Ep 15: Inside Diablo Canyon Nuclear Power Plant | BG2 w/ Bill Gurley & Brad Gerstner

00:00:00.000 | Take Tiablo Canyon.

00:00:01.440 | They built two nuclear reactors here.

00:00:03.720 | You know, this site was provisioned for six,

00:00:08.040 | for six reactors.

00:00:09.720 | I could imagine if you had four more reactors sitting here,

00:00:13.360 | if you could land them at the right price,

00:00:15.640 | you could have one reactor for Meta, one for Amazon,

00:00:19.680 | one for Microsoft, one for NVIDIA.

00:00:21.720 | You could have the data center sitting right next to them.

00:00:24.360 | (upbeat music)

00:00:26.940 | (upbeat music)

00:00:29.520 | Bill, man, I couldn't be more excited to be here.

00:00:39.380 | We're sitting in, you know,

00:00:41.540 | probably your three wood distance from two nuclear reactors

00:00:46.540 | that are banging out two and a half gigs of clean power.

00:00:51.240 | We just had an incredible day with Maureen Zawalnik

00:00:54.820 | down here at Diablo Canyon.

00:00:57.380 | You know, it's just this beautiful nuclear facility

00:00:59.540 | on the central California coast.

00:01:01.740 | It's really great to be here.

00:01:03.740 | You know, when you look at this facility,

00:01:06.180 | you read about the positive impact on the local economy.

00:01:09.460 | Of course, it's the type of dense baseload power

00:01:12.940 | we so desperately need in California.

00:01:16.460 | You know, I think you said on a previous pod,

00:01:19.180 | somebody showed up with a value proposition of fission today

00:01:23.140 | you know, and blow all of our minds.

00:01:24.940 | And here we were about ready to decommission this plant

00:01:27.460 | in 2016, which as Elon has said is incredibly brain dead.

00:01:32.460 | You know, I was pretty excited to see this week

00:01:35.460 | and I was watching ESPN game day.

00:01:37.460 | I think it was at Texas A&M.

00:01:39.680 | And I see somebody holding up a sign, I love nuclear,

00:01:42.360 | like college kids are now holding up signs

00:01:45.020 | that say, I love nuclear.

00:01:46.740 | So it's good to finally get down here

00:01:49.020 | and put on our analyst hat, dig in, ask a lot of questions.

00:01:53.020 | And, you know, be able to share it with everybody.

00:01:55.980 | - Yeah, and one thing, you know,

00:01:57.500 | two things I think that are a little bit different

00:01:59.580 | about the podcast we're gonna do today.

00:02:02.260 | One, you know, I think it's important to recognize

00:02:05.180 | we're obviously not nuclear experts.

00:02:07.060 | You know, we come at this from outside.

00:02:09.940 | That being said, the second point I would make is

00:02:13.300 | you and I have gone extremely deep in the past week or two

00:02:16.880 | and been given phenomenal access to a lot of people

00:02:20.100 | that have been in and around the industry for a long time

00:02:23.580 | and including getting access today

00:02:25.400 | at what is really remarkable.

00:02:27.440 | I mean, just to see it up close and the scale

00:02:30.460 | and how well run it is, it's just super impressive.

00:02:33.660 | And so I qualify, I'm certain that we're gonna get

00:02:37.300 | some feedback from some people,

00:02:39.180 | like, why are you guys talking about nuclear?

00:02:41.500 | And my only qualification I would offer to everyone is

00:02:45.860 | if someone comes at us with something that's different

00:02:48.320 | from what we said or that's additive to the discussion,

00:02:51.380 | next time we're up, we'll talk about it

00:02:53.260 | and we'll bring that into the discussion.

00:02:54.860 | You know, absolutely.

00:02:56.060 | I mean, I think you and I talk about it

00:02:58.320 | pretty much on every pod, we're analysts.

00:03:00.820 | As analysts, the one thing we're reasonably okay at

00:03:04.060 | is we ask questions, we dig in, we find our way to experts,

00:03:07.100 | we find our way to information.

00:03:08.900 | And frankly, the more digging we did

00:03:11.340 | about Diablo and about nuclear,

00:03:14.180 | it's just so clear that it has to be part

00:03:17.340 | of the energy constellation future of the United States.

00:03:20.740 | I think that's correct. It's clean, it's dense,

00:03:22.580 | it's the exact type of energy that we need.

00:03:24.740 | So why don't we kick off

00:03:25.700 | with a little bit of background today?

00:03:27.260 | We'll weave in some discussion about Diablo,

00:03:29.860 | we're gonna talk to Marine Zawalny,

00:03:32.620 | we're gonna talk about China's emerging advantage here,

00:03:35.740 | right, like, why are they on such a fast path

00:03:38.900 | and a cheap path to nuclear?

00:03:40.940 | Hone in on those costs.

00:03:42.420 | And then some of the things that we believe we gotta do

00:03:44.540 | in order to get the United States back on the nuclear track

00:03:47.380 | and maybe end with a little bit of that positive.

00:03:49.420 | - That'd be great.

00:03:50.260 | And one thing I wanted to share with the audience,

00:03:53.680 | I think we've uncovered some really amazing documents,

00:03:58.120 | research, pieces of research, podcasts, that kind of thing.

00:04:01.460 | So we're gonna put a list of those together

00:04:03.960 | in the show notes.

00:04:04.800 | And if anyone wants to follow the journey we've been on

00:04:08.580 | and go a little bit deeper

00:04:09.620 | than what we're gonna talk about today,

00:04:11.180 | those will be available.

00:04:14.260 | Marine, it's great to be here.

00:04:16.260 | Marine Zawalny, Vice President here at Diablo Canyon.

00:04:20.020 | It's just been an incredible day.

00:04:21.260 | Thank you for having Bill and I here.

00:04:24.420 | You know, maybe just a little background on Diablo Canyon.

00:04:27.140 | You know, it took 10 years to build this,

00:04:29.820 | you know, starting in 1970.

00:04:32.880 | It cost $16 billion to build both reactors.

00:04:36.220 | It went online in 1985.

00:04:39.220 | It's the state's single largest power station.

00:04:42.060 | It generates about eight to 9% of total energy,

00:04:45.260 | about 20% of all the renewable energy in the state

00:04:48.540 | at a cost of about six cents per kilowatt hour.

00:04:52.020 | So very cheap relative to the power

00:04:53.860 | that we import in the state.

00:04:55.700 | It's been an extraordinary day going around.

00:04:58.280 | And I think one of the things we'd love to start with

00:05:01.300 | is just a little bit of the history,

00:05:03.340 | your history here at Diablo.

00:05:05.620 | - Well, great.

00:05:06.460 | First of all, thank you for coming.

00:05:07.420 | And it's always great to get people here

00:05:09.980 | that have not been here before and putting eyes on it

00:05:12.420 | and looking at the facility,

00:05:14.460 | seeing the security around it,

00:05:16.020 | the safety around it and so forth.

00:05:18.260 | And so I've been out here for 30 years

00:05:22.440 | and I've raised my children here in the community

00:05:25.140 | and I've had various different positions out here.

00:05:27.420 | We are the largest private employer in the community.

00:05:30.820 | And what is just amazing

00:05:32.460 | and just something I like to highlight a lot

00:05:35.220 | is the strong safety culture we have out here,

00:05:38.220 | the strong use of standards

00:05:40.100 | and the history of the excellence in safely

00:05:42.980 | and reliably operating this nuclear power plant.

00:05:45.840 | - Well, given how safely you operate it,

00:05:47.660 | I appreciate you letting us into the control room.

00:05:50.500 | It's just the simulator of the control room.

00:05:53.980 | But that was very evident today.

00:05:56.220 | The fact of the matter is the history of the last 10 years

00:05:58.660 | has not been smooth sailing here at Diablo Canyon.

00:06:01.900 | Tell us a little bit about like what took you on the path

00:06:05.180 | of decommissioning this two and a half gig facility

00:06:09.100 | and kind of where you are today.

00:06:11.260 | - Great question.

00:06:12.100 | So, you know, 10 years ago, eight, 10 years ago,

00:06:15.500 | the energy equations and the need for Diablo

00:06:19.060 | had very different assumptions and inputs.

00:06:21.100 | What I mean by that in the 2015 timeframe, 2016 timeframe,

00:06:25.700 | you know, we weren't talking about AI.

00:06:27.540 | We weren't talking about data centers.

00:06:29.540 | We weren't talking about the electrification goals

00:06:32.900 | of the state and of the country.

00:06:34.980 | We didn't have geopolitical things going on

00:06:37.460 | like the Russian invasion in Ukraine.

00:06:39.220 | So that has like a squeeze on some of our supply

00:06:42.660 | for nuclear fuel and uranium.

00:06:45.620 | And so you have all of that and then you add on the drought

00:06:49.060 | and the climate stuff going on

00:06:50.940 | and the severe heat and the wildfires.

00:06:53.260 | And what I mean by wildfires is that's impacting

00:06:55.580 | our bringing in energy to California

00:06:58.340 | and affecting our transmission lines of importing in energy.

00:07:03.060 | So you don't have all that back in 2016.

00:07:05.660 | Now fast forward to 2020, August, rolling blackouts,

00:07:10.260 | seeing just peak demands on the system

00:07:12.500 | and on the grid in California.

00:07:15.060 | And really re-looking at that needs analysis,

00:07:18.500 | is Diablo needed given now all these new factors?

00:07:21.740 | You run all those numbers and you know, what we're seeing,

00:07:25.740 | it's very hard to pull off

00:07:27.540 | the largest clean energy producer,

00:07:29.420 | the largest energy producer in California.

00:07:31.740 | That's about nine to 10% of Californians.

00:07:34.340 | So the projects to replace,

00:07:38.420 | the renewable projects to replace,

00:07:41.020 | Diablo have not made the progress

00:07:43.100 | that I think the state thought it would back in 2015, 2016.

00:07:46.820 | - So this is things like offshore wind.

00:07:48.500 | - Correct, offshore wind projects and so forth.

00:07:51.860 | We need a mix of it all for not only California,

00:07:55.380 | but for the country.

00:07:56.380 | We need a mix of solar and wind,

00:07:58.860 | hydro and clean nuclear energy

00:08:01.860 | to meet the goals that we have of this country

00:08:04.060 | and of the state.

00:08:05.180 | - Yeah, I think a lot of the people in our industry

00:08:09.580 | have kind of been on a pro-nuclear bandwagon

00:08:14.100 | past five years.

00:08:15.140 | - Yeah.

00:08:16.060 | - And that appears now to be something

00:08:19.260 | that's kind of tipped across the US.

00:08:22.140 | Take us back to prior to that starting to happen.

00:08:25.460 | What were the forces that were pushing for decommissioning?

00:08:29.940 | - So the main force was the projections

00:08:34.940 | by the Energy Commission and other energy advisors

00:08:39.860 | was showing that there wasn't a need for Diablo.

00:08:42.340 | That was the main driver.

00:08:43.660 | So there were a number of things that were going on in 2016.

00:08:47.700 | And what was important was that we were being used

00:08:50.420 | for a bridging strategy

00:08:51.820 | to get to have those other renewable projects

00:08:54.780 | come online to replace us in 2024 and 2025.

00:08:58.420 | So here we are.

00:09:00.060 | Unit one's current license expires November 2nd of 2024.

00:09:05.060 | And it'll be really interesting to look at

00:09:07.100 | what's going on November 3rd and 4th with our grid

00:09:10.620 | had we taken unit one off.

00:09:12.380 | So we're right there, right?

00:09:14.300 | Unit two's current license expires in August of 2025.

00:09:18.500 | But we've put in for a 20 year license renewal application

00:09:22.860 | with the federal regulator,

00:09:24.180 | the Nuclear Regulatory Commission.

00:09:25.860 | Even though the state's only asked us for five,

00:09:28.380 | we've done that to make sure we maximize the optionality

00:09:30.900 | for the state and seeing the progress

00:09:33.380 | of those other projects coming online to replace Diablo.

00:09:36.500 | - It's inconceivable to me.

00:09:39.380 | I mean, we're just in the generating facility.

00:09:42.500 | This is an extraordinarily efficient operation

00:09:46.380 | for the production of very dense baseload power.

00:09:50.220 | Elon Musk recently said, with respect to Germany,

00:09:53.340 | that it's utter madness to take plants like this offline.

