Chris Gadomski

Lead Analyst, Nuclear

Bloomberg New Energy Finance

May 24, 2021

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Ep 311: Chris Gadomski - Lead Analyst, Nuclear, Bloomberg New Energy Finance
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Bret Kugelmass
We are here today with Chris Gadomski, who is the Lead Analyst, Nuclear at Bloomberg New Energy Finance. Chris, welcome to Titans of Nuclear.

Chris Gadomski
Thank you. It's a pleasure to be here.

Bret Kugelmass
It's a real thrill. I remember, we've been on industry conference calls for a few years now, it's always good hearing your voice. You're one of the people who started reporting on this sector, I think, before anyone. We'd love to hear about that and how you got tuned into it. But before we do that, I want to go all the way back to the beginning, talk about your early life, how you got interested in journalism and energy. Just start us at the beginning.

Chris Gadomski
Years ago, before you were born, I went to a gas station with my father and they raised the price of gasoline from 27 to 28 cents a gallon. I remember distinctly that day and that caused me a lot of anxiety. I started to worry, even at the age of five or six, about rising energy prices. So, that was the first day that I recall really starting to think about energy. Several years later, in the fourth grade, we had a science project. And what did I do? I went ahead and built a wind turbine for the science project in class and sort of reinforced, slowly, my interest in energy market systems, things like that and what the possibilities were. Then, in college, I had witnessed the first oil shock in '73, '74 - I'm really dating myself over here - and I can remember the price of gasoline going through the roof very, very quickly, and how, at that time, there was a huge interest and response to solar energy as a way out. So, that kind of got me interested in what was going on globally. I was in the Navy ROTC program at the college I went to and they take us to various places to go ahead and see what type of career we want to have in the Navy. They took us down to Pensacola to go fly airplanes. And they took us to Groton, Connecticut, to go ahead and explore being a nuclear submarine officer. That was my first exposure and the first contact with nuclear reactors, back when I was a junior, or so, in college. We went on board these brand new boats and fooled around with Geiger counters and there were two reactors on there. So, I got a sort of inkling of what was going on with nuclear power space at that time. One of the exercises we did is they put us on a simulator and they gave me the con. I was driving a nuclear submarine in a simulator and managed to go ahead and plunge the nose of the nuclear submarine into the mud. And that was the end of my nuclear submarine career. A few months later, upon graduation, I got my orders from the Navy and the Navy has kind of a sense of humor about these things. They said, Well, Chris, you're not going to be driving nuclear submarines, but how about driving oil tankers around the Navy? So, I ended up getting my boots black - as they call in the oil industry - by driving or being an officer on naval oil tankers driving and picking up fuel in the US, taking it to Mediterranean, refueling fleets, and got a pretty good exposure to what was happening with the oil fossil fuel industry at the time. Having had that being set up in '73, '74 with the oil embargo. So, I finished my time in the Navy, worked for a marketing research firm that specialized in defense areas and they introduced me to these things called commercial lasers. So, if you were back in the early 70s or so, commercial lasers were kind of, that was before PCs really and people didn't really understand and I was forecasting millions and millions of commercial lasers being used in printers. But cousins to commercial lasers are electro-optic devices, including photovoltaics. One is electricity in, light out. The other one is light in, electricity out. I got sort of interested in doing this, professionally researching this, this whole area and then got kind of surprised a few years later when we had the Iranian hostage crisis. I was driving by, 150 cars was the longest line of cars waiting to buy gasoline. With this whole interest in electro-optics, I sort of became a solar energy junkie at the young age of 26, 27 years old. And that was really my introduction into the energy space and we're getting to nuclear here.

Bret Kugelmass
This is fascinating, take as long as you want on this path, because this is something, I have to pry this out of most people. But I'd love to hear just it is actually amazing that it's so clearly thought out in your mind that you've obviously been able to have a chance to reflect on this, because most people don't know how they got from point A to point B. But yours is an incredibly interesting pathway.

