Q1 - Entrance into the Energy Sector

Bret Kugelmass: Where did you grow up?

David Blee: David Blee was born in the remnants of the British Empire in Karachi, Pakistan, as a son of a foreign service officer. His family then moved to South Africa, and then spent 6 years during his formative years in India. After Blee moved to Washington, D.C., he attended college in Pennsylvania and cut his teeth in political campaigns on Capitol Hill. His last stint on Capitol Hill was as chief of staff to Congressman Connie Mack, who later went on to be a Senator in Florida. As he was coming off a campaign, Blee was given an appointment through the White House as a director of public affairs to the Department of Energy (DOE). He later went on to head up director of external affairs where he was in charge of congressional and public affairs. At this point, Blee was completely immersed in energy; one of his first issues in the nuclear energy space was Yucca Mountain. Blee was drawn to the energy sector because he recognized early on that it was very important to everyday life, as well as the economy and national security. Blee also dealt with natural gas electricity market deregulation and concerns about nuclear plant shutdowns.

Q2 - Management of Depleted Uranium

Bret Kugelmass: What was it like during the early talks of advanced reactors?

David Blee: Twenty years ago, talk of advanced reactors was very government and National Lab centric, creating a downselect environment where one design is selected, as opposed to todays’ entrepreneurialism. At the point, the administration was unsure about its commitment and advanced reactors basically disappeared. At one time, there were 57 reactors at Idaho National Labs. David Blee took the plunge into nuclear energy full time when he became executive vice president of NAC International, a technology and services company. The front end group was focused on the whole fuel cycle. The technology side was focused on the back end of the system and the technology systems that manage spent fuel. Spent fuel was previously stored in pools to cool off, but eventually decided to re-rack the systems, since the government was supposed to pick up the spent fuel in 1998 under contract. The at-reactor storage outside spawned that industry. Nuclear fuel is not a gas or liquid, but is the form of a rod. Companies sued the government for storage costs that they shouldn’t be paying for and now the government is paying $5 billion a year for on-site storage. Most folks also didn’t know they were signing up for 100 year storage at their sites. Maine Yankee is an orphan site, which has already been decommissioned and has no others nearby. It is empty except for 64 canisters sitting in storage and the site must be maintained and secure, paid with government money. A repository is needed at the end of the day, whether you recycle the material or not. Depleted uranium still has commercial value; some estimates of the value of depleted uranium from the uranium enrichment facility in Paducah is worth $5 billion dollars. Yucca Mountain, interim storage, and technology should be pursued to address spent fuel.

Q3 - United States Nuclear Industry Council

Bret Kugelmass: Can we invest in technologies to reduce or eliminate nuclear waste instead of invested so heavily in Yucca Mountain?

David Blee: David Blee believes in closing the nuclear fuel cycle to reduce or eliminate nuclear waste. There are currently 70,000 metric tons of spent fuel in the U.S., which could be placed in canisters and stored on a plot of land 40 acres in size. The U.S. is produced 2,000 tons each year from the reactor fleet. It will take 50 years to ship all the spent fuel to a central location. Consolidated storage with staging grounds, a reactor, and recycling could benefit the reduction of inventories and put them to use. The U.S. Nuclear Industry Council is a business consortium focused on opportunities in advanced nuclear and global markets from a hybrid supply chain perspective. The group started with a back end fuel cycle focus when it looked like Yucca Mountain was going to get going in the early 2000’s. In 2009, the Obama administration terminated the Yucca Mountain program, but the general consensus of the group was that nuclear remained important. There was a lot of competitive energy in the U.S. because of cheap gas, and Fukushima also affected the nuclear renaissance. Blee’s group decided to expand the focus on the resurgence of American nuclear energy and propelling technology to extend the current fleet and support innovation. The supply chain must be ready for nuclear and needs to stay the best in the world. The U.S. had atrophied in terms of their ability to construct big reactors, only constructing 65% of the big reactors domestically since the U.S. lost its way in manufacturing. Small reactors will be the nuclear supply chain renaissance as they will be factory assembled.

Q4 - International Nuclear Market

Bret Kugelmass: Will we have trouble competing in international nuclear?

David Blee: Advanced technology is the game changer and market disruptor for international nuclear. The AP-1000 pressurized water reactor (PWR) is the best big reactor, featuring passive safety features. China, Korea, Russia, and France are all pushing enhanced nuclear designs. The U.S. is still using the same technology the U.S. Navy decided they wanted to use years ago for their ships, submarines, and aircraft carriers. There were other designs that were more innovative that were less appealing to the Navy. The Russians are using a build on operating approach, where they come in and build it, take a 49% share, operate it, co-own it, and bring all the project financing. U.S. energy companies have to go to market where they must win on best value. The U.S. needs to remain the go-to country for nuclear energy, meaning advanced reactor innovation and a versatile test reactor at Idaho National Lab. Other countries want the American supply chain because it runs the best plants in the world, operates the best safety culture, and has the deepest and widest supply chain. Power companies’ first focus is job one, which is the current fleet and revenue. This is a big disadvantage to the international market, since the utilities do not usually go to the international market.

Q5 - Nuclear Program Financing Challenges

Bret Kugelmass: What needs to change in the U.S. to keep competing more effectively from a financing perspective?

David Blee: Financing across the board, in terms of venture capital money, has at least a ten to fifteen year payoff. The Export-Import (EXIM) Bank needs to get back in action. A prerequisite for any bid is whether you have an export-import bank that provides financing. EXIM bank right now is not fully staffed up right now due to political reasons. The last Congress tried to kill the EXIM bank, but the President has come around in terms of recognizing the return on investment. Getting OPEC, the Overseas Private Investment Corporation, involved is also important and they are redlining nuclear projects right now. There will still be a desire for big plants globally, such as a six-pack in India and an eight-pack in China. The real game changer to the financing issue is to have small reactors, which are maybe $1-3 billion dollars which is easier to acquire funding for. As a rule of thumb, when you start to get volume orders, there is a 20% reduction in cost. Big plants, in some respects, are one-offs in the sense of assembly at the site and not being as scalable. Fleet extension is important, but the new plants should be able to run 100 years. Wind and solar are only going to run 20-25 years and are treated the same as nuclear, even though the asset will be there for 80-100 years. Getting a loan guarantee program back on track is helpful to both state regulators and the finance community. People should go see a nuclear plant and go inside to see how it operates. A relatively small footprint produces the same as thousands of windmills or miles of solar collectors. Nuclear needs to be socialized and demystified to break the code to the financial community.

Q6 - Future of Nuclear

Bret Kugelmass: What are some of the more global forces at play and where do we see new nuclear markets emerging?

David Blee: New nuclear markets are emerging in Asia. Right now, there are roughly 60 plants being constructed around the world and 150 more on the drawing board. 1.2 billion people currently don’t have electricity. Electric vehicles is electrification of the transportation sector. Saudi Arabia will need massive amounts of electrification for their water, in terms of driving their desalination plants. Vietnam, Malaysia, and Indonesia are still looking to realize the value of nuclear energy. There is a lot of desire for self-sufficiency, and having baseload nuclear energy gives a lot of confidence for your economy 24/7. David Blee is very optimistic about the future of nuclear and is encouraged to see the advanced nuclear community mobilizing, as well as a desire to be the world leader in the supply chain. People want clean energy. The pipeline must be filled for the 2020’s and Vogtle must be completed. There is potential for small modular reactor (SMR) deployment and completion of Bellefonte plant in Alabama. Replacement for the existing nuclear fleet will happen in the 2030’s. Nuclear is a dedicated industry and the people are committed to putting their heads together when facing a challenge.