the appointed position. I actually worked at Nyserda 10 years earlier building our large scale renewables portfolio. And prior to that I'm a very solid engineer. I love technology, I love science. I actually worked in the nuclear power industry early in my career and foundationally I just love the authority for the very purpose that it serves, which is to provide objective, credible and reasoned solutions to benefit New Yorkers. So it's been a great ride and tons of fun and challenges along the way.
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A
Indeed, I can imagine. So yeah, as I want to talk about nuclear power, want to talk about plans for the future in a moment. Before we get to that, let's talk a little bit about the past. It seems to me that New York State was very much identified as a kind of poster child for shortsighted decisions on nuclear power and for shutting down nuclear plants when they shouldn't have been shut down. And when people kind of think about that, obviously sort of Germany is an example that's often cited. But also people think about New York State and the Indian Point reactor which was finally closed in 2021. And I don't know what your data show and you hear somewhat different arguments made for this, but it seems to me pretty clear that when you look at what happened is essentially the generation that was previously provided by Indian Point is now provided by increased gas fired generation. And there may be a bit of renewables there as well, but certainly gas fired generation in New York State increased following the closure of Indian Point. So from a climate point of view that seems like a clear loss. You're getting rid of some emissions free generation, adding generation that has emissions attached to it. So that was where we are now this year, 2025. We've had apparently a pivot away from that, a rethink of the role of nuclear power in, in New York State. And now the governor and the state are supportive of new nuclear development. Could you talk a bit about that journey? What has been the thinking there and what explains that apparent change of heart?
- [06:49]
C
Well, you're bringing up a number of issues, but I would say in the first instance, one of our jobs at NYSERDA is to really be on the forefront of technology development and evolution and really monitoring the market readiness of various technologies to be invested in and or deployed. So the type of nuclear power that we are talking about today, certainly that Governor Hochul has made clear, she wants us to take a very measured and careful but I think ambitious approach to deploying these technologies are not the same technologies that had been deployed in our state at least many decades ago. Looking at technologies that in many instances are kind of coined as advanced nuclear technologies, focusing on increased safety in the first instance, but also designs that are modular can be assembled elsewhere and really brought in in a manner that improves not only their efficiency, but also one of the core challenges with nuclear safety. And so one of the things that we saw very markedly in the market, if you will, was the 2024 Advance act that was advanced in the federal. And really looking at the bipartisan support that existed at that time, we in New York State cannot advance technologies alone. We're certainly an important part of doing so. I think the fact that Governor Hochul has leaned in so significantly on nuclear development is reflective of not only where the market sits, but the fact that we as states really do need to use all energy sources that we can avail ourselves to to meet what is an increasingly challenging situation with serving electric load. So all that to say, number one, we're not talking about the same thing, but number two, we saw the market signs that indicated that it was ready, ready for consideration, maybe not ready for standardization and liftoff, but it was worth investigating. So we have, we have a master plan process that NYSERDA is leading with our colleagues, the utility regulator. We are looking at advanced nuclear technologies from all aspects. Safety, community support, waste offtake contracts, et cetera, really all aspects of this work. And at the same time, the governor's charged New York Power Authority to advance a project of at least a gigawatt. So all that to say it is a different time and in Indian Point is a different project. It's one that really had safety concerns at its core and that was the real rationale. I agree with you on the environmental impacts from an emissions perspective in particular, but I think the reasons that Indian Point was decommissioned are quite different than the reasons that we're now looking at advanced nuclear technologies.
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A
Right. So as you say, then, the governor has said she wants to see a project being developed for at least a gigawatt of new nuclear in New York State. And, and you are looking at the ways to make that happen. What are the crucial next steps then? And what are the sort of the milestones on the path that we should be looking at in terms of getting this project advanced?
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C
Yeah, I would say one thing that's really important to understand is that I, I don't believe that our story stops with a gigawatt of advanced nuclear technologies. When we look at this, I mentioned where the state's energy office, we're conducting A state energy plan as we speak. And it is very clear that, that we need perhaps tens of gigawatts of dispatchable emissions free resources in the coming couple of decades. And so yes, this one gigawatt is a great down payment. But I think what one thing you should be on the lookout for is really the broader policy statements that we will be advancing along with that project.