00:09:57.860 | When you look at the shift over the last 10 years,

00:10:00.820 | characterize your own view.

00:10:04.620 | Obviously, you're an interested party here,

00:10:07.180 | but given the state's increasing needs for baseload power

00:10:11.700 | and the fact that some of these things

00:10:13.820 | have come online slower,

00:10:15.340 | I assume you would agree it would be utter madness

00:10:17.540 | to take Diablo offline.

00:10:19.380 | - And I would, and I would from being an engineer

00:10:22.100 | and a scientist who loves to work in facts.

00:10:25.180 | Nuclear's capacity factors, you said efficient,

00:10:30.580 | their capacity factors, Diablo's upwards of 90%, right?

00:10:35.580 | And we have had our units run at 93, 94%.

00:10:39.860 | You can't mess with those numbers.

00:10:41.780 | We're available 24/7, 365 days a year, rain or shine.

00:10:46.700 | And so much needed if you need to store some of that energy

00:10:49.460 | or need that energy for the high demand

00:10:53.060 | that we see in extreme conditions.

00:10:56.140 | I mean, this today, right now,

00:10:57.660 | we're under restricted maintenance operations by the state

00:11:02.620 | because it's in the hundreds degrees

00:11:04.540 | in the majority of the state

00:11:06.300 | and the demand is gonna be so high

00:11:07.900 | and we don't wanna have what happened

00:11:09.180 | in August of 2020 happen again.

00:11:12.340 | I mean, that's about people's--

00:11:13.180 | - Rolling blackouts. - Rolling blackouts.

00:11:14.820 | That's about people's lives.

00:11:16.020 | That's people in hospitals.

00:11:17.300 | I mean, you see the tragedies in Texas going on, right?

00:11:20.940 | We need to be doing something about it.

00:11:22.740 | So it would be utter madness and scientifically wrong.

00:11:26.780 | And I say that from 35 years in the industry

00:11:30.060 | as a nuclear engineer with confidence.

00:11:33.220 | - Right.

00:11:34.300 | Can you talk about the potential timeline for Diablo?

00:11:39.300 | 'Cause you mentioned earlier

00:11:43.180 | that the state had talked about five years

00:11:45.700 | but you're applying for 20.

00:11:47.300 | How far theoretically could it run

00:11:49.980 | or how long theoretically could it run?

00:11:51.860 | - Sure.

00:11:52.700 | So the current licenses

00:11:53.980 | for all United States nuclear power plants

00:11:56.260 | is your original licenses for 40 years, okay?

00:11:59.500 | Then there's a process that we're in right now

00:12:00.980 | to renew it for 20 more years.

00:12:03.260 | And just about every nuclear unit in the United States

00:12:06.540 | has submitted for that except for a few of us.

00:12:09.220 | We had previously submitted,

00:12:10.540 | but part of the decommissioning

00:12:13.060 | or the shutting down agreement in 2016

00:12:14.860 | was to pull that application back.

00:12:17.220 | And then there's about a dozen plants

00:12:18.700 | that are going for subsequent license renewal applications

00:12:21.460 | to go 20 more.

00:12:22.460 | - From 60 to 80.

00:12:23.620 | - Yeah, so go 80 years.

00:12:25.420 | And so the NRC has these processes

00:12:27.420 | 'cause just like renewing your driver's license

00:12:30.100 | that you have to do on a periodicity,

00:12:31.340 | you wanna be looking at the licenses

00:12:33.780 | and the components and so forth at every nuclear plant.

00:12:37.740 | So they have that opportunity as a safety regulator

00:12:39.980 | to approve those phases.

00:12:41.660 | - This is something you educated me on today.

00:12:43.820 | I think I was under the perception

00:12:46.060 | that there was some kind of finite life

00:12:48.700 | to one of these facilities

00:12:49.860 | because of something about nuclear I didn't understand,

00:12:52.340 | but I'm walking away now thinking

00:12:54.260 | that the plant is upgradable and maintainable,

00:12:58.140 | and it's just a matter of keeping it in tip-top shape,

00:13:01.380 | meeting all the safety standards

00:13:03.220 | and then reapplying for these licenses.

00:13:05.340 | - Yeah, absolutely.

00:13:06.180 | We run this station to excellence and performance,

00:13:11.180 | as I said, from a safety perspective,

00:13:12.940 | from an operational, from a maintenance, engineering,

00:13:15.700 | everything that it takes.

00:13:17.500 | We are in the highest compliance ranking

00:13:19.820 | of the Nuclear Regulatory Commission,

00:13:22.420 | and we have achieved many evaluations

00:13:24.940 | by an industry group

00:13:27.300 | that evaluates all nuclear power plants

00:13:29.100 | in the world of excellence performance

00:13:31.380 | in operation and safety and reliability.

00:13:33.700 | So we run this plant very well,

00:13:36.100 | and that's what made it such a fairly easy call

00:13:38.820 | from the state of California of,

00:13:40.900 | hey, what would it take?

00:13:42.660 | What's the point of no return?

00:13:44.060 | Could you keep operating Diablo Canyon?

00:13:46.700 | And that was the legislation of Senate Bill 846

00:13:49.260 | in September of 2022,

00:13:50.780 | because we're regulated by both the federal government

00:13:53.780 | and the state government.

00:13:54.780 | So the state government think

00:13:56.020 | the California Public Utility Commission,

00:13:58.380 | they just approved in December of 2023

00:14:00.820 | our new expiration dates, which is 2029 and 2030.

00:14:04.500 | State Lands Commission,

00:14:05.700 | you got to see the intake and the discharge.

00:14:07.860 | We have leases with them,

00:14:10.580 | so that they just extended it for five more years

00:14:13.460 | or up to 2030.

00:14:14.660 | And then State Water Resource Control Board,

00:14:17.500 | we had to get the continued exemption

00:14:19.420 | for things like once-through cooling

00:14:21.860 | that has been required

00:14:23.460 | because of the way our system is designed,

00:14:25.540 | our plant is designed.

00:14:26.500 | - Just to be clear,

00:14:27.700 | the current governor could extend

00:14:34.300 | the plant's useful life for an additional 15 years

00:14:38.180 | beyond 2030, assuming the federal 20-year extension

00:14:42.460 | comes through, which you expect to come through.

00:14:45.060 | Now, of course, at any point along the way,

00:14:47.220 | they could say we have excess power generation.

00:14:49.940 | All of a sudden, we had a breakthrough in solar or wind

00:14:52.340 | and we don't need Diablo anymore.

00:14:54.500 | But there's an opportunity over the next two years, Bill,

00:14:58.500 | for Governor Newsom to extend the operating license

00:15:03.500 | here in the state on Diablo,

00:15:05.060 | which seems to me, given our present power needs

00:15:07.900 | and what we see inflecting up,

00:15:09.340 | we've talked a lot about what's happening in AI.

00:15:12.540 | I'm sure you've had the hyperscalers down here

00:15:14.740 | talking to you guys, talking to Patty at PG&E

00:15:19.740 | about their power needs.

00:15:21.060 | But if we're gonna build data centers

00:15:22.380 | in the state of California,

00:15:23.300 | as I was walking around here today,

00:15:24.580 | I was thinking to myself,

00:15:25.540 | they ought to be building data centers right here.

00:15:27.340 | You have plenty of excess land

00:15:29.100 | and plugging them into these incredible

00:15:32.380 | power-generating machines that we have.

00:15:34.180 | So that's the opportunity right now for Diablo

00:15:37.820 | is to extend for another 15 years beyond 2030.

00:15:41.700 | - We will stay ready for that call, if we get that call.

00:15:45.380 | - Do you wanna get that call?

00:15:46.340 | - Absolutely wanna get that call.

00:15:47.180 | - What's the argument?

00:15:48.020 | I mean, tell me if I'm wrong,

00:15:50.020 | but what's the argument for decommissioning nuclear

00:15:53.100 | ahead of coal?

00:15:54.340 | Like there's no argument, is there?

00:15:56.900 | - I think it gets down to the energy policies

00:16:00.140 | and how you define renewable versus greenhouse gas free.

00:16:04.780 | And Senate Bill 350, I believe is the number from 2015.

00:16:09.020 | And at the very end of that bill,

00:16:13.140 | they changed the word greenhouse gas free to renewable

00:16:16.140 | and excluded nuclear and large hydro.

00:16:19.100 | So we need a mix of renewables.

00:16:20.260 | - Who's they?

00:16:21.100 | - Yeah, I mean, legislators, yeah.

00:16:24.820 | Which is fine because again,

00:16:25.940 | that's what was known in 2015 timeframe.

00:16:29.260 | Very different equation and formula

00:16:31.740 | that we are navigating through

00:16:33.220 | with all the things I mentioned earlier.

00:16:34.780 | - Yeah, that's why I go to some of the smartest people

00:16:38.100 | in our world, whether it's Elon or Patrick Collison

00:16:40.980 | or Steven Pinker is not in our world,

00:16:43.340 | but a very smart individual.

00:16:45.180 | I think they would all argue you take coal and gas off

00:16:51.500 | before you take nuclear off.

00:16:53.100 | - I would say, and then to reverse it or flip it

00:16:55.460 | is just go after as much carbon free as you can.

00:16:58.660 | - Totally, totally agree.

00:16:59.980 | - And work on that, the latter part there.

00:17:02.460 | But again, going for the 20 or applying

00:17:05.700 | for the 20 year licensed renewal application,

00:17:08.020 | which is the NRC's process.

00:17:09.500 | That's what they approve.

00:17:10.420 | So like in the state of New York,

00:17:12.460 | Indian Point was a plant which applied

00:17:14.420 | for the 20 year licensed renewal NRC process,

00:17:17.540 | got that approval.

00:17:18.380 | And then the state decided,

00:17:20.020 | hey, we have enough renewable in that

00:17:22.260 | and we don't need the nuclear power plant.

00:17:24.460 | And after about 10 years or so, I don't have the exacts.

00:17:27.140 | But I mean, that is we are governed

00:17:29.220 | and regulated by both the state and the federal government.

00:17:32.740 | - It's hard to believe, it's hard for me to see a future.

00:17:35.940 | Okay, when you have China,

00:17:38.060 | who's adding six to eight new fission reactors per year,

00:17:42.300 | it's gonna add upwards of 25 or 30

00:17:44.260 | over the course of the next five or six years

00:17:47.220 | is expected to surpass the United States

00:17:49.300 | in nuclear power production by 2030.

00:17:52.340 | You've been around this for 30 years.

00:17:54.380 | The United States has been preeminent in nuclear technology.

00:17:59.180 | We built most of our plants in the '70s and '80s.

00:18:01.940 | By the '90s, we basically had stopped building new plants.

00:18:06.540 | We were talking about decommissioning

00:18:08.140 | all of the plants that we had.

00:18:10.220 | As you look at the political environment today,

00:18:13.020 | not just in California,

00:18:14.540 | but you spend a lot of time around the world, right?

00:18:17.820 | Advising, interacting with your operating peers

00:18:20.660 | in lots of other countries.

00:18:23.780 | Where are we in terms of that pendulum

00:18:27.260 | in the United States swinging back and forth?

00:18:30.140 | You're clearly more optimistic than you were in 2016

00:18:34.540 | when they passed the legislation

00:18:36.500 | or you entered the agreement to shut down Diablo.

00:18:40.140 | But is there hope, is there a future

00:18:43.100 | for shifting the gears back into expanding fission,

00:18:48.100 | base load power production in the United States?

00:18:52.860 | - Absolutely, and I think Diablo Canyon is the case study.

00:18:55.900 | And what I mean by that, on a micro level,

00:18:59.620 | what I call that when I consider the need

00:19:02.300 | of what Secretary Gronholm and COP 28 has said

00:19:05.100 | that we need triple the amount of nuclear

00:19:07.660 | for our environmental and climate policies.

00:19:11.340 | So I say micro level for Diablo Canyon

00:19:13.260 | because what we did in a year and a half, two years

00:19:15.700 | is what is needed to keep that pendulum swinging

00:19:19.780 | and the momentum needed to build out

00:19:21.860 | traditional more nuclear

00:19:23.220 | and preserving the current 94 units we have,

00:19:25.980 | if we count the new Vogel three and four that came online,

00:19:28.580 | which is outstanding, right?