Chris Gadomski
Right, so I was then doing some research in electro-optics, photovoltaics and got sort of really hooked on to the whole thing, especially when oil prices went through the roof, and started doing some consulting in the industry after I was fired from my job as an analyst at this marketing research firm and said, Okay, now's the time, I'll go on my own. So, I did some consulting for several of the PV companies and I also tended a lot of the solar energy conferences a time, including going to Australia to the 1983 Solar Energy Conference and sort of got kind of immersed in all of this solar energy stuff and met a lot of people and talked to a lot of people about the promise that solar energy was going to have. That was all good until 1985 when they eliminated the tax credit for solar in the United States and the Saudis said, Hey, wait a second, we can't have all this interest in solar energy. So, guess what we're gonna do, we're gonna start pumping oil like crazy. And they started pumping oil like crazy. Oil went down to record low prices and interest in solar in the United States, with the result of lower oil prices and low tax credits, sort of disappeared. I was sort of scratching my head wondering what to go ahead and do, but not before I managed to hook up with the United Nations and the United Nations sent me to Egypt for three or four months as an advisor to the Egyptian government on solar energy. If you look at the rooftops in Israel, you look at the rooftops in Cyprus and look at the rooftops in Cairo, there's a big difference in that there is no solar energy in Cairo, plenty in Israel and plenty in-

Bret Kugelmass
And what accounts for this?

Chris Gadomski
Well, that's a result of the pricing of electricity. It's subsidized in Cairo and it's unsubsidized and Israel and Cyprus. So, there's an economic incentive for someone as a homeowner to go ahead and put in.

Bret Kugelmass
Why do the government subsidize the fuel directly? Instead, why don't they let the market move around a little bit to find themselves the best, lowest cost energy source and if what they want to do is encourage economic growth, like find somewhere else to inject the cash?

Chris Gadomski
Yeah, I mean you're going deep into politics in a place like Egypt. They would have riots when they raise the price of bread, for example, and it's cheaper to go ahead and use a loaf of bread in Egypt at the time to clean off your table than to buy a paper towel and clean it off that way. So, it's a little bit over there. But the point of all of this was that I started getting really into energy markets and what pathways make sense for a variety of different countries. When I went to Egypt, I had one manager at the UN working for the United Nations Development Program. When I came back, I had another one. And this gentleman, Dimitri, is his first name, was someone from the former Soviet Union, and fluent in five or six languages, you get the drift of where I'm going with that station at the United Nations. And he and I became close friends. So, he decided that, because we're such close friends, that he was going to send me to Somalia. I went a few years before Blackhawk Down and I spent a month in country advising the Somali government, through the United Nations offices over there, about how to go ahead and deal with what their energy problems are. They would have 80 or 90% of their generating capacity down at any one time. Again, it was trying to sort of work within the country. So, I became pretty familiar with some pretty extreme markets in Egypt and in Somalia about what goes on and the challenges that those countries face as far as developing a robust electrical power infrastructure.

Bret Kugelmass
It just seems to me that, the lessons that you're learning - I understand you learned it through firsthand experience and jumping around the world - but it seems to me, leaders of countries should have energy pricing stability as part of their bedrock policy, just knowing how much it affects everything else. You think we would think about energy security with the same degree that we think about other types, like national security from like terror. You'd think that there would be entire departments stood up with the sole intent of maintaining like stable energy prices.

Chris Gadomski
You would think that there, and in some places, there's an attempt to create that. But what you desire to have happen, sometimes policy intent does not trade translate into actual execution of strategy. For example, you could go ahead and fast forward to the United States a few years. There's no government policy that's going to incentivize adequately the construction of nuclear power plants. And no matter what you did, you have to have a fundamental demand for electricity and a recognition that nuclear energy is going to be the solution to your energy supply problems. So, any government policy is going to sort of fall short of being a very, very effective way of going ahead and delivering large sources of clean carbon electricity. It's a very, very interesting dynamic with what's going on.