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A
Oh, that's really interesting. And actually, let's just get into that because that I think is a really important point in terms of kind of what the demand is and why there might be a role for new nuclear in New York State. Because in terms of power demand, obviously New York State, like many other places, is looking at kind of new data centers for AI and other drivers of increased electricity demand. And you also have very ambitious goals to reduce emissions. So where does nuclear fit into that overall picture of your vision for energy in New York?
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C
Well, through our state energy planning process. We have a draft out for a public comment right now. It's over 1,000 pages. Happy reading. But one of the key findings of that plan is really how we look at our energy needs in sort of a bottoms up approach. Meaning first of all, what is our electric load likely to be in the coming 15 years, which is the horizon of this plan? Certainly through electrification of buildings and transportation, we see an increasing load as we have as a general matter. Increasingly though, we also see these large loads. New York has a very major investment going into the upstate area by Micron as a great examp example of our investments in semiconductor manufacturing. All that to say when we look at it collectively, we could see our electric load increase by as much as 25% over that planning horizon, which is not a typical exercise for a utility planner. Right. So. So we need to look at how we serve that load. And it really comes in three forms. One, we will continue very ambitious renewable build out. We have been on the forefront of the deployment of wind and solar and we have a large pipeline of projects that frankly we need to get built. And they are our pipeline of projects to build in the next number of years. So we will be taking advantage of the now expiring tax credits and really accelerating the development of those resources in the near term. We also see even in that horizon, an increase of renewable deployment on the order of 80%. So it's a big build out tens of gigawatts of renewable generation. But that generation necessarily needs to be complemented by other resources. And that's where certainly advanced nuclear would fit within this broad category of what we call dispatchable emissions free resources. They could take many forms. But in our view, advanced nuclear is a central pillar of the zero emission electricity that, as I said to you, could, could encompass several gigawatts if not more of new technologies. The other major finding of our energy plan is that we're going to need to continue to invest in the fossil infrastructure that we have as a state. And for New York that's a bit of a shift. We are seeing slower renewable build out. We know that these technologies like we're here to talk about can contribute, but they are not a near term solution. We can probably talk about timing here. So as such, we have looked hard at our aging infrastructure and have said we need to invest in it and in some cases repower those fossil facilities that are contributing to the reliable grid that we need.
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A
And what kinds of investment might that mean? Might that mean actually new gas fired power plants? Might it mean new gas pipelines? What's going to be involved?
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C
So on a statewide basis we see various scenarios. As with any planner, we're planning against, you know, many potential future outcomes. I think when one looks at the need as a state, it is certainly to maintain the fleet that we have and the infrastructure that we have. There are some specific utilities which, which forecast the need for new, new build, if you will. I wouldn't say that that's a statewide story, but there are some utilities that at least in their own plans, may result in infrastructure construction as opposed to repowering.
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A
Right, got it. Okay, so let's go back to what we're talking about earlier in terms of the nuclear plan and where that's going. As I said, in terms of the milestones, what should we be looking out for? How fast should we expect all this to advance? And if you had to make a guess now or make a prediction now, when do you think we might have new nuclear generation on the grid supplying power to customers in New York State?