00:19:30.340 | And so we can't have any of the current 94 shutting down,

00:19:32.820 | let's preserve that.

00:19:34.660 | There are some other initiatives,

00:19:36.700 | Palisades, a plant in Michigan

00:19:38.260 | that they're looking to restart.

00:19:39.820 | And they're really looking at a lot of the stuff we did,

00:19:42.020 | we call it team pivot or pivoting from decommissioning

00:19:45.100 | and getting that call from the state in 2022

00:19:49.900 | to continuing to operate.

00:19:51.260 | And that's hiring over 300 people

00:19:54.820 | in an efficient speedy time,

00:19:57.620 | working communicatively, coordinated and transparent

00:20:02.060 | with our regulators on what needs to be done.

00:20:05.460 | Just lots of examples there that I think can be used

00:20:08.780 | on a macro level to keep that momentum going

00:20:12.020 | that we're showing that can be done here at Diablo Canyon.

00:20:17.300 | - One thing, another thing I learned today

00:20:19.460 | that I was really impressed by,

00:20:21.340 | I wonder if you could share with the audience, Maureen,

00:20:23.860 | is that there are both national and worldwide communities

00:20:28.860 | where you share best practice with other operators.

00:20:33.660 | And I'm thrilled to know that that's true.

00:20:36.820 | I didn't know that that was true.

00:20:38.140 | Can you talk more about that?

00:20:40.220 | - Yeah, absolutely.

00:20:41.060 | In fact, we're here at Diablo Canyon Simulator

00:20:44.300 | and that came after the unfortunate event

00:20:46.900 | at Three Mile Island in 1979,

00:20:50.260 | and also the formation of the Institute

00:20:53.460 | of Nuclear Power Operations.

00:20:55.300 | And I think what you're asking about

00:20:56.660 | is a fundamental thing in nuclear

00:20:58.660 | and our nuclear industry is anything that happens anywhere

00:21:02.940 | happens to all of us.

00:21:04.100 | And we're a culture of continuous improvement,

00:21:06.900 | a culture of self-aware and self-correcting,

00:21:09.460 | and we wanna learn from each other.

00:21:10.740 | So we share information.

00:21:12.300 | You don't see that between the airline industries.

00:21:15.660 | I heard an example recently, even with hospitals,

00:21:18.460 | even the same hospitals in different units, we value that.

00:21:22.180 | Something happens with a certain motor or a pump

00:21:26.340 | or a generator or human performance item,

00:21:30.180 | it's called operating experience.

00:21:32.820 | We all own that.

00:21:35.020 | We enter it into a system called Corrective Action Program,

00:21:38.100 | get the learnings from it, make adjustments we need to,

00:21:40.740 | to how we operate, train, do maintenance and so forth.

00:21:45.300 | And that's just a continuum as we seek excellence

00:21:50.300 | and again, safe and reliable operations.

00:21:53.340 | That's great.

00:21:54.180 | Well, one of the things Bill and I

00:21:55.900 | are gonna spend a lot of time talking about today

00:21:58.460 | is the cost differential around the world

00:22:01.700 | from building Vogel

00:22:05.060 | versus what they're building AP1000s for

00:22:08.740 | in South Korea, as an example.

00:22:11.380 | When you think about the state of the supply chain

00:22:15.180 | in the United States,

00:22:16.060 | when you think about that talent network

00:22:18.460 | that you're a part of, right?

00:22:22.020 | That you have to go tap into when you wanna hire people.

00:22:25.540 | You know, there's a certain amount of that

00:22:27.100 | that we gotta tap into just to keep the 94 reactors online.

00:22:30.820 | But if we wanna start building more reactors, more Vogels,

00:22:33.980 | and we wanna drive down the costs, right?

00:22:36.660 | Of scaling up these level three

00:22:39.660 | and now advanced nuclear reactors.

00:22:42.060 | Do we have the talent?

00:22:44.100 | Do we have the supply chain?

00:22:45.900 | Do we have the capability?

00:22:47.140 | What needs to be done?

00:22:48.220 | What do you wish was different today?

00:22:50.060 | Well, that's a great question.

00:22:53.140 | It did take a Herculean effort to get the human resources

00:22:58.140 | and the other resources we needed, but we did it.

00:23:01.020 | You know, we had a mantra around here.

00:23:02.980 | What needs to be true to hire the people we need

00:23:06.500 | to restart up our senior reactor operator license classes,

00:23:11.780 | to get operators trained and qualified

00:23:14.460 | and proficient can be upwards of three, four years.

00:23:17.820 | You know, what do we need to do that?

00:23:19.140 | But we did it.

00:23:20.180 | But on a macro level, on a bigger scale

00:23:22.540 | for the US and on supply chain, I can't emphasize enough.

00:23:27.300 | It's a collective effort.

00:23:29.620 | And you have to also fold in there the financial part of it

00:23:33.260 | and the regulatory model of it.

00:23:35.060 | We are a highly regulated industry

00:23:41.100 | and that's good.

00:23:42.940 | You know, we're running a nuclear reactors

00:23:45.300 | and nuclear power plants, you know,

00:23:48.260 | but there were ways that we were able to put

00:23:52.140 | in more innovation or processes or tools to navigate

00:23:55.900 | through a 3000 page license renewal application,

00:23:58.860 | for instance.

00:23:59.700 | So there needs to be that kind of thinking,

00:24:01.380 | that kind of breakthrough thinking on, you know,

00:24:04.380 | how do we get there?

00:24:05.780 | And I worry sometimes that there might be a group over here

00:24:10.820 | trying to do it in a group over here

00:24:12.460 | and then they're competing

00:24:13.500 | and then it's just not gonna come to fruition.

00:24:15.740 | Like, how do we do that on a national energy policy level

00:24:20.740 | to move forward?

00:24:23.140 | I'm very encouraged by the, you know,

00:24:25.860 | the civil nuclear credit program that we qualified for

00:24:28.260 | by the DOE, the ADVANCE Act.

00:24:30.820 | I mean, it's a bipartisan discussion now.

00:24:32.740 | So I think that's been a huge step.

00:24:34.780 | So I have hope, but you need to have that breakthrough

00:24:38.820 | and that what needs to be true thinking

00:24:41.060 | to collectively get that done.

00:24:42.780 | Another thing, Bill, that was amazing to me today,

00:24:47.740 | you know, I've heard a lot about nuclear waste, right?

00:24:52.220 | Spent fuel rods.

00:24:53.780 | And we had the chance to go by the safety facility

00:24:57.180 | where you store these spent fuel rods.

00:24:59.620 | And there are two things that struck me

00:25:01.220 | as pretty extraordinary.

00:25:02.420 | One, and maybe you could just share, like, you know,

00:25:06.980 | what is the space required for the spent fuel rods

00:25:10.820 | in the United States?

00:25:11.660 | And this is, given that we have a moratorium,

00:25:14.220 | we could reprocess 90% of this, but we don't,

00:25:17.540 | like France does.

00:25:18.380 | So even in the case where we don't reprocess

00:25:20.780 | any of these fuel rods, I think you said,

00:25:23.540 | you gave an incredible fact about the total space

00:25:27.740 | that would be occupied from all the spent fuel rods,

00:25:29.940 | from all 94 of the nuclear plants.

00:25:32.620 | And I just thought sharing that information

00:25:34.700 | would be interesting.

00:25:35.540 | - Yeah, absolutely.

00:25:36.380 | So absent of having a federal facility

00:25:40.060 | to take all of the spent nuclear fuel

00:25:42.420 | from all the commercial nuclear reactors,

00:25:44.700 | each of the individual utilities or sites

00:25:47.820 | have their own independent spent fuel storage installation.

00:25:51.340 | We all have an acronym, ISFSI, that you saw today,

00:25:54.060 | I took you up there.

00:25:55.260 | And our pad has enough capacity

00:25:58.780 | for all 40 years of the original license.

00:26:00.860 | And we have enough for 60 years collectively on site,

00:26:03.620 | or over 60 years, including the spent fuel pools,

00:26:05.860 | the wet storage.

00:26:06.860 | You roll up all of that footprint,

00:26:09.860 | and you got to see it's very small.

00:26:11.460 | And you take all of the over 100 units in the United States,

00:26:15.580 | it would fit in the size of a football field

00:26:17.980 | up to the goal posts.

00:26:19.580 | And that's the total of the spent nuclear fuel.

00:26:23.300 | Now you start reprocessing that,

00:26:25.020 | and you have, again, a federal policy change

00:26:28.900 | from the Carter administration

00:26:30.220 | to allow for reprocessing like France does.

00:26:32.780 | You can get about, you hear numbers between 80, 90%

00:26:36.180 | of isotopic use of being able to use it again.

00:26:41.020 | - That's extraordinary.

00:26:43.460 | Single football field,

00:26:44.500 | and we could actually reprocess 90% of that.

00:26:47.660 | - And that would help a lot

00:26:48.540 | on your supply chain question,

00:26:50.580 | with where the market is right now

00:26:51.820 | with enriched uranium product and so forth.

00:26:54.700 | - Yeah.

00:26:55.580 | One thing I would just highlight

00:26:57.580 | is really I was blown away by the operational excellence.

00:27:02.980 | You can see it in everything that's going on here.

00:27:05.940 | And I do think Diablo was this kind of massive turning point

00:27:10.940 | for the industry, for the nuclear industry in the US.

00:27:14.140 | There was so much.

00:27:15.460 | I think people were committed to decommissioning this thing

00:27:19.380 | that many of us believe is the cleanest,

00:27:22.300 | most resourceful source of power you could have.

00:27:25.820 | And as you stated, now we have a lot of momentum,

00:27:30.420 | bipartisan support for the industry writ large.

00:27:33.740 | So anyway, I think we all owe you thanks

00:27:36.780 | for what you guys have done here.

00:27:38.540 | It's pretty impressive.

00:27:39.660 | - It's an incredible team out here that are dedicated,

00:27:43.420 | committed to those excellent standards.

00:27:46.180 | They're community members.

00:27:47.740 | They teach little league.

00:27:49.340 | We contribute so much with volunteer hours.

00:27:52.340 | There's so much pride out here and there's generations

00:27:54.580 | of people out here and their footprint,

00:27:56.700 | which is you can't walk around San Luis Obispo

00:27:59.340 | and say you work at Diablo Canyon and say,

00:28:01.260 | "Oh, do you know?"

00:28:02.140 | I mean, it's just, it's incredible.

00:28:04.540 | - That's great.

00:28:05.380 | - You know, I also recently listened to a podcast

00:28:07.900 | with Patty Poppe, the CEO of PG&E.

00:28:10.940 | - I know her.

00:28:11.780 | - It was great.

00:28:12.940 | Your boss, your boss, for everybody else, the CEO of PG&E.

00:28:17.940 | And it was great to hear her support for Diablo Canyon.

00:28:22.340 | It was great to hear her support for, frankly,

00:28:25.340 | a lot of innovation, right?

00:28:27.460 | Whether it's grid innovation, whether it's two-way,

00:28:30.820 | you know, charge and discharge with cars,

00:28:33.620 | whether it's undergrounding of power transmission lines,

00:28:36.620 | which we talked a lot about today,

00:28:38.300 | leads to higher efficiency, you know,

00:28:40.340 | less, you know, lower cost to retail customers.

00:28:45.340 | So it does feel like there's a lot of upside

00:28:48.940 | and Diablo's, you know, kind of the tip of that spear.

00:28:53.380 | Thanks for having us.

00:28:55.220 | We're certainly, you know, going to put the word out

00:28:58.580 | to the governor and others.

00:28:59.820 | I would love to see this place extended for 15 years.

00:29:02.220 | It's the type of optionality that we need in the state.

00:29:05.340 | And frankly, a huge portion of the incremental bid

00:29:09.980 | for power is coming out of Silicon Valley, right?

00:29:13.180 | Power is the primitive for AI.

00:29:17.100 | And that's why China is heads down in this race.

00:29:21.180 | And they're taking our technology, right?

00:29:23.980 | And they're, you know, they're improving it.

00:29:27.460 | And it's high time, I think, that the United States

00:29:29.740 | got, you know, back on board and with leaders like you,

00:29:33.020 | you know, at the front of the pack,

00:29:34.260 | I think we're in a good place.

00:29:35.260 | So thanks for being with us today.

00:29:36.700 | Thank you for being here.