Bret Kugelmass
Right. But France caught wind of this pretty early and that's why they built out their nuclear fleet, because they prioritized. I mean, they had a reaction to the oil crisis, like you did. But as a country, they made a very clear, strong decision, like we are not putting up with energy security issues again.

Chris Gadomski
Yeah. And the saying in France was, No oil, no gas, no choice - we have to go nuclear. And that was one of the things that they went ahead and did. But the difference was that that was very much a government embrace of the need to sort of, Hey, we're not going to fool around any here. This is what the strategy has to be. And it's a very, very successful strategy. 75% of electricity comes from from nuclear and it's much cheaper electricity than anywhere else in Europe and carbon emissions are very, very low.

Bret Kugelmass
It drives me crazy. So, I came to the nuclear industry pretty late. You've been following it since the beginning. Like how come others didn't see the model of France and how come it wasn't copied in at least 6, 7, 8, 10 countries exactly as France did it, like literally to the power plant. Just hire EDF to go to your country and build 40 of them? How come that wasn't done?

Chris Gadomski
I think perhaps the first stumbling block to that type of strategy evolving, was perhaps the hysteria around Three Mile Island, which happened at the late 70s or so, where France really ramped up during the 70s and early 80s or so. So, all of a sudden, now you have this fantastically scary thing called radiation and that has caused a lot of issues. And secondly, we have to understand the origins of nuclear power, and that it was something that was very, very secretive when it was developed and so, there was this aura of secrecy around the nuclear power industry, which led to certain sort of lack of transparency and mystery surrounding all of this. One of the things that I tried to do, or have tried to do in the last couple of years - because in addition to being an analyst at Bloomberg, I also teach graduate students at New York University - and so, I would routinely take, in my course on nuclear power, I would take graduate students to the now closed - unfortunately - Indian Point nuclear power plant, and we would go in to tour the full facility and as a special treat, we would go ahead and go into the spent fuel area. The first time I watched, I went in there, it was fascinating to have 38 years or 39 years of spent fuel sitting at the bottom of pool 15, 20 feet away from me, and was kind of thinking, Boy, that's all there is.

Bret Kugelmass
Yeah, I know, I know.

Chris Gadomski
Every single time that I would go back there, I would take the students with me and you take like, 10 of them at a time or so or eight of them at the time because of restrictions and I would watch their eyes and you could literally see in their eyes that oh, my god, what is this? This is all there is? Where was the big story about this? So, there again, because of the secrecy, because you want to keep that stuff somewhat contained and controlled, people don't understand that spent fuel is much less of a technical problem than it is really a political and social problem.

Bret Kugelmass
Yeah, I know. It's like, every time someone says, Well, what about the waste? The only answer I see that is fitting is like, Yeah, what about it? Like what waste? Yes, okay, some of it exists, but on a per energy basis, there's no waste, there's no waste on an energy basis.

Chris Gadomski
Yeah, it's absolutely true. I've been to nuclear power plants on every continent in the world of, save Antarctica, and visited them and got a firsthand look at what they do over there as far as safety is concerned, or whatever. And yeah, you have unfortunate developments like Chernobyl, and you have unfortunate developments like Fukushima, which I've been to, and it's tragic. As a result of this the industry is fighting a very, very difficult battle, upward battle, because people love to hate nuclear power, as much as they love to hate - what they used to call the tar sands- now, the oil sands in Canada. I used to joke, what is the most hated technology in North America. So, nuclear power or the oil sands? And I went up to the oil sands, investigating the opportunity of reducing the carbon footprint of producing oil from the oil sands with nuclear power and all of a sudden, people realized, well, Chris, you're combining two of the most hated technologies approaches. And perhaps that's something that we're not really ready for, but we should be ready. That's the third largest deposit of oil in the world. And it's going to get used and you might as well use it and develop it in the most responsible way that you possibly can.

Bret Kugelmass
It's so funny, but you kind of get where they're coming from. I mean, I as a big climate advocate, big nuclear energy advocate, even I, that idea was presented to me years ago. And I also felt this guttural reaction against it. But, once again, you got to act like an engineer sometimes and just look at the math and look at the reality and be like, no, there's actually an opportunity to do some good here. But yeah, the, the analytical side does come into conflict with the emotional side sometimes.