- [14:52]
C
Well, these are technologies that take time. Infrastructure just takes time. So what I would characterize our position right now is really thoughtful planning is where we are. And that takes several forms. One is Governor Hochul has made clear that we are first of all looking upstate for these projects. We are not looking in the metro area where we sit today at Climate Week, but rather other areas of our state. So we need to be working with host communities to identify communities that would be interested in the projects and the benefits that come from them. So we've made clear that that is a precondition, that there has to be a supportive community. So we're working in conjunction with NYPA on that activity. We also have the need, and this is perhaps among the most important needs from a longer term perspective, is that we have to have a way of standardizing. The market is quite nascent and there are many, many, many, many technologies that one could rely on for this purpose. So we've been pleased to co lead an initiative through the national association of State Energy Officials called the First Movers Initiative. And the goal there is to do just that. We call it an order book. But we all need to align on what technologies we're actually solving for so that we develop some standardization scale and ultimately cost compression. So NYSERDA is working with a number of other states, not our typical bedfellows, which is an important thing to say. These are what one would typically call red states in large instances. But we see great alignment in that respect, including with the Trump administration. So it's an area that we really are excited to be working on. And then I think perhaps the third major pillar is the perhaps existential question, which is how to pay for it. And that's a big question, of course, that NYPA will need to be working toward. But these are projects, we call them first of a kind for a reason. Right. We know that as we move through from first of a kind to nth of a kind, we're going to see improvements in not only scale, but also cost reductions as we've seen with other technologies. But we have to figure out how to address the fundamental challenges of these early stage projects as such. And that is where not only the State of New York needs to really look at the models that we can be using to facilitate these partnerships in the private sector. Interest, including large electric loads who are perhaps potential counterparties, but also the ways in which federal funds and frankly federal support can be brought to bear as well, including through the loan programs office as a major, I'd say principled place of engagement, the Department of Energy generally and ultimately tax policy at the same time. So these are, these are big multi year work streams. But it is toward an outcome that again, at least based on our state energy planning modeling, we do see these projects becoming operational within our planning horizon between now and 2040.
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A
Okay, right. So sometime in the 2000 and 30s, you would definitely expect a right now. Got it. And just going back to your point about federal government support and maybe the loan program office and things like that getting involved, it'd be very interesting. Also for the show, we're talking to an investment analyst about the issues that are needed to get private sector investment flowing into new nuclear. And it's clear that on the whole private sector investors are very wary of nuclear, new nuclear development in particular, just because look at all the recent examples we've had across the western world really of big projects going way over budget, falling well behind schedule. That's something that makes most private sector investors very, very nervous. Therefore, it makes the private companies really unwilling to invest. So yeah, I mean, you think some kind of state support and government support, in the sense of both support from the state and from the federal government is going to be essential, you think?
- [18:55]
C
I do. I think it's going to be among the most complex transactions that we've ever undertaken for a few different reasons. Number one is just straight the capital cost. Right. These are high dollar investments. There are also investments, and to the investment community's point, that involve an amount of risk that is atypical. And therefore there will need to be many parties, many, many parties coming together to address those issues and sort of share that risk. And the risk takes multiple forms. Of course. There's the big one that we talk about is cost overruns. Obviously we've seen massive cost overruns in the most recent US installations of the AP1000. But it is also the case that we have a situation in which we have, I think, more complex commercial transactions because we actually have a very interested set of buyers in the form of, in my world, a large industrial customer, a hyperscaler, a semiconductor manufacturer, et cetera, who actually have a willingness to pay for clean firm generation. In my view, this is not just sort of a government support circumstance, but rather one in which there's parties that when brought together in the right frame, could actually amount to a very rational commercial structure. But again, this is unlike any project, certainly very unlike wind or solar, but also unlike a typical way a gas fired plant would get constructed or built at the same time.
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A
Right, sure. And as you were saying earlier, also just going back to that policy point, it does have nuclear, does have bipartisan support. You could work with red states, you can work with a Republican administration in order to advance those developments. Is that something that's sort of active at the moment? Are you having productive conversations with the Trump administration right now?
- [20:49]
C
Yes. So this is an area where we found a lot of alignment with this, the Trump administration. It is one also that, that we see the early start, if you will, that we got in this area as being quite beneficial because we aren't starting from zero. We've been working on this for a number of years. One of the things that we're working on as we speak is an application to the US Department of Energy. NYSERDA is partnering with Constellation for the consideration of advanced nuclear reactor installations at their Nine Mile Point facility in upstate New York. They actually had looked a number of decades ago at installing another reactor there. So they're also a little ahead of the curve. Again, we have multiple proverbial irons in the fire, but the point is, is a very clear one, which is when we saw the benefits coming forward from the federal government. All of this on net is a benefit for the New York consumer, and that's something we intend to capitalize on.
- [21:47]
A
And you're saying it needs to be a benefit on net for the New York consumer because what the power has to be cheaper than the power that could be procured from any alternative technology.