00:29:37.580 | It's been a great day.

00:29:38.860 | Before I kick in with a little bit of background,

00:29:40.500 | I do want to thank the incredible team at Diablo,

00:29:42.980 | Maureen Zwolnick, you know,

00:29:45.140 | who is one of the incredible leaders here.

00:29:47.980 | And, you know, a startup founder, Trey Lauderdale.

00:29:51.060 | You know, after we talked about nuclear on pod six,

00:29:55.460 | he reached out to me, he said,

00:29:56.740 | hey, I think there's incredible opportunities here

00:29:59.620 | to make it even more efficient leveraging AI.

00:30:01.940 | He's got a partnership here with Diablo.

00:30:04.220 | And so thanks to them for having us down here.

00:30:06.700 | It's been a great day.

00:30:08.140 | And to give ourselves a little bit of credit,

00:30:10.700 | one advantage you have as an outsider

00:30:12.860 | is you see things with a fresh set of eyes.

00:30:15.460 | And so maybe for the audience,

00:30:17.860 | we will uncover a few tidbits that they will find useful

00:30:21.140 | as they think about this.

00:30:22.260 | Yeah, I mean, listen,

00:30:23.540 | I have to say that I'm embarrassed how little I focused

00:30:26.780 | on this issue up until a few years ago.

00:30:29.300 | The truth is the United States has been a global leader

00:30:32.060 | in nuclear power for 50 years, okay?

00:30:35.380 | We commissioned our first nuclear

00:30:37.300 | electricity generating plant in 1957.

00:30:41.100 | The majority of American plants

00:30:42.740 | are built in the '70s and '80s.

00:30:44.820 | We have 94 plants today online representing 31%

00:30:49.580 | of the world's total nuclear energy production.

00:30:52.540 | It's 20% of total US power production

00:30:57.020 | and nearly 50% of US clean energy production.

00:31:00.940 | It's large, it's at scale, we've been leaders.

00:31:03.900 | The problem is that it represents the effects

00:31:07.340 | of investments and efforts and an installed base

00:31:11.140 | that largely stopped in the 1990s, right?

00:31:15.340 | China's on track, on the other hand,

00:31:17.780 | to bring on more capacity in the next 10 years

00:31:21.740 | than we've brought on in the last 40 years.

00:31:24.340 | They're expected to pass us in terms of total power

00:31:27.980 | generation from nuclear by 2030 or thereabouts.

00:31:32.780 | Our supply chain is atrophying.

00:31:35.620 | However, there does seem to be some growing

00:31:38.540 | bipartisan recognition that we gotta get this back on track.

00:31:42.740 | And that's a key reason we wanted to come down here today.

00:31:45.700 | So as you look at this, Bill, what are some of the things

00:31:50.580 | that we ought to just set as a baseline about nuclear?

00:31:54.020 | Well, one thing that I would say is super important,

00:31:57.220 | especially because we have an audience

00:31:59.980 | that includes entrepreneurs,

00:32:01.420 | we're gonna talk first about level three fission.

00:32:04.580 | Yes, yes.

00:32:05.700 | There's level four, which is a different type

00:32:07.700 | of cooling technique.

00:32:08.580 | There's one plant in China doing that.

00:32:11.100 | There's SMRs, which are small modular reactors,

00:32:13.820 | which a lot of startups are excited about.

00:32:16.580 | And then there's obviously eventually fusion,

00:32:18.980 | which is a big unknown about the timeline.

00:32:22.140 | But for the next window until we stop,

00:32:25.740 | we're just talking about level three fission,

00:32:28.420 | which is a big scale out discussion.

00:32:31.460 | That's what's operating here at Diablo.

00:32:33.300 | That's what's operating in the majority

00:32:35.180 | of nuclear plants around the world.

00:32:37.260 | So a couple of ways you could go through things.

00:32:41.140 | First of all, we have been through this roller coaster

00:32:45.580 | of emotional beliefs about nuclear energy.

00:32:50.500 | And many people tie that way back to association

00:32:54.140 | with the bomb and this inability to think

00:32:57.300 | about these two things separately.

00:32:59.660 | We had the Three Mile Island incident,

00:33:02.980 | Chernobyl, Fukushima, and all these things have an impact

00:33:07.500 | on what people's perceptions of nuclear.

00:33:10.020 | I would argue based on the research I've done,

00:33:12.620 | the healthcare impact of all three of those disasters

00:33:15.380 | is tiny compared to the healthcare impact of coal

00:33:19.180 | or other technologies that nuclear competes with.

00:33:22.420 | But people's perception,

00:33:23.780 | the media overplayed those things as well.

00:33:26.900 | And it's only been recently that the public sentiment

00:33:31.060 | has started to swing back in favor of nuclear.

00:33:34.340 | Most of the brightest people in our industry,

00:33:37.900 | that Elon, Patrick Collison, I see a pro-nuclear bias.

00:33:42.900 | And I'm a huge fan of people like Steve Pinker,

00:33:46.580 | who's one of the great thinkers in our world.

00:33:48.740 | He's got a huge pro-nuclear bias.

00:33:51.100 | But a lot of people weren't on that page.

00:33:54.380 | Now, more and more people are on that page.

00:33:56.460 | - I mean, what's amazing is even in Japan,

00:33:58.660 | where after Fukushima,

00:34:00.220 | they took all 30 nuclear reactors offline.

00:34:02.580 | I think they have 75% approval rating

00:34:04.620 | for people wanting to put those reactors back online,

00:34:06.940 | because I think there's a recognition in the world, okay,

00:34:10.540 | that it's clean.

00:34:12.820 | It's the type of dense, always-on nuclear power

00:34:17.100 | that you need. - It's incredible.

00:34:17.940 | - And the facts are just undisputable.

00:34:20.340 | It's safe.

00:34:21.340 | - Well, and this goes back to that statement.

00:34:23.860 | I think I actually stole it from Joshua at Lux,

00:34:27.180 | but that if this were discovered today,

00:34:30.460 | people would be like,

00:34:31.300 | "Oh my God, climate change is solved."

00:34:33.540 | But if we let it go through this place

00:34:35.620 | where it was associated with these negative things,

00:34:39.020 | I don't think we're accurate.

00:34:40.220 | But now, hopefully, we're moving to a place

00:34:43.060 | where people are open-minded.

00:34:44.580 | So you could also look through

00:34:47.060 | a bunch of different countries.

00:34:48.380 | So France is, most people know this,

00:34:51.220 | 75% of their energy from nuclear.

00:34:53.620 | They've been the one that stayed in there the longest,

00:34:56.660 | leaned in the hardest.

00:34:58.100 | You have Germany, which I think people think of

00:35:00.500 | as the ultimate disaster,

00:35:02.180 | where they've taken all their plants,

00:35:04.260 | they've decommissioned everything.

00:35:06.100 | And because of some of the things

00:35:09.460 | that have played out in the European market,

00:35:11.300 | they're now a net importer of fossil fuel energy.

00:35:15.580 | - Disastrous.

00:35:17.900 | They got sold a bill of good by the Greens.

00:35:19.940 | Merkel decides to shut down all the nuclear power plants.

00:35:22.780 | You can see how it just falls off a cliff and goes to zero.

00:35:26.380 | And instead, they're getting fossil fuel-produced energy.

00:35:30.580 | They're less secure, both from an energy perspective.

00:35:33.780 | I mean, remember at the start

00:35:35.260 | of the Russian invasion of Ukraine,

00:35:38.020 | we had all the conversations as to whether or not

00:35:40.140 | people were gonna freeze in Germany during the winter,

00:35:42.380 | et cetera, because they had taken all these plants offline.

00:35:44.500 | - Unbelievable.

00:35:45.340 | And one thing we've learned through this process is,

00:35:48.340 | one of the silliest things you could possibly do

00:35:52.140 | is decommission 'cause you already paid for the damn thing.

00:35:55.140 | Once you turn one off, as Marina shared with us,

00:35:57.820 | it's a lot harder to bring it back.

00:35:59.340 | We're gonna see if that can work.

00:36:01.620 | - Right.

00:36:02.700 | - And so anyway, and there's a fourth country

00:36:05.500 | we should talk about.

00:36:06.420 | So you already mentioned China.

00:36:08.100 | - Yeah.

00:36:09.220 | - One of the amazing, well, let me dive deep on China

00:36:12.980 | and then I'll mention the fourth country.

00:36:14.460 | So this is publicly available data so people can go get it.

00:36:18.780 | We recently brought on two new plants in the U.S.,

00:36:22.500 | Vogel 3 and 4 in Georgia.

00:36:25.140 | And the total cost of that was about 30 billion

00:36:28.340 | for 2.2 gigawatts.

00:36:29.940 | It turns out over $13 billion per gigawatt.

00:36:33.940 | The plants in China that are the equivalent

00:36:37.180 | level three fission plants right now

00:36:39.300 | are coming on board at 2.5 billion per gigawatt.

00:36:43.340 | - Right.

00:36:44.180 | - So 13 to 2.5.

00:36:46.020 | - Right, right.

00:36:47.060 | - And that's a shocking delta.

00:36:49.300 | - Yes.

00:36:50.140 | - And one of, I would say the single most surprising thing

00:36:54.540 | to me of all the discussions I've had in the past two weeks

00:36:57.420 | with everyone that's in this industry

00:36:59.380 | is how few people are shocked by that.

00:37:02.180 | - Right, well, let's talk about that a little bit.

00:37:04.300 | When you look at the cost differential,

00:37:06.940 | which I think is one of the biggest problems today

00:37:10.060 | with U.S. nuclear, and I wanna decompose

00:37:13.420 | as to why you think there's such a delta,

00:37:15.860 | but let's just talk about what it is.

00:37:18.860 | Vogel had a bunch of stuff as they were going through COVID,

00:37:21.500 | so let's say that that is more expensive

00:37:23.660 | than what a run rate AP-1000.

00:37:26.140 | This is the type of gen three nuclear reactor

00:37:29.780 | that they're building in South Korea, in China,

00:37:32.180 | and at Vogel, right?

00:37:34.060 | - Since you mentioned Korea, that's the fourth country,

00:37:36.060 | so let me just real quickly go there.

00:37:38.500 | So Korea, so a lot of people look at the China data

00:37:41.740 | and they go, "Oh, that's China."

00:37:43.300 | You know, authoritarian government,

00:37:45.620 | and they're able to dismiss it because it's different.

00:37:49.380 | South Korea is a democracy, a friend of the United States.

00:37:54.380 | They're at the same delivered price point as China,

00:37:58.180 | and they're doing it at scale,

00:38:00.220 | and they're starting to export their technology.

00:38:04.260 | So in some ways, just because I think it's easier

00:38:07.540 | for Americans to wrap their head around it as a data point,

00:38:12.940 | the South Korea data is more interesting than the China.

00:38:15.620 | - Right, so let's talk about it.

00:38:17.220 | Let's break this down a little bit,

00:38:18.940 | because both the South Koreans and the Chinese, right,

00:38:23.940 | are building on technology that they procured

00:38:28.100 | from the United States, from Westinghouse,

00:38:31.220 | under tech transfer licenses over the course of the past,

00:38:34.940 | you know, 20 or 30 years, okay?

00:38:37.260 | Now they're building a lot of indigenous technologies

00:38:39.740 | on the back of that technology,

00:38:42.500 | and yet building the exact same technology,

00:38:46.140 | even though it was invented here,

00:38:48.740 | it costs us, give or take, four times as much

00:38:51.740 | as what they're spending to build in South Korea or China.

00:38:54.980 | So give us your best guess.

00:38:59.020 | What are the big buckets that are costing, you know,

00:39:02.380 | this cost differential in the United States,

00:39:04.980 | and whether or not there's anything that we can do about it?

00:39:07.620 | - And I wanna come back to later.

00:39:09.700 | I'll answer your question,

00:39:10.580 | but I wanna come back to the built on our technology thing,

00:39:14.660 | 'cause I think there's some important things

00:39:16.380 | to talk about there.

00:39:17.500 | So I went out and talked to a whole bunch of people,

00:39:20.860 | and I was able to talk to one individual

00:39:23.380 | who had worked both in the regulatory part

00:39:25.780 | of our government and at a producer

00:39:30.060 | who I think had a really good lens on all this,

00:39:33.220 | and I'm gonna leave him anonymous,

00:39:35.380 | but he brought up four things.