Chris Gadomski
There's no shortage of that. So, we never really got involved how I made my transition to nuclear power.

Bret Kugelmass
Please, please.

Chris Gadomski
So, Dimitri, my manager at the UN, was very dismayed .Now it's late '89 or so and the Berlin Wall is falling down and he is a little bit scared about his future as a representative of the Russian government, Soviet government in the UN. We tried talking about possible ways for him to exit from a state employee to a private sector, so, we talked about producing some reports because, now that the Berlin Wall had fallen down, there were business opportunities in the former Soviet Union - Poland, Czech Republic, Slovakia, Czechoslovakia at the time, and Hungary. We published as an independent entrepreneur, myself, I published several reports about the opportunities for US businesses in the former Soviet Union - Poland, Czech Republic, Slovakia and Hungary - and a lot of that was, Hey, you got a lot of nuclear power plants over there that needs some help, needs some refurbishment, things like that. That was my first look as a market analyst at nuclear power infrastructure in detail in places where there was a lot of nuclear power. I got kind of pretty interested in all of that. We published that and I kept that in the back of my mind. Then, several years later, I had a chance to go to Yucca Mountain. Again, I was pretty much migrated from a solar guy into an energy markets guy and wrote for several publications. When I went to Yucca Mountain, I just said to myself, How is it that we could spend $6 billion on an asset to go ahead and bury spent fuel that we're not going to even use it? I mean, what went wrong? At what point did the wheels fall off the truck on this one? I just was kind of really intrigued and I went inside and looked at all of this and became pretty, pretty interested in what was happening in the nuclear power space. At the time, a good friend of mine, Michael Liebreich - who I didn't know at the time, but I interviewed while I was writing for Project Finance Magazine - was jumping on the bandwagon, or leading the bandwagon, about this rush to renewable energy. Hence, after talking to him and interviewing him about what New Energy Finance, the precursor to Bloomberg New Energy Finance was doing, I wrote articles about solar development, wind development, biofuels development, and had a conversation develop report with Michael Liebreich. At the time, he was expanding his business and he asked me if I could contribute to his business. He did so because we had an argument about the feed-in tariffs, the policy of the German nation to go ahead and promote solar energy and I just put solar panels on my rooftop - which I'll come back to in a while - and paid a lot more than they were paying in Germany, and back and forth and realize that this is something that was pretty interesting dynamic. The fact that I had solar on my house in California and the fact that I was doing some solar development at the time intrigued him and he says, Listen, can you join our team? I said, Well, you already have a pretty strong solar team. He says, Yeah, we're not interested in solar. We're interested in someone to follow nuclear.

Bret Kugelmass
Why were they interested in that? Was there something else that was pushing that interest behind the scenes?

Chris Gadomski
Well, I think that they were, at the time, what had transferred or what has happened in the preceding 10 or 15 years and the first wave of sold ended in the mid 80s. And now, the second wave was coming 15 years later and it was driven by different things. The first time it was driven by the expense of fossil fuels. The second time, it's being driven by the increasing global awareness that there's something going on with that climate and maybe we ought to look at things to think about it. They were really interested and focused on renewables as a solution, but they had the wisdom to sort of think, Well, we need some old white-haired guy to sort of talk to all the other old white-haired guys in the nuclear power business to establish a rapport. And they said, Can you go ahead and join our team and focus on nuclear energy? That was around 2008, 2009 that I started doing that.

Bret Kugelmass
That was a time when the nuclear industry was talking about the Nuclear Renaissance, quote, unquote, right?

Chris Gadomski
And he, Michael Liebriech, was very, very smart to recognize that there was an opportunity for nuclear to sort of play a role, and they used me more as a defensive mechanism to go ahead and to make sure that we had an understanding what is going on in global nuclear markets, global energy markets rather, and they we had somebody who could cover the nuclear space. That person was me and and I've been fortunate enough, as a result of that, to travel all over the world, visit nuclear power plants all over the world, and to get an understanding of how nuclear can fit in to the energy portfolios of the future.