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C
There's a lot of ways to look at at costs and benefits. What I'm referring to has more of a societal perspective, on balance. But it is true that these projects, if you're solely looking at the ratepayer impact or the consumer impact from a financial perspective, they come at a premium, there's no doubt about it. Our fundamental question is, is it worth it? And when we looked at it from the broader benefit cost perspective, it definitely was right.
- [22:22]
A
So let's talk about technologies a bit. You've talked a lot about advanced nuclear and you mentioned earlier, as you say, the other sort of big technology for a new reactor that's out there is the Westinghouse AP1000. Those were the reactors that were built at Vogel and suffered from those very long delays and cost overruns. Even despite that, I still meet plenty of people who say the most likely first new reactor that's going to be built in the US will, will be an AP1000 simply because it's existing, tried technology. It's in operation right now, not just in the United States, but in other parts of the world as well. And so even with the challenges that it faces, it's still the safest bet. And actually still providing we kind of get a move on and don't leave it too long. There is still a base of knowledge that's there in terms of lessons learned from what went wrong at Vogel and what went right as well. That means that the costs of building a new AP1000 would be lower and the risks would be lower as well. But you're suggesting, though, that you think for New York's purposes, it's definitely better to go for a new generation of reactor technology.
- [23:38]
C
I Am not saying that. I am saying when I really look at the various categories of reactor technology that they each serve a bit of a different purpose. So in the first instance we need to really think about do we want the energy density of an AP1000 like technology? If we have a space and a need. Right. That may be the most efficient way to deploy. However, SMRs, I agree with you, they are not, we have not standardized on a technology by a long shot in the world of SMRs. Again, they may be more relevant in a situation where you wanted a what we would call a behind the meter application with a new economic development customer, something more localized for example. All that to say and then microreactors are still on the table in various applications. That is why we're going about a process that involves a clear eyed look really at the range of opportunity spaces. I would not say that anything is off the table for the state of New York.
- [24:37]
A
Oh, got it. So you're absolutely not going in with any preconceptions then? You're right. Okay. Could be an AP1000, could be new SMRs as you say. Wide range of different SMR technologies to choose from at varying stages of development. Some like the NuScale reactor, very well advanced, others at a very early stage. And so key job for you is to look across that technology set and choose which is going to be the best option for the state.
- [25:05]
C
Exactly. And to bring others along. Importantly, we need some standardization, no matter the technology type category if you will, so that we can be working to scale in a uniform way. So that's one of the reasons why we're leading this first movers initiative that I had referenced before.
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A
Right. And so backing out that critical path, then as you say, if you're thinking that you want a new reactor in service by 2040, by when do you need to make that kind of decision like committing to a particular technology?
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C
Well, the master plan process was intended to encompass at least a couple of years. We started last year and it will necessarily move on over time, but that's around our timeframe. We have to start to articulate our broader goals as a state and allow this work to advance until we get to the point where we have some specific use cases that we're working against. Again, these projects don't develop overnight. We see huge benefits in a diverse energy portfolio as I had described. So we need to keep multiple tracks moving. Our renewable track, our fossil infrastructure maintenance track and our zero emission track as well.
- [26:21]
A
And a final thought on this. Do you think you're going to have the public support in New York State that you need, or more importantly, I guess the governor needs in order to get this project to make progress and eventually be completed. I mean, just speaking personally for myself, I can see the climate benefits are very compelling. I can see that the energy security benefits are very compelling. But sometimes to a lot of people, those benefits may seem somewhat kind of theoretical and distant. The thing most people care about is the cost of the power. And particularly now because retail electricity prices have been rising. The cost of electricity is, is a urgent issue for a lot of people. And speaking as a power customer in New York State myself, I could see why that is. And it's obviously rising up the agenda as a political issue as well. And as you've been saying, it probably is going to be the case that nuclear power will cost more than power from other sources, such as natural gas or from solar, and probably from onshore wind as well. There's also obviously a general kind of anti nuclear sentiment that still exists in the country and still among some people, among some environmental groups. And if you look at the decision to shut Indian Point down, one of the issues there was sustained and eventually effective campaigning by environmental groups to get that plant shut down. So given all these factors and given that you need to sustain political support for a decade and a half, is that something that's going to be possible, do you think?