00:39:38.660 | So the first was regulatory.

00:39:41.300 | So the separate federal and state

00:39:43.620 | environmental permitting processes in the U.S.

00:39:45.980 | is onerous, lengthy, probably 10 years

00:39:48.660 | for a nuclear power plant, expensive.

00:39:52.580 | Most people don't know this.

00:39:53.780 | They have no reason to know this,

00:39:55.180 | but the NRC is a fee-based regulatory.

00:39:58.500 | So you literally pay per hour

00:40:00.420 | to have 'em come regulate you.

00:40:02.580 | And so those costs are extremely high.

00:40:06.180 | The second thing is litigation.

00:40:07.660 | So multiple special interest groups,

00:40:09.860 | particularly environmental groups,

00:40:11.460 | will sue to stop any development whatsoever.

00:40:14.540 | So there's no chance of a deployment

00:40:16.900 | or an attempted deployment without fending off

00:40:20.860 | inbound litigation that you have to deal with in the U.S.

00:40:24.980 | The third is passage of time without us doing anything.

00:40:31.540 | And so everyone talks about learning curves.

00:40:34.780 | We're so far off the learning curve

00:40:36.860 | 'cause these two new plants were the first in 30 years.

00:40:40.340 | So there's no repeatable process,

00:40:42.860 | which you now have in China and there.

00:40:46.580 | And then that's all before you look at other things.

00:40:50.260 | I would say labor, cost of steel, cement,

00:40:53.300 | those things can be higher here than there.

00:40:55.980 | And so it's a whole big litany of stuff added up

00:40:59.860 | and none of those factors apply in China.

00:41:02.380 | - Right, right.

00:41:03.220 | If we could boil that down,

00:41:04.980 | the way I kind of got my head around it is,

00:41:08.900 | one, if you just look at the length of time.

00:41:11.780 | So now they're building these AP 1000s

00:41:14.340 | in South Korea and in China in about seven to eight years.

00:41:17.380 | And in the United States- - Six, I think six even.

00:41:19.380 | - Maybe as fast as six.

00:41:20.780 | In the United States, it's not 10.

00:41:23.300 | It's more like 12 to 15, okay?

00:41:25.740 | So it's taking us twice as long

00:41:28.180 | to bring one of these plants online.

00:41:30.300 | Time equals money.

00:41:31.860 | - And you and I talked about this,

00:41:33.780 | but a modern, large, multi-gigawatt vision facility

00:41:38.780 | is a large piece of infrastructure.

00:41:43.100 | - Exactly.

00:41:43.940 | - It's not like you're building even a rocket engine.

00:41:47.220 | It's more than that.

00:41:48.140 | It's this big facility.

00:41:48.980 | - You look at the South Koreans or the Chinese

00:41:50.700 | building a highway, an airport, a hospital, a school.

00:41:55.020 | - A subway station. - A subway station.

00:41:56.500 | - Have you seen these videos?

00:41:57.860 | Go on, if you haven't, go on YouTube

00:42:00.460 | and look at China's new subway station.

00:42:02.860 | Unbelievable.

00:42:03.700 | And so the US, the first thing is just

00:42:08.700 | our regulatory environment causes it

00:42:11.900 | to take a much longer period of time, and time is money.

00:42:15.380 | Secondly then, we don't have a scale up

00:42:18.780 | or scale out operation going on, right?

00:42:21.900 | Two facilities over the course of the last 20 years

00:42:24.820 | compared to six to eight of these

00:42:26.940 | in a repeatable process coming online in China.

00:42:29.700 | That means supply chain.

00:42:31.220 | That means talent chain.

00:42:32.940 | That means that regulators are constantly talking

00:42:36.020 | with the operators.

00:42:37.340 | You just have the type of system

00:42:40.180 | that you need to drive down costs.

00:42:41.780 | And in fact, if you look at these gen three

00:42:44.460 | and gen four reactors coming online,

00:42:46.700 | even in the United States,

00:42:47.980 | they always cost more in that first plant.

00:42:51.260 | But by plant five, it was cut in half.

00:42:53.860 | By plant 10, it was cut by 70%, right?

00:42:56.860 | So cost comes down as you ramp up scale production.

00:43:00.140 | Think about the Roadster was a lot more expensive

00:43:03.300 | for Tesla to build, right?

00:43:05.260 | Than the model three,

00:43:06.940 | once you are producing a million of these cars.

00:43:09.260 | So we need to get to a place

00:43:11.700 | where we also have scale production.

00:43:13.380 | And then the third, what everybody tends to focus on

00:43:16.220 | is kind of this labor differential.

00:43:18.500 | I would put that in the third bucket,

00:43:20.380 | but it's like a third, a third, a third, and this adds up.

00:43:22.900 | It seems to me the first two, right?

00:43:26.460 | We can tackle, right?

00:43:28.540 | You can consolidate the regulatory environment

00:43:31.300 | in the United States so that you reduce the time

00:43:33.460 | to bring one of these things online.

00:43:35.420 | And I also think that if you clustered some of these,

00:43:38.660 | if we wanted to get back to building more of these reactors,

00:43:41.980 | there's no reason to think

00:43:43.220 | that if we had a scaled cluster of reactors,

00:43:46.180 | five to 10 reactors that you wanted to bring on

00:43:48.420 | over a 10 year period of time,

00:43:50.020 | that you wouldn't drive down the overall cost of the reactor.

00:43:52.460 | - Perhaps.

00:43:53.300 | There's not a lot of proof points of us building

00:43:58.300 | either at a federal or state level,

00:44:00.700 | big projects at very low cost in modern history.

00:44:04.980 | There were some, there's famous things.

00:44:08.060 | - But if you think about infrastructure,

00:44:09.300 | most of it is one-off, right?

00:44:11.260 | You build a bridge somewhere,

00:44:13.300 | then you build a bridge in a different city.

00:44:15.340 | And it seems like the other issue is

00:44:17.980 | the South Koreans are not only building them for themselves,

00:44:20.820 | they're building them for export, right?

00:44:23.100 | And again, that just gets back to this scale mentality

00:44:26.860 | of building these plants.

00:44:28.340 | But to be clear, the idea that we're gonna bring the cost

00:44:32.140 | of building one of these things down by 70%,

00:44:35.500 | which is kind of the target needed to make this competitive

00:44:38.900 | in the open market with gas and everything else,

00:44:41.420 | I think is very, it's hard to see.

00:44:43.340 | - And this is a good point.

00:44:44.420 | The landed price points in Korea and China

00:44:47.820 | are very similar to the landed price points

00:44:50.940 | of other renewables and things, just on a CapEx bill.

00:44:55.660 | But ours isn't because ours is three or four X,

00:44:59.140 | the global best.

00:45:01.660 | I wanna talk, I'm gonna go back to the South Korea thing

00:45:04.740 | because you brought up the IP issue.

00:45:06.820 | I'm not convinced that it's helping us any

00:45:11.500 | to sit around and cry about whether China

00:45:14.780 | or South Korea used our IP.

00:45:16.860 | And if anything, I think,

00:45:19.020 | and I've mentioned this on the pod before,

00:45:21.180 | I think this anti-Chinese mentality is a little nuts

00:45:26.020 | because if you look at low-cost EVs,

00:45:28.660 | if you look at their subway stations,

00:45:30.380 | if you look at, they're leading us in many areas.

00:45:34.980 | And we have this holier-than-thou, you know,

00:45:38.260 | attitude that America's the best and that we're the leader

00:45:43.060 | and we're being passed.

00:45:44.540 | Like, I would say landed cost of energy

00:45:47.980 | is the data point you should measure most.

00:45:50.860 | And if they're four X where we are,

00:45:52.980 | I would say we should have the alarm bells ring

00:45:55.940 | going, what the hell is going on?

00:45:57.820 | Why are we so far behind?

00:45:59.460 | And I think it's a little bit of a crutch to lean on

00:46:01.860 | and say, oh, they built it on our technology.

00:46:04.220 | One of the things I learned about the Korea situation,

00:46:08.140 | so they're trying to export it.

00:46:10.180 | Westinghouse, who was the company

00:46:12.780 | that originally designed Level 3 fission in the US

00:46:16.620 | is suing to try and prevent them

00:46:18.820 | from delivering to Czechoslovakia.

00:46:21.340 | And, you know, we talked to Maureen

00:46:24.300 | about how the different nuclear plant operators all share

00:46:29.100 | and that we're kind of all in this together, right?

00:46:32.020 | And if climate change is a global problem

00:46:34.820 | and we all want it solved,

00:46:36.460 | like, we should want everyone to win.

00:46:39.340 | Like, we shouldn't be jealous that China's doing that.

00:46:42.660 | And so for me, you know, I ask all the AI bots,

00:46:46.820 | you know, do you think there's any chance

00:46:48.460 | we would license something from South Korea?

00:46:51.740 | They all said, no, there's no chance we would do that.

00:46:54.220 | And that's the kind of a middle blocker,

00:46:55.860 | like Trump derangement syndrome or something.

00:46:58.180 | Like, if Korea could help us deliver a planet,

00:47:01.980 | 2.5 billion per gigawatt, why wouldn't we want that?

00:47:05.820 | And so I just-

00:47:06.740 | - I mean, we invited TSMC into Arizona

00:47:08.780 | to help us build chips.

00:47:09.860 | - I know, but if you have this attitude,

00:47:11.860 | they took it from us,

00:47:12.860 | then you don't get into that right mindset.

00:47:15.060 | So I just think that's an important kind of thing

00:47:17.780 | to think about.

00:47:18.620 | We would all be better off if nuclear energy were cheaper

00:47:21.620 | for everyone on the planet.

00:47:22.860 | - Right.

00:47:23.700 | - And a lot of the political disagreements that lead to war,

00:47:28.700 | a lot of people believe are tied to energy costs

00:47:32.180 | and energy availability.

00:47:33.420 | So you might reduce that as well.

00:47:35.940 | - I think one of the reasons we're so focused on China

00:47:40.620 | is what started this conversation for you and I

00:47:46.020 | was when you model out the need for data center capacity

00:47:50.580 | over the course of the next five to 10 years,

00:47:53.100 | you realize for the first time in really two decades,

00:47:57.100 | the US's need to grow its baseload power generation

00:48:01.620 | is going to go up significantly,

00:48:04.100 | significantly faster than it has

00:48:06.060 | over the course of the last two decades.

00:48:07.500 | - And this has become a standard topic of discussion

00:48:11.060 | in Wall Street.

00:48:11.940 | Everyone's talking about this.

00:48:13.140 | - Energy, reliable, always on energy, right?

00:48:17.660 | In fact, most data centers wanna build right next

00:48:21.100 | to the source of energy.

00:48:23.020 | - Right.

00:48:23.940 | - That is the primitive to AI.

00:48:25.820 | And we do believe that AI supremacy

00:48:30.500 | really goes to national security.

00:48:32.660 | So the reason I believe that we're seeing finally

00:48:36.780 | some bipartisan movement in Washington

00:48:40.500 | and around the country, frankly, on this issue,

00:48:42.980 | is people realize how inextricably

00:48:45.740 | these things are tied together.

00:48:47.380 | So the reason I'm worried about China

00:48:49.780 | taking the lead in nuclear

00:48:50.980 | is not just that they have more nuclear power plants

00:48:54.380 | in the United States,

00:48:55.220 | but what it enables them to do down the line

00:48:58.540 | around AI and everything else.

00:49:00.260 | Because if you are the low cost power provider

00:49:03.340 | in the world, right?

00:49:05.140 | Then you're going to be able to build bigger data centers

00:49:07.500 | that power bigger AI clusters, et cetera.

00:49:09.980 | And I'm not certain that that leads to better AI,

00:49:12.900 | but there's a reasonable enough chance

00:49:14.580 | that you don't wanna give them that unilateral option.

00:49:18.260 | - I think even if you don't take that lens,

00:49:22.500 | you say to yourself, if we can't fix this problem,

00:49:26.300 | but other countries can,

00:49:28.260 | you may be through being imported by South Korea,

00:49:32.300 | then it becomes a competitive weapon for those countries.

00:49:35.300 | And just as you might put a manufacturing plant

00:49:39.980 | in Mexico or Vietnam or Czechoslovakia,

00:49:43.900 | there's no reason why a data center

00:49:45.700 | can't live there as well.