Bret Kugelmass
Can you draw a contrast between two different parts of the world and how what the nuclear plants might look like, or how they're run, or just the experiences going there? What would you say are polar opposites? Is there one country here and another country there or are polar opposites? Or even two totally different experiences that you can compare and contrast?

Chris Gadomski
For example, a very easy one to go ahead and make is what's going on in China and in the US, for example. One is a very well developed electrical power infrastructure in the US, not a lot of room for future energy demand growth. Ha ha. Electrical vehicles aside. China is a country where you will have tremendously rapidly growing demand for electricity. They have lots of coal there and when you drive around China, you see piles and piles of coal all over Beijing and other places in the country. They pile the cabbage right next it, you know, the bok choy cabbage that they eat too, so it's, you know, just take your pick. So, China has to sort of, in its industrialization, it needed to sort of develop a portfolio of technologies. Coal was that at start, but they realized that they needed to go ahead - and very smartly - have something besides coal, so, the nuclear was something that they had a very consistent national strategy. We're going to go ahead and buy plants from countries all over the world, try to go ahead and understand what is the best aspect of each type of technology and every single type of vendor has sold into the China market. They look at that, watch that, see that, and then they go ahead and take the best of that and try to go ahead and develop their own thing. So, China will continue to develop large nuclear power plants for the foreseeable future. In the long term, they'll go to a fast reactor. There's a lot of interest in fusion that they talk about as well in the future. But for the meantime, they're going to be building to sort of ramp up a variety of different technologies to go ahead and all of a sudden try to tamp down their carbon emissions. Contrast with the US where we don't know how to build nuclear power plants anymore. At least we don't know how to build a nuclear power plants in an economic way. The Chinese send people to United States to watch how well we operate nuclear power plants, US sends people to China to see how well they go ahead and build that. They'll build six one gigawatt reactors on one site and so, the whole team can go through there, so, they can build them for a fraction of the cost.

Bret Kugelmass
Yeah, the efficiencies are incredible when you just build the same cookie cutter thing over and over and over again.

Chris Gadomski
Which is what they do. I don't see us building any more large reactors in the Americas. There's a reason for that and that is, we don't have the tremendous ramp up in demand that China has, for example. We see more or less a flattening of the demand as a result of energy efficiency advances, deployment of solar panels, etc. So, it's a different marketplace over here. What I see the big opportunity in the United States, as opposed to the big opportunity for large reactors in China, is developing small modular reactors in this country with advanced reactors in this country that address the increased safety concerns, the intermittent concerns of the renewable fleet so that, when the wind is not blowing, it's much easier to go ahead and ramp up a small reactor or take down a small reactor than it is over here. So, you have the two largest energy markets in the world, China and the US; one will continue to develop large reactors, because they know how to go ahead and build them effectively on time on budget, whereas in the United States, we don't know how to do that anymore and the need is different. There is a need for carbon-free generation that complements the renewable energy industry, because politically, the renewable energy industry has beaten the nuclear industry hands down and they're driving the ship, and we're pulling her along the nuclear power industry.

Bret Kugelmass
You mentioned SMRs and, if we were to kind of trace back the history of who's talking and looking and thinking about SMRs, you're one of the first. I also got to interview Steven Chu and, around the same time, that 2012 timeframe, he started catching wind of this space as well. That's a long time ago. How come we have yet to see an SMR built in all of that time?