- [27:58]
C
I do have to say I've had the benefit of traveling this. I always travel the state, but this particular month I've traveled the state more than I usually do because we've been holding public hearings for our state energy plan from the Buffalo. And next week we're all the way in Long Island. So believe me, I've seen the state and I've heard a lot of opinions about all of this. And there is, you know, there's. The environmental community is in an interesting place because they have had their own reckoning of these issues. And often the circumstance that we find ourselves in is that this is an entirely new generation of New Yorkers who are assessing nuclear power. We were thrilled when we began to see college students appear at these hearings. And I came to realize that they were wearing pins and the pin says nice on it. It stands for Nuclear is Clean Energy. And we saw students from University of Buffalo, Cornell, rpi, et cetera. These are all nuclear engineering students. And they are here to tell us that the technology is ready and that they're ready to contribute to the advancement of these projects. I just thought that was really interesting because they have no preconceived notion about this history. It is one that they see as much like nyserda, as an objectively relevant resource that could be beneficial in to our state and frankly, the world in the long term. That's not universally the opinion, and that's why we have to be deliberate about how we advance this work. It is. It's complicated and one of the biggest complications we have is time to your point, because it's not that you can make a decision and have a reactor generating a year later. It needs to have sustained support and ultimately a sustained process to allow for that support. And that's really what I consider our master plan there to do is to really consider all of the ways in which we need to advance this resource responsibly and in a durable manner.
- [29:58]
A
Right. Well, that really is fascinating about the response that you've been getting. Be very interesting to explore that, I think, and don't know if there are any listeners who have been attending any of your meetings, but would love to hear from them because I think that's a really important issue to explore in terms of, as you say, whether you're going to get that license to operate, that stable public support that you're going to need for new nuclear. We have to leave it there. But it's been great talking to you. Thanks very much indeed, Dorian Harris, for joining us.
- [30:26]
C
It's been great to speak with you. I couldn't end this without putting a plug in. We have a conference next week in Syracuse focusing on the supply chain, the economic development and the workforce associated with advanced nuclear technologies. People are coming out of the woodwork. The nuclear engineers are so excited that finally we're paying attention to them again. But we've got a good group coming together on these particular issues and, frankly, opportunities within our state. So this former nuclear engineer is very excited as well as the academics. So it's great to be here with you, Ed, and thanks for your time.
- [31:04]
A
Oh, well, thank you. All the best with that event. And we'll be very keen to hear from you again as your exploration of this issue develops and as you come to decisions about the right way to go. We'd love to hear more.
- [31:14]
C
Great. Happy Climate Week.
- [31:16]
A
Absolutely glad to you. Thanks very much.
- [31:18]
C
Thanks.
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A
And it's not only happening in New York. Interest in nuclear power is picking up in many parts of the US At a federal level, the nuclear industry enjoys bipartisan political support, including from the Trump administration. The president has signed four executive orders intended to encourage investment in the industry. No company is so far committed to building a new reactor in the U.S. but many companies are exploring what might be possible. To discuss the latest hopes for a nuclear revival in the US I'm joined by Nick Campanella, who's a senior equity research analyst at Barclays Bank. Hello, Nick. Welcome to the show.
- [31:50]
B
Thanks for having me, Ed. I really appreciate it.
- [31:52]
A
Very good of you to join us. So we're thinking about the nuclear industry and prospects for investment in nuclear. My sense of what happens when you talk to investors and bankers about nuclear power is it's a bit like getting a vampire and showing them a cross or some holy water. Right. People are appalled by it and kind of shrink away in horror. It seems to be very difficult to get people into use. And if you talk to not just picking on investors, well, but actually, if you think about management teams, leadership of the key power companies in the US There seems to be very little enthusiasm for investment in new nuclear capacity, even though kind of if you take a step back and think at kind of the national level, it would probably be a good thing if the United States had more nuclear power plants. So. Well, I suppose. I mean, let's talk about my characterization for a start. Is that fair? Is it fair to say that there is this kind of shrinking back from commitment to new nuclear?