00:49:47.260 | And quite frankly, it's easier to drop a fiber optic cable

00:49:51.940 | from Mexico to America than it is to move goods by truck.

00:49:56.940 | - So should we be trying to build,

00:49:58.820 | cooperate with the Mexican government

00:50:02.820 | and build AP 1000s just over the border in Mexico?

00:50:05.860 | - I think we should be open-minded

00:50:07.660 | to the fact that the world needs this technology

00:50:11.620 | and that if they get it, it's good too.

00:50:15.100 | If Czechoslovakia gets it, it's good too.

00:50:17.660 | This was my main point about like,

00:50:19.540 | I just don't think having an attitude that,

00:50:22.020 | oh, that's ours or I don't even don't love the,

00:50:25.780 | it's a race and they're winning.

00:50:27.260 | I think everyone should be winning in this area.

00:50:30.460 | Like once again, if you care about global climate change,

00:50:34.300 | like it's a global problem, everyone should.

00:50:36.300 | I mean, it wasn't that long ago

00:50:38.540 | that with this same kind of anti-China attitude,

00:50:41.860 | we sat here and said,

00:50:43.300 | oh, we're gonna clean up our pollution,

00:50:45.660 | but look at those guys and we're pointing our finger.

00:50:48.260 | Now we wake up and they're landed costs

00:50:50.700 | of nuclear energy is one fourth of ours.

00:50:53.020 | And like, who are we pointing a finger at?

00:50:54.900 | Like, you know.

00:50:55.980 | - Yeah, I think there is, I was reading,

00:51:00.580 | I think I got the name correct.

00:51:02.100 | Professor Brunjerno from MIT is the director

00:51:05.060 | for the Center of Advanced Nuclear Energy Systems.

00:51:08.220 | You know, he said, China's now the de facto world leader

00:51:10.580 | in nuclear technology, right?

00:51:12.860 | And it's not because they're smarter, they're better,

00:51:15.020 | but it's simply because they made it a national priority,

00:51:19.020 | right, that they were going to build these plants.

00:51:22.100 | And when you do that, you innovate, right?

00:51:26.060 | And when I look at the moratorium that has largely existed

00:51:28.980 | in the United States over the last two decades,

00:51:31.260 | you tell me, if you had the Elon Musk of the United States

00:51:35.020 | working on fission over the course

00:51:37.540 | of the last two decades, right,

00:51:39.500 | we would be light years ahead of where we are

00:51:41.940 | from an innovation perspective.

00:51:44.220 | And maybe that's a decent segue to talk about, you know,

00:51:48.060 | what some of these gen four advanced nuclear reactors

00:51:51.820 | look like, because you and I, again,

00:51:53.780 | are talking about generation three

00:51:55.980 | or generation three plus reactors.

00:51:58.420 | The AP-1000 is kind of the standard reactor

00:52:01.540 | that's, you know, that's being built today.

00:52:05.380 | But whether you're talking about TerraPower,

00:52:07.540 | these alternative sources of cooling that are being built,

00:52:10.740 | I think we have five or six or seven of these

00:52:13.860 | that are authorized under kind of the developmental,

00:52:18.100 | you know, regime in the United States

00:52:19.860 | that are hoping to come online over the course

00:52:21.740 | of the next five to seven years.

00:52:24.020 | For the first time in four decades,

00:52:25.780 | an American company broke ground on a next-generation

00:52:28.780 | nuclear power plant in the US.

00:52:31.300 | The company behind the new technology is TerraPower,

00:52:34.540 | and it's backed by billionaire Bill Gates.

00:52:37.540 | Nuclear power is carbon-free,

00:52:39.500 | which means it doesn't emit the greenhouse gases

00:52:42.220 | scientists link to climate change.

00:52:44.380 | And Gates is building a plant in Wyoming

00:52:46.620 | at a cost he estimates will be $10 billion.

00:52:50.660 | TerraPower's new reactor uses liquid sodium

00:52:53.740 | rather than water for cooling,

00:52:55.140 | which the company says makes nuclear power

00:52:57.900 | cheaper, safer, and more efficient.

00:53:00.540 | If we all agree that the 94 reactors

00:53:02.940 | that we have currently online, we should keep online.

00:53:05.980 | The question I have, Bill, is should we be looking

00:53:09.420 | to build more of the Gen 3 fission reactors,

00:53:13.620 | or should we leapfrog and be, you know,

00:53:15.900 | there seems to be a lot of energy,

00:53:17.180 | at least in Silicon Valley and, you know,

00:53:19.380 | in Washington, Bill Gates, behind these Gen 4 reactors,

00:53:23.340 | where would you spend your time and energy?

00:53:24.620 | - Yeah, so, I mean, my first reaction would be

00:53:27.740 | it shouldn't be an either/or, like we should be doing both.

00:53:30.780 | And I think that's what's happening, so that's fine.

00:53:33.260 | I would also say if, one of the big issues

00:53:37.660 | for both level three and four,

00:53:40.340 | what we could call the futures technologies,

00:53:43.340 | is utilities having the gumption

00:53:47.580 | to put the CapEx and invest.

00:53:51.140 | If you start, and I heard this from multiple people

00:53:53.660 | that I talked to, utilities are inherently conservative.

00:53:58.660 | - Yes.

00:53:59.700 | - Like Wall Street investors think of them

00:54:02.140 | as these stable things you buy that don't move around a lot,

00:54:06.820 | but just have a stick.

00:54:07.660 | - I think the CEO of PG&E recently said,

00:54:09.700 | who owns Diablo, recently said on a podcast

00:54:12.620 | they have no interest in investing in SMRs.

00:54:15.340 | They said, "We're gonna let risk capital invest

00:54:17.740 | "in small nuclear reactors, and if they work, right,

00:54:21.180 | "then we'll consider it,

00:54:22.060 | "but we're not gonna be the risk capital."

00:54:23.620 | - It affects both of them, and maybe that's changing.

00:54:26.460 | When I first heard about Constellation Energy Group,

00:54:29.860 | which operates a bunch of nuclear reactors here in the US,

00:54:32.660 | I reached out to 'em, and I asked 'em,

00:54:34.660 | "Are you doing anything new?

00:54:36.060 | "Are you innovating?

00:54:37.060 | "Are you doing a new plant?"

00:54:38.660 | They said, "No, no, no, we just operate these old ones."

00:54:42.020 | Now there's a rumor that they're talking to Threema Island

00:54:45.100 | about restarting that, and so maybe these changes

00:54:49.980 | in attitude are gonna tip 'em in.

00:54:51.820 | If, I say this with a ton of confidence,

00:54:55.180 | even though it's unprovable,

00:54:57.540 | if these utilities could snap their fingers

00:55:00.740 | and have fission level three online at--

00:55:04.900 | - Competitive rates.

00:55:06.220 | - Korea and China price points,

00:55:08.220 | I think they'd be turning 'em on.

00:55:09.180 | - Of course, of course.

00:55:10.020 | - So there's a huge difference between 2.2 or 2.3 and 13.

00:55:15.020 | Like, there's just a huge difference.

00:55:17.700 | So if that problem were solvable,

00:55:20.460 | I think they'd be investing more.

00:55:22.460 | But I don't know if that's solvable, I really don't.

00:55:24.420 | - To answer my own question,

00:55:26.100 | or perhaps push you a little further on this,

00:55:28.460 | so if you listen to Gates talk about the reason

00:55:31.300 | for alternative to gen three power plants,

00:55:34.580 | is they effectively said the gen three design

00:55:38.740 | was a massively complex engineering solution

00:55:43.540 | to the safety challenges of the plants

00:55:46.900 | that came before it, okay?

00:55:48.940 | And so rather than designing with perhaps elegance,

00:55:52.060 | like passive cooling,

00:55:54.820 | they came up with very complex

00:55:57.100 | and expensive engineered solutions to those problems.

00:56:01.420 | Now, the great thing about the engineered solutions

00:56:03.420 | is they work, right?

00:56:05.100 | We know they work, they're repeatable processes,

00:56:07.660 | and we've driven down the cost

00:56:09.100 | in some of these other places.

00:56:10.300 | But if you look at the gen four reactors,

00:56:12.940 | they're much more modular.

00:56:14.980 | Some of 'em can be produced in factories.

00:56:18.500 | A lot of 'em have sodium or alternative mechanisms

00:56:22.580 | for passive cooling.

00:56:24.100 | Is that perhaps, again, when we think about the cost

00:56:27.900 | of driving down these plants,

00:56:30.420 | it does seem to me that we can't magically snap our fingers

00:56:33.860 | and make labor costs in the United States go down.

00:56:36.100 | We can't snap our fingers and make,

00:56:38.500 | say we're gonna scale this up

00:56:39.820 | and make all the regulatory stuff better.

00:56:41.980 | So a leapfrog would be just build a smaller, simpler plant.

00:56:46.300 | - Yeah, I mean, China, there's a new plant in China,

00:56:50.420 | I probably can't pronounce it right, Shidao,

00:56:53.180 | that is level four,

00:56:54.660 | but it came on at a price way above Vogel.

00:56:57.340 | So like-

00:56:58.420 | - Yeah, but any new plant, any novel thing

00:57:01.060 | is gonna be a lot more expensive on unit one

00:57:03.500 | than it's gonna be on unit two.

00:57:04.340 | - You know, they used to call,

00:57:06.140 | I've heard people refer to modern day semiconductor investing

00:57:10.340 | as a sport of kings,

00:57:11.780 | 'cause you're 50 million to first take that.

00:57:14.020 | If that's a sport of kings,

00:57:15.580 | this is a sport of emperors.

00:57:17.180 | You may be multi billions to first revenue.

00:57:21.740 | And so good thing we have Bill Gates like emperors

00:57:26.740 | that wanna make this stuff work.

00:57:28.380 | Yeah, let's dive in on SMRs for a second.

00:57:31.100 | So I'm sure the at least high level pitch

00:57:35.620 | you would hear from all of the SMR vendors

00:57:38.060 | is one of the reasons that level three fission

00:57:41.220 | is so expensive is it's a huge infrastructure project

00:57:44.940 | and the US isn't good at those anymore.

00:57:47.740 | And if you could build this thing in a factory

00:57:51.180 | and then ship it and deliver it where it's used

00:57:53.780 | and there's talks of, oh, I could take an old coal plant

00:57:57.860 | and put an SMR in there, several of them.

00:58:00.540 | And now the transmission lines are all in the right place.

00:58:03.060 | And I get, and to what you just said,

00:58:06.380 | and then I can repeat it.

00:58:08.620 | Then the first unit might not be competitive,

00:58:11.500 | but the hundredth unit might be,

00:58:13.180 | 'cause I could get into more of an automation factory thing

00:58:16.580 | and get out of this infrastructure build problem

00:58:19.620 | that we're no good at in the US.

00:58:21.300 | That is the argument.

00:58:23.020 | I think another super valid argument is the Navy.

00:58:28.020 | And one of the links we will provide is a 92 page PDF

00:58:32.460 | on the miraculous success of the Naval Nuclear Program,

00:58:36.860 | which are in essence SMRs that already exist

00:58:40.460 | on a hundred different vessels, some submarines,

00:58:43.860 | some carriers in the US Navy.

00:58:46.220 | And the track record is phenomenal.

00:58:49.540 | The costs are pretty interesting,

00:58:51.980 | especially since they've never been applied

00:58:54.140 | at a commercial level.

00:58:56.620 | And so there's reason to believe in this.

00:59:00.500 | The problem, I think the overwhelming problem

00:59:03.340 | is that the utilities aren't really,

00:59:08.020 | they're not acting like, say,

00:59:10.300 | Google and Amazon are buying Nvidia clusters

00:59:14.300 | where, oh, we're gonna put them up.

00:59:15.620 | And they're more conservative.

00:59:17.980 | They want the startup to bear most of the risk.

00:59:20.700 | There's an agreement called a power purchase agreement

00:59:24.420 | where the utility says, oh yeah, I'll buy it from you

00:59:27.980 | if you can deliver it to me at this price,

00:59:30.980 | where they know their margin.

00:59:32.580 | And the startup's completely on the hook

00:59:35.420 | for whether they can get there or not.

00:59:36.860 | And we've already had one colossal miss

00:59:39.340 | with a startup called NuScale

00:59:41.340 | that had one of these agreements in place

00:59:43.100 | and they got time to qualify.

00:59:46.500 | And the utility went, I'm out.

00:59:50.060 | And NuScale had to start laying people off.

00:59:52.860 | And it's just tough.

00:59:53.780 | And the other tough part, the NRC,

00:59:56.860 | which we haven't talked much about,

00:59:58.260 | but the regulatory commission here in the US is fee-based.

01:00:02.300 | And all the people that are playing in this market

01:00:05.180 | I've talked to say you're probably 60 million

01:00:08.060 | to first approval.

01:00:09.220 | Just on fees, the startup's gonna pay to the NRC

01:00:12.700 | to tell them what they're doing is okay.

01:00:15.020 | Once again, sport of emperors.

01:00:16.660 | - Yes, well, and that brings us back to,

01:00:21.540 | why did you and I really amp up this conversation?

01:00:25.380 | Because of Nvidia, because of Meta,

01:00:28.420 | because of Google, because of Microsoft,

01:00:30.300 | the power needs that they have.

01:00:32.380 | - And maybe those companies are the ones

01:00:34.820 | that need to kind of--

01:00:35.660 | - I mean, if they're spending $250 billion a year

01:00:38.020 | on CapEx associated with AI,

01:00:40.420 | that is emperor level spending, right?

01:00:42.580 | - Maybe they need to be the ones underwriting

01:00:44.700 | the risk on the SMR.

01:00:45.860 | - And I also think what they can do, Bill, how about this?

01:00:50.100 | Why don't the hyperscalers form a consortium, okay?

01:00:54.260 | And they go to Washington and they say,

01:00:56.660 | "Hey, we'll put up X amount

01:00:59.460 | "in order to build some AP 1000s," right?

01:01:03.180 | Or daisy chain a bunch of these SMRs together, right?

01:01:07.340 | I'm talking about a new type of project

01:01:09.780 | in partnership with Washington, DC,

01:01:12.260 | where there's a mutual need.

01:01:14.660 | They have the capital, public-private partnership

01:01:17.220 | to get this going.

01:01:18.300 | Because honestly, as I sit here today,

01:01:20.300 | take Tiablo Canyon.

01:01:22.020 | They built two nuclear reactors here.

01:01:24.260 | You know, this site was provisioned for six,

01:01:28.620 | for six reactors.

01:01:30.300 | I could imagine if you had four more reactors sitting here,

01:01:34.220 | right, if you could land them at the right price,

01:01:36.780 | you could have one reactor for Meta,

01:01:39.300 | one for Amazon, one for Microsoft, one for NVIDIA.

01:01:42.860 | You could have the data center sitting right next to them.

01:01:45.660 | It does seem--

01:01:46.500 | - By the way, I ran some math on the Diablo dollars,

01:01:49.140 | just 'cause it's interesting.

01:01:50.500 | So in the mid 80s dollars,

01:01:53.460 | the plant was built for 5.5 billion.

01:01:56.180 | So right around 2.4.

01:01:59.700 | Unfortunately, in today's dollars, that's 6.4.

01:02:03.100 | But 6.4 is still half of 13, which is Vogel.

01:02:07.180 | And so, yeah, just interesting.

01:02:10.580 | - I mean, you know, again,

01:02:12.540 | we know the reasons why they're not coming online

01:02:15.100 | at that price.

01:02:15.940 | So the question is whether or not you can change

01:02:17.620 | those dynamics through some of the things

01:02:19.460 | that we talked about.

01:02:20.940 | I do think these Gen 4 reactors,

01:02:23.580 | there's room, you know, I, like you,

01:02:26.260 | believe it's an all of the above strategy.

01:02:28.420 | We should have the large Gen 4 reactors,

01:02:31.540 | but we also should do this small modular stuff.

01:02:34.100 | We basically have a hundred floating SMRs

01:02:36.980 | in our naval fleet.

01:02:38.900 | You know, just imagine if you just took those ships

01:02:41.260 | and dropped them on land and, you know,

01:02:43.420 | set some transmission lines up again.

01:02:45.900 | What's great about those reactors is, you know, again,

01:02:49.900 | part of what we need to do is get the flywheel going

01:02:53.060 | on the marketplace.

01:02:55.180 | Not everybody needs, not every situation needs 1.5 gigs.

01:03:00.020 | - That's true.

01:03:00.860 | - Right, a hundred megawatts out of a small nuclear reactor

01:03:03.340 | may be a perfect fit for some of these smaller solutions.

01:03:07.340 | - Well, let's talk about possible solutions.

01:03:09.700 | - Okay.

01:03:10.540 | - Not that we get to decide.

01:03:11.780 | And I'll start with on the level three side

01:03:16.460 | and then let's go to the SMR side.

01:03:18.300 | But, you know, the first thing that popped in my mind

01:03:21.780 | when I see how far behind China and Korea we are is,

01:03:26.780 | like I said, I'm shocked no one's shocked.

01:03:30.460 | But if someone inside of Washington is like,

01:03:35.460 | oh my God, we have to fix this.

01:03:37.780 | The first thing that comes to my mind,

01:03:40.460 | and maybe this could be applied to both SMRs

01:03:42.620 | and level three scale out, is we could choose

01:03:46.780 | to do something more like a Manhattan project

01:03:49.340 | or a NASA project.

01:03:51.060 | And you hinted at this already,

01:03:53.020 | where you get the best and brightest people,

01:03:55.820 | you put them somewhere on the side,

01:03:59.180 | you give them the ability to do things

01:04:01.780 | they couldn't do before.

01:04:03.340 | Like re-imagine the NRC from the ground up.

01:04:08.260 | You give them a goal like the Manhattan project

01:04:12.060 | and NASA had to deliver nuclear at a competitive rate

01:04:17.140 | in the US, you know, and come hell or high water.

01:04:21.500 | Now, we haven't done one of those things

01:04:23.660 | since those two that I mentioned,

01:04:25.340 | but we were pretty successful when we did those.

01:04:28.140 | You know, and I think when you have an industry

01:04:30.740 | that's this important to the country

01:04:32.700 | and this highly regulated, it is kind of an exception

01:04:36.620 | where you say maybe the free market's not the right--

01:04:39.420 | - I mean, it's pretty clear to me

01:04:42.700 | that because of the regulation,

01:04:46.140 | which again, I'm sure we could regulate

01:04:48.420 | this industry better, but you're happy

01:04:50.420 | the industry has a lot of regulation, okay?

01:04:53.420 | It's incredibly safe.

01:04:54.940 | But given that burden of regulation,

01:04:58.860 | it does drive up the cost

01:05:00.260 | relative to alternative solutions.

01:05:02.300 | And the United States is just incredibly lucky.

01:05:04.300 | We have an abundance of natural gas.

01:05:06.380 | So left purely to market forces,

01:05:08.340 | if you don't subsidize any of this stuff,

01:05:10.140 | we wouldn't have any solar, we wouldn't have any wind,

01:05:12.940 | we wouldn't have, you know,

01:05:14.340 | we're not gonna have the investment required

01:05:16.700 | to bring on these new plants.

01:05:18.140 | So I do think it has to be a partnership

01:05:20.540 | where the government is willing.

01:05:21.940 | Now, listen, what we're doing in the IRA with chips,

01:05:26.300 | we've decided building chips in the United States

01:05:28.740 | is a strategic priority.

01:05:30.100 | You and I have debated whether or not

01:05:32.300 | that will be successful.

01:05:33.820 | We happen to both be on the same side of the agreement

01:05:36.220 | that that's going to be very challenged

01:05:38.100 | in the United States, but the United States--

01:05:40.460 | - They did in the recent week, including Intel stock price.

01:05:43.300 | - But the United States government

01:05:44.860 | is absolutely committed, you know, to that path.

01:05:47.820 | I think nuclear is at least as important.

01:05:50.620 | - But they didn't go as far as we're talking about.

01:05:52.660 | They just did loan programs and stuff.

01:05:54.500 | I'm saying, if you did a Manhattan Project

01:05:57.380 | or NASA scale thing,

01:05:59.260 | where you're trying to redo everything,

01:06:02.780 | not just provide loans or incentives.

01:06:05.540 | And by the way, there is, I think, an imperative,

01:06:07.940 | just as a quick side, to at least make sure nuclear

01:06:13.740 | is not disadvantaged relative to wind and solar.

01:06:16.500 | It has operating efficiency and this durability

01:06:21.500 | and this always-on piece

01:06:24.060 | that make it so much better than those.

01:06:26.260 | And right now, I think it actually

01:06:28.140 | has less incentive programs.

01:06:29.900 | And I'm not sure that's smart.

01:06:32.580 | - If you look at, you know,

01:06:33.900 | I saw this mashup the other day on Twitter.

01:06:36.220 | You know, it's Trump and Biden and Elon and Bill Gates

01:06:42.860 | folks on both sides of the political divide, right?

01:06:45.860 | The one thing that's very clear right now

01:06:47.740 | is that both sides of the political divide

01:06:49.860 | have come together on this issue.

01:06:51.460 | - Take nuclear power, biggest source of clean energy.

01:06:54.500 | - There's no question that there are benefits.

01:06:57.100 | - Our nuclear energy sector produces clean, renewable

01:07:00.420 | and emissions-free energy.

01:07:02.660 | - In Germany, they closed the nuclear power plants.

01:07:06.620 | They have to keep coal burning.

01:07:08.300 | They said no to clean energy.

01:07:10.380 | And they said yes to fossil fuels.

01:07:12.220 | And we in California, we have a nuclear power plant

01:07:14.820 | called Diablo Canyon Nuclear Power Plant.

01:07:17.380 | 9% of clean energy.

01:07:19.420 | So why would we shut it down?

01:07:20.900 | - There's a new effort to increase the amount of energy

01:07:24.620 | obtained from nuclear power.

01:07:26.420 | It's a better form of energy

01:07:28.500 | because it doesn't have greenhouse gas emission.

01:07:31.020 | - It's crazy to shut down nuclear power plants.

01:07:33.460 | I can't emphasize enough.

01:07:34.660 | Please do not shut down the nuclear power plants.

01:07:36.620 | Please reopen the ones that have been shut.

01:07:39.660 | This is total madness to shut them down.

01:07:41.980 | - Total madness.

01:07:43.580 | - Think about where we were just, you know,

01:07:46.700 | like Maureen shared with us today, just 10 years ago.

01:07:49.780 | I mean, there was a moratorium.

01:07:50.980 | They were decommissioning plants.

01:07:53.060 | So I think we do have a lot of forward progress.

01:07:56.540 | And I think we need to come up

01:07:57.580 | with that statement of principles.

01:07:58.780 | No more decommissioning.

01:08:00.620 | Bring online the plants that we've decommissioned

01:08:03.060 | that are easy enough to bring online, right?

01:08:05.340 | Figure out whether or not,

01:08:06.700 | I think there's a startup maybe called The Nuclear Company

01:08:10.100 | that's trying to build six or seven of the AP1000s.

01:08:13.540 | You know, maybe there are some companies

01:08:15.060 | that we can get behind

01:08:16.420 | that are going to go cluster build

01:08:18.500 | some of the Gen 3 reactors.

01:08:20.260 | You know, maybe there are things the government can do

01:08:22.460 | to, you know, streamline that process,

01:08:24.700 | provide some credits, make that process work.

01:08:27.220 | And then I think, you know, letting the market work

01:08:30.580 | by removing some of the regulatory burdens.

01:08:33.020 | We've already done this through a lot of legislation

01:08:35.460 | at the federal level to let these Gen 4 reactors

01:08:38.180 | at least come online, experiment,

01:08:39.740 | see whether or not they're going to work.

01:08:41.940 | That feels like a pretty good solution.

01:08:43.580 | - I think it's tough, you know, on the NRC front,

01:08:48.100 | two of the links we're gonna provide

01:08:50.060 | are a presentation from the head of the NRC

01:08:52.700 | and a podcast with the head of the NRC.

01:08:54.980 | And one thing that becomes very apparent is like,

01:08:57.940 | he's like considers it a win that we've gone

01:09:00.220 | from a negative reduction

01:09:02.380 | to just keeping everything online.

01:09:04.940 | And we're sitting here staring at China going,

01:09:07.020 | why aren't we doing this?

01:09:08.300 | So they're just not in that mindset.

01:09:10.860 | And they've been around a long time.