- [32:56]
B
Look, I think it's fair from the standpoint of let's just take the last two years out of the picture. The last 10 years, we've had only two plants be pursued in the U.S. one of them failed and the company ended up getting swallowed into another company. The other made it through while shareholders and board members were severely scarred. But that was at a time where power prices were in the pick. Your point, 20 to $40 per megawatt hour across the country. Power demand was flat to declining every year.
- [33:25]
A
Right. Okay. Let's just, as you say, think about that history of the past ten years or so. So these are the vogel plants, Vogel 3 and 4, which went many years behind schedule, multiples over budget. The ratepayers of Georgia, where those plants are built, are paying significantly increased power bills as a result of those plants being built. And as you say, that seems to be kind of crucially that experience absolutely not unique to this country, to that particular company. If you look all around the world, all around the western world, certainly nuclear projects are running late and going over budget and hitting consumers with increased bills. So, I mean, you say things are a bit different now. It's not at all irrational to be skeptical about new nuclear. Right.
- [34:16]
B
It's not at all Irrational to be skeptical. I think what's different now is let's just take a step back. There's three things that allow new nuke to be built. Policy support, a customer that wants to take on a contract and then an EPC that wants to build it. We know that there's policy support. We know that there's customers that are willing to pay north of $100 per megawatt hours for current operating nuclear. And now we need to figure out who's going to backstop this risk and actually want to construct this and pursue it. And I think people in the industry are trying to be very thoughtful in using lessons learned to put together a final investment decision package that's formidable, that can actually be underwritten. And what's going to enable that is policy support and positive economics and financial backstops.
- [35:02]
A
Right, so let's run through that. So policy support then. So there are tax credits for nuclear. It's kind of touch and go during the passage of the big beautiful bill whether those tax credits would survive in their current form. But they essentially did. So there's that. Do you need more policy support from that really to make it worthwhile to invest in new nuclear?
- [35:22]
B
We do think that from talking to companies that operate in large scale nuclear, they would like to see things like transferability of the production tax credit which doesn't exist right now, or the ability to monetize those transfers during construction would be very helpful. Things that can increase cash flow for the industry. On the policy side, of course, one.
- [35:46]
A
Of the great advantages of nuclear power relative to fossil fuel generation is its emissions free. That benefit is not particularly recognized at the moment in US policy. Is that something that would help as well if you had some stronger carbon pricing or additional incentives to recognize the benefit of nuclear as carbon free electricity?
- [36:09]
B
I think in some essences, yes. But I think what's also been very helpful to this conversation is that most companies and investors have been more accepting about like an all of the above approach. So I do think that capital is no longer shying away. When I say capital, I mean long term equity financing for new projects is not no longer shying away from nuclear because it's dirty. And I think the fact that you're starting to see coal be revitalized in this country is a sign that the clean attributes are less of an input going forward. That said, the clean attributes make it more profitable because we do know that hyperscalers are paying a clean attribute premium on top of their current PPA prices.
- [36:54]
A
Right. So you talk about the economics Being right, then we're in a position where, as you were saying, compared to where we were 10 years ago. Power prices are on the rise for various reasons. Because of increasing demand, because of tightness in the supply chain, because of tariffs probably being an issue. If you look at gas fired generation, which used to be the absolute cheapest way to provide new electrons on the grid in the US and still is probably the cheapest way to provide new baseload power, the cost of that has gone up a lot. Even just in the past five years or so. If you look at the cost of building a new gas fired power plant, that's risen very significantly. If you look at our forecast at Wood Mackenzie about where gas prices are going to go, we think those are going to be on a gradually rising trend over time as well. So that might help nuclear power become more competitive, look more attractive economically. Is that going to be enough though?