01:09:13.140 | And I don't, I think there's red tape is red tape.

01:09:17.020 | And I just think that, you know,

01:09:19.220 | you're probably at a place where you might want to send

01:09:22.620 | a bunch of people off in a room and like zero base it,

01:09:25.940 | you know?

01:09:26.780 | - Well, I think this is, I mean, again,

01:09:28.460 | companies get built where markets are created.

01:09:33.140 | There's a lot of growth domestically in China.

01:09:35.500 | So there's a lot of this stuff coming online.

01:09:37.260 | - But they don't have the history of red tape that we have.

01:09:40.060 | - I agree with that.

01:09:40.900 | In South Korea, they're exporting.

01:09:43.140 | Well, we have export controls in the United States,

01:09:45.980 | which are preventing a lot of these companies

01:09:47.820 | from building and exporting.

01:09:49.020 | So like, again, we could change those export controls

01:09:52.180 | and perhaps build a domestic export industry,

01:09:55.580 | you know, for nuclear.

01:09:56.500 | Why do you do that?

01:09:58.100 | Because it builds the supply chains.

01:10:00.100 | It builds the resilience that benefits you domestically.

01:10:03.820 | - I'm a little skeptical.

01:10:04.860 | Like, I uncovered this document

01:10:09.660 | from the Idaho National Laboratory, I think it's called,

01:10:14.020 | which is a separate nuclear arm of the US government

01:10:18.420 | from the NRC.

01:10:20.220 | And they recommended 30 things to change about the NRC.

01:10:24.060 | And I'm sitting here thinking,

01:10:25.340 | "Wow, that's a lot of things you would change."

01:10:27.340 | And people can go find this document.

01:10:30.100 | But my guess is, even if Congress got behind this document

01:10:35.100 | and said, "You should change these things,"

01:10:36.580 | what would happen is, over five years,

01:10:38.980 | they'd change 20% of them.

01:10:40.940 | They wouldn't change all of them.

01:10:42.460 | And I don't think the impacts, we're at a 4X cost.

01:10:45.900 | I don't think you get there, you know?

01:10:48.300 | And so, you know, I mentioned this earlier,

01:10:51.060 | but Josh Shapiro, the Pennsylvania governor,

01:10:54.500 | who everyone praises because this bridge went down on I-95,

01:10:58.860 | and he got it back up in 12 days.

01:11:00.660 | - Yeah, how'd he do it?

01:11:01.980 | - He took all the regulation and lawsuits off the table.

01:11:06.820 | And so, we have to recognize that one of the reasons

01:11:10.020 | we can't build infrastructure

01:11:11.420 | in the California high-speed train thing is where it is,

01:11:14.580 | is because we've indoctrinated ourselves in red tape,

01:11:19.580 | both with regard to regulation and litigation.

01:11:23.260 | And if you want to go build

01:11:25.740 | this next generation level three plant,

01:11:28.060 | I think you've got to rewrite the regulation

01:11:30.180 | from zero ground up, like, make it thinner and tighter.

01:11:34.860 | And two, I think we've gotten to the point

01:11:38.740 | where we got to say, "This is so important,

01:11:40.380 | "you can't sue these people."

01:11:42.260 | Like, the government's doing this.

01:11:43.740 | - And that, to me, seems perhaps even more important, Bill,

01:11:46.380 | because in South Korea, their national regulation

01:11:50.140 | and the regulatory body that oversees it all

01:11:53.180 | is modeled on the U.S., okay?

01:11:56.620 | - So, that, to me, doesn't explain

01:11:59.300 | why we have this massive price differential,

01:12:01.540 | but I do think the litigation environment,

01:12:04.380 | all the other things,

01:12:06.060 | the fact that we have this dual level of litigation,

01:12:09.100 | and then, ironically, here at Diablo Canyon,

01:12:12.380 | you say, "Why, what was one of the leading forces

01:12:16.460 | "that caused this place to get decommissioned

01:12:18.340 | "in the first place?"

01:12:19.340 | It's groups euphemistically called Friends of the Earth,

01:12:23.700 | right, who sue them at every different stage,

01:12:26.340 | who turn public support against them.

01:12:29.380 | Ironically, right, if you decommission Diablo,

01:12:33.180 | you know what the state does?

01:12:34.780 | It imports more coal-produced power.

01:12:37.940 | - We know this.

01:12:38.900 | - And yet, Friends of the Earth are lobbying for this.

01:12:41.460 | - And that doesn't exist in China.

01:12:43.060 | - Right.

01:12:43.900 | - So, to a certain extent, you've built your own problem.

01:12:46.700 | - Well, listen, I would much rather deal

01:12:49.540 | with the downsides of a free system,

01:12:55.340 | where, you know, you have the market competing,

01:12:58.500 | but I will say that when you have this much regulation,

01:13:01.780 | right, the government has chosen to be involved.

01:13:03.740 | You no longer have an unfettered market, right?

01:13:06.220 | So market forces break down.

01:13:08.100 | Clearly, they've broken down here,

01:13:10.380 | and I think now we see the strategic priority

01:13:13.060 | to get, you know, to get behind this.

01:13:15.260 | It's been a heck of a learning.

01:13:16.900 | - Let me riff on one other thing you said

01:13:19.220 | before we wrap up.

01:13:20.100 | On the SMR front, I like your idea

01:13:23.140 | of these people getting together.

01:13:24.500 | You know, we've talked about Facebook's

01:13:26.660 | Open Compute Project, where they open-sourced

01:13:29.620 | all the elements of their data center,

01:13:31.700 | and we heard from Maureen that a lot of these operators

01:13:35.180 | get together and share best practices,

01:13:37.420 | and it strikes me that creating an IP-free world

01:13:42.420 | for these people to live in is beneficial to the utilities.

01:13:48.300 | It should give them more confidence in what they're doing.

01:13:51.140 | I wonder if, I ask all the AIs,

01:13:54.700 | has anyone tried to commercialize

01:13:57.580 | the learnings of the Navy, and they said no.

01:14:00.660 | Everywhere else said no. - In the SMRs.

01:14:02.340 | - And so maybe there's an opportunity there, right?

01:14:05.220 | The government, why not take some of the--

01:14:07.260 | - That would be the coordinating function

01:14:09.100 | if the government could create kind of that

01:14:11.260 | open-source standard for the AP1000, right?

01:14:13.980 | - Or for the SMR one, maybe,

01:14:15.460 | by leveraging what's been done in the Navy

01:14:18.340 | and maybe getting these hyperscalers behind it,

01:14:21.180 | and maybe that's a mini version of a Manhattan Project,

01:14:24.460 | but boy, it seems like there's an opportunity there,

01:14:28.340 | and the reason, and people will be very upset

01:14:33.340 | that as a capitalist I'm suggesting this,

01:14:35.540 | the reason to make it IP-free is to get everyone

01:14:39.300 | working on the same platform,

01:14:41.120 | to remove single-source dependency risk,

01:14:43.680 | and to get the utilities confidence

01:14:46.460 | that this thing's gonna be successful

01:14:48.820 | and gonna go forward, and to get everyone behind it.

01:14:51.540 | So do the Linux of SMRs.

01:14:54.980 | - And by the way, again, this is about buying time, right?

01:14:59.980 | Like if we telescope way out,

01:15:03.140 | and I think Elon's thought about this as much as anyone,

01:15:06.740 | he said ultimately the sun's the source

01:15:08.620 | of all of our power, right?

01:15:11.220 | The problem is we don't have the technologies today

01:15:13.820 | to store it as efficiently as we need to

01:15:16.420 | in order to provide all of our energy, okay?

01:15:18.580 | So I don't know whether it's 25, 50, 75 years,

01:15:21.780 | but we're going to have to bridge these technologies.

01:15:24.580 | We have a clean energy that we invented, right,

01:15:27.840 | that currently is powering, you know,

01:15:29.700 | it's 20% of our total base load power,

01:15:32.140 | it's 50% of our clean energy.

01:15:33.920 | If there's one thing I've taken away

01:15:35.740 | from what we've studied over the course of the last 10 weeks

01:15:38.580 | is that we have 94 plants in this country,

01:15:40.740 | and we should not be decommissioning any of them.

01:15:43.220 | They all have much longer useful lives

01:15:45.940 | than I ever thought about.

01:15:47.100 | At 60, 70 years old, they still run safely

01:15:51.260 | provided that you do the proper maintenance

01:15:53.620 | and all this stuff to these plants,

01:15:55.500 | which frankly is new news to me.

01:15:57.820 | Yeah, me too, me too.

01:15:58.660 | And I think terrific news.

01:16:00.180 | And it's also very clear that we can build more.

01:16:02.420 | I mean, Vogel, yes, we had big cost overruns,

01:16:05.260 | but we have the capacity in this country

01:16:07.180 | to build more of these Gen 3 reactors.

01:16:09.140 | We have a lot of vibrancy and activity going on

01:16:11.380 | on the Gen 4 side.

01:16:12.740 | We've got a lot of bipartisan support now in Congress.

01:16:15.660 | And so I come out of this a little bit more optimistic,

01:16:19.700 | but in the state of California,

01:16:21.180 | we are sitting here at Diablo.

01:16:23.260 | I would love to see Governor Newsom

01:16:25.780 | in the course of the next 24 months

01:16:28.320 | announce that he's gonna extend the license here

01:16:31.700 | for another 15 years.

01:16:33.140 | I mean, this seems to me to be a crown jewel

01:16:37.900 | of California's leadership on things like AI,

01:16:41.900 | our ability to produce this type of energy.

01:16:44.540 | It makes no sense.

01:16:45.380 | Take this off the table

01:16:46.940 | and let's get to working on what we need to do next

01:16:50.380 | in order to reduce our dependency on fossil fuels

01:16:53.300 | and frankly, drive up the power generation in the state

01:16:57.620 | that we're gonna need to power the economy and AI.

01:17:00.900 | Yeah, and I would urge those that care

01:17:05.460 | that if you want to really meaningfully

01:17:10.500 | keep up with China and Korea,

01:17:12.820 | that one, we should quit vilifying them

01:17:15.460 | and start respecting the fact that they're executing

01:17:18.340 | at a level above and beyond us.

01:17:20.700 | And then two, consider some type

01:17:23.620 | of Manhattan Project-like approach

01:17:27.580 | where you get out of the current environment,

01:17:29.900 | you get a lot of smart people thinking

01:17:32.780 | from first principles.

01:17:33.940 | You maybe borrow from what the Navy's done

01:17:37.420 | and consider open source or IP-free solutions

01:17:42.220 | to get everybody on the same page.

01:17:43.700 | Yeah.

01:17:44.580 | Well, next week or the week after,

01:17:46.540 | we'll be back to regular programming.

01:17:48.660 | But this is one of the things you and I wanted to do.

01:17:50.620 | We wanted to take some deep dives on some topics

01:17:53.060 | that interested us along the way.

01:17:54.540 | So thanks.

01:17:55.380 | And I would encourage people that disagree

01:17:57.900 | and I'm sure many will to reach out.

01:18:01.060 | Oh, you're gonna hear from 'em.

01:18:02.260 | I know, I know.

01:18:03.100 | You're gonna hear from 'em.

01:18:04.300 | Share your point of view and we will bring that data

01:18:08.460 | into the discussion.

01:18:09.420 | But on the flip side,

01:18:11.180 | I wanna see more of those "Game Day" posters

01:18:13.540 | saying, "I love nuclear."

01:18:14.620 | I'd love to see people energized around the topic.

01:18:17.620 | I'd love to see the presidential candidates

01:18:19.300 | talking about the topic.

01:18:21.420 | Well, I'm headed to Ann Arbor this weekend

01:18:24.380 | where I suspect "Game Day" will be.

01:18:27.060 | Will we see some more signs?

01:18:28.660 | So maybe I can show off with the signs.

01:18:31.860 | We'll see if I have time to do that.

01:18:33.540 | All right, man.

01:18:34.380 | Have a good time.

01:18:35.220 | Great seeing you. Yeah, take care.

01:18:36.060 | Bye-bye.

01:18:36.900 | (upbeat music)

01:18:39.500 | As a reminder to everybody,

01:18:47.340 | just our opinions, not investment advice.

Ep 15: Inside Diablo Canyon Nuclear Power Plant | BG2 w/ Bill Gurley & Brad Gerstner

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