- [37:53]
B
I totally agree. The fact that that's going to help, right, a rising LCOE for natural gas is going to make a nuke look all the more palatable. Is it enough to get people over the hump? I'm not entirely sure. I do think that you need to see first and foremost more policy support to enable what has actually come out of some of these Trump executive orders. If you really want to see 10 new AP1000s, there's going to need to be new incentives for supply chain. There's going to be, we're starting to see new efforts for uranium production in the U.S. so there's a lot that needs to kind of be figured out from a supply chain standpoint and incentivizing that for these to kind of come to reality. And then I think on the backside of that you need a financial backstop for the companies that are going to be constructing this. And I'm happy to kind of get into that.
- [38:43]
A
Well, yeah, please do then. So what would that look like?
- [38:45]
B
So I think some of the financial backstops that people want to look towards is, is a hyperscaler willing to kind of step in and take on construction risk. There is an MoU on the SMR side between Amazon and Dominion for a structure like this. Potentially a sliding scale PPA where the PPA will adjust alongside the dollar per kilowatt costs of the plant as they change over time. And then finally some type of commitment to realize what they call nth of a kind efficiencies. Meaning as a hyperscaler. I'm not just going to pay XYZ company to underwrite one nuke. I'M going to pay for five and I'm going to fill your order book in a way that you know, that fifth, I'll make it up, that fifth piece of iron is going to be significantly cheaper than that first.
- [39:35]
A
So let's talk about the hyperscalers then, big tech companies, because certainly they are important players here. They are largely responsible for the increase in power demand that is driving the need for new generation capacity of all kinds, including nuclear. And they also very often have pretty ambitious emissions goals, which means that they're very interested in emissions free power. But another thing that's very important to them is speed to power. And they see AI as this race where it's very important to be able to offer the maximum AI capabilities as quickly as you possibly can. And you need increased power supply to be able to do that. And for those purposes, nuclear is pretty terrible, right? I mean if you're building an existing design of plant, those AP1000 that were built at Vogel, that's 10 years plus to get one of those built. If you're looking at new types of reactor, small modular reactors, these have theoretically a lot of great advantages, but they haven't been deployed yet. Very often they haven't even been licensed yet. And so there are inevitably pretty long delays in getting those things approved and so on. So that seems to be a real problem for investment in new nuclear. If you're talking about taking an old nuclear plant and operating it maybe, or you're talking about taking a plant that's been shut down and bringing it back online, that can be done relatively quickly, maybe just a few years, so that I can see as compelling. But new nuclear is a very different thing, isn't it?
- [41:11]
B
Yeah. And look, the low hanging fruit on restarts and operates has been kind of realized over the last year to year and a half. I think in terms of the timeline to get to new build, you're talking eight to 10 years. And that's also why, you know, we think that the companies that have what we call early site permits, this is places where you already have a pad of concrete that's been determined by the NRC to be an acceptable place to build a reactor will be the ones to kind of first see interest. Because maybe that timeline is more like 8 than 10. But it doesn't solve your time to power problem. What I can offer there is the fact that natural gas at a time of declining power demand and increase in renewables was always seen as a bridge, right? We're going to build this gas that's going to allow us time to get all these renewables on the grid. And then we're going to, we're going to shut down coal and we're all going to, we're all going to be happy. But now that you have real increases in baseload demand, the only way to truly get to a clean net zero target is going to be by adding net zero clean electrons that are operating at 80% capacity factors. Right. Not 33% capacity factors like renewables. So I do think that there's a window to still call gas the bridge to help get nuclear up and running. But it's going to take a lot of time and commitments.
- [42:37]
A
Right, so you mean even if nuclear is slow to build new capacity, it's still worth doing that? Because the future is going to come eventually. One, one day we'll be in the 2000-30s and then we'll wish if we hadn't done it, we'll wish that we had built new nuclear capacity.
- [42:54]
B
That's essentially my pitch. And look, I think that when I look at integrated resource planning and how it's changing over the last couple of years, what you've actually seen is gas get kind of pulled in and pushed into the picture. While some renewables have either been canceled or pushed out to the right, I'm pretty sure that customers, being the hyperscalers, would be happy to, you know, underwrite the ability to have those clean electrons in 2030. Because when you think about it, a data center, when it ramps all these deals, we're going to have a little bit of power in 27. We're going to have a lot more power in 28. The real inflection in power demand is 2030 to 2032. And that's what we're really playing for. And being that we're in 2030, 2025, you know, we, we still have time to start building today.
- [43:43]
A
Hang on, do we? What if you started building a new nuclear plant today, you think you could have it online by 2032?
- [43:50]
B
2035. 2035.
- [43:52]
A
Right. So, yeah, but over time, over time, and it is, I suppose it's like that old saying, you know, the best time to build a new nuclear plant was 20 years ago. The second best time is today. Right? It's.
- [44:03]
B
That's very fair. That's very fair. And like, let's look at, let's look at what coal capacity looks like by the time we get to 2030s as well, because I think it's very easy to see a couple plants push a few years to kind of sustain that bridge, if that makes sense.
- [44:17]
A
Yeah, and it's very interesting. I was just reading about Texas where a big coal plant is, has gone down and it's not going to be available for the next two years. And feels like that's the kind of story we're going to be hearing more and more of. As these plants, a lot of which were built back in the 1970s. People are trying to push those beyond their expected working lives. You're going to see more and more failures. Yeah, I do think that's a, that's a really important point.
- [44:43]
B
I would just add on to that as well. If you think about on the gas side, heat rates are moving more, moving back towards all time highs. We're running and utilizing our gas fleets heavier and heavier every single year. It just kind of comes back to the fact that you want more baseload reliable power and you have to do that in a clean way. So.
- [45:03]
A
Okay, so question are we really going to see this get started then? So as you say, needs the policy support, needs the customer commitment, needs the economics to be right overall. But with those things in place, there is a real case for investing in new nuclear. Do you think that case is going to be made? Are all the pieces going to fall into place such that we will see starts actually making progress within the next year or two?
- [45:31]
B
Yeah. So we do think that if we're betting, we do think that we will see a final investment decision for new nuclear sometime in 2026. We think it's going to be more large scale than smr. We think that anyone can go out there and do an SMR MoU and it's very easy to talk to SMR but in reality those are 10 to 100 megawatt opportunities and we need gigawatts on this grid. So we do think that it is possible to see something in 2026. I think what gets us there is going to be a more certain financial commitment from a hyperscaler to take on construction risk. A more certain financial commitment from the government to provide new types of subsidies. And that's what we're really kind of looking for over the next, you know, call it six months. I think it's, I think it's important to also remember like Meta did run an RFP in late 24 asking for new and current new capacity on the back of all those gas deals that they did in Louisiana. So you know, we would expect to start to see some announcements in the back half of this year early, early next.
- [46:42]
A
And do you think that would just be for a single plant or would people be looking to do that thing you've talked about of really trying to achieve economies of scale learning by doing producing multiple plants on the same design, which then could hopefully drive costs down significantly and, and actually make it possible to generally make the economics much more attractive.
- [47:05]
B
The companies that we're seeing being more forthcoming and talking to investors about this are ones that have multiple sites or multiple states that are showing support. You know, whether it's a multi state coalition or an industry working group, we've seen even some new unique kind of companies come up trying to address the situation by getting hyperscalers in a room with a multiple amount of US Utilities to create kind of like a JV structure. So there's a lot of different ways that this could kind of go down, but it's going to kind of come down to an acceptable cost. Sharing is what's going to get people.
- [47:42]
A
Over the hump, what's going to be fascinating to see how that plays out over the next year or so.
- [47:46]
B
We're definitely excited.
- [47:47]
A
Yeah. As you say, an exciting time.
- [47:49]
B
Yeah.
- [47:50]
A
Nick Campanella, thanks very much indeed. Great talking to you.
- [47:52]
B
Thank you.
- [47:52]
A
Thanks for joining.
- [47:53]
B
Appreciate it.
- [47:54]
A
Many thanks to Nick Campanella and Dorian Harris for joining us here on the Energy Gang in New York at Climate Week. And thanks to all of you for listening. We really do value your feedback, so please do leave us a comment if you're watching us on YouTube or leave a review wherever you get your podcasts. We'll be back very soon with more of our special coverage of the most important stories in clean energy here at New York Climate Week. I'm Ed Crooks. Goodbye.