Chris Gadomski
Yeah, it's a very interesting point, and I think that is a lack of strong government policy. They've failed, we failed in that category and can give you a perfect example. In 2010, we have an energy summit in London with New Energy Finance, Bloomberg New Energy Finance - it was just right after the acquisition - and I had a speaker of an SMR company in the US, I had two speakers of the SMR companies on a panel, and during that same conference, someone talked about the fact, Hey, guess what the Russians are doing, the Russians are building a floating nuclear reactor, they're gonna operate it north of the Arctic Circle. Ha ha ha, that's pretty funny. So, 10 years later, at the end of 2020 - they were actually generating electricity at the end of 2019 - north of the Arctic Ocean with a floating nuclear reactor. Now, the technology is not necessarily innovative, but it's a small reactor and it's deployed and generating electricity. At the same time, the representatives of that SMR company in the US have made the announcement, at the same time, that they are still 10 years away from delivering.

Bret Kugelmass
This drives me insane. So, why is that? Why is that there was a tremendous amount of government support for nuclear power in Russia and-

Bret Kugelmass
How much government support actually went into that floating ship? Like one billion, two billion? I mean, it can't be that much compared to how much money we dump on anything here.

Chris Gadomski
I think they'll never tell you what the exact cost of that is. I'm sure they flailed around, but they decided that this is something that makes sense for them, given the Arctic, the opening up of the Northern passage. So, for them, it was strategically something for them to do. And what are you gonna buy from Russia? You're gonna buy vodka, caviar, some tanks perhaps, and nuclear power plants, whereas-

Bret Kugelmass
The export market they see it as. I see.

Chris Gadomski
They saw something and this is something they did, and there's a need for that. You know, I remember when I was visiting the United Arab Emirates and looking at the Barakah Plant, I met people from Sudan, and the people from Sudan came up and says, Hey, listen, we'd love to have a US nuclear reactor, small reactor, can you tell us when one's going to be ready? I don't see that coming soon? Don't hold your breath. So there's a tremendous demand for these small modular reactors, because they can't swallow the price tag of a large reactor. There's also very real ambitions to have a development of renewables complemented by carbon-free nuclear in many small countries of the world. The Russians have said, Hey, listen, you want one? Right here, we'll just make the next one for you. They have an operating reactor and they have the financial resources to go ahead and finance one to go ahead and to build that. The advantage of a floating reactor is they don't pay the bills, they turn around and float away, pull it away. There's a lack of coherent strategy. I remember presenting to the Department of Energy years ago and telling them, Listen, you are got fooling around. You've got a billion dollar budget for nuclear. If you want to be serious about it, increase it to $5 billion and get some reactors built. Once advanced reactors - and I consider small light water reactors an advanced reactors, because the innovation in the size -then you will open up many, many opportunities, and people are dying to buy American, but they're not dying to buy a $25 billion AP-1000s, because they just can't afford to do it. There's slow, slow molasses steps being taken for us to go ahead and do that, but it's not happening fast enough.

Bret Kugelmass
But why does it require so- I still don't get why it requires so much government support. We have private companies that in the Fortune 500 that have a balance sheet that really could support the R&D for- heavy industrial companies like Caterpillar that produces diesel generators and sells them around the world. Their R&D budget is big enough that they could get into the SMR game. Then they're probably 10 or 20 others. They don't see this opportunity? They're energy and industry players., why aren't they just coughing up the money themselves and just doing it like most companies do?

Chris Gadomski
It's not so much the the R&D funding that's lacking, it is the purchase orders that are lacking. Westinghouse is a perfect example and said, Hey, listen, we're gonna develop these small modular reactors, but guess what, no one came up to buy any. The same story at mPower, they didn't see a market for that.

Bret Kugelmass
Isn't that because of the price that they were trying to sell it at? And, to me, these shouldn't cost that much. An SMR should be cost competitive with any other power source. I mean, for god's sakes, your fuel is practically free, and then the rest of it's just a power plant.

Chris Gadomski
Yeah, I 100% agree. But what is the obstacle? The obstacle is, when I look at an energy project, I sort of define five variables, now six variable, and the five variables will be, it's what I call the STEEP analysis. There's technological, there's social, technological, economic, environmental, and political aspects to the project. And I add a W for water, because water becomes a very important thing. So STEEP plus W is the analysis. So, you can have, in looking at building a nuclear power plant and natural gas is very, very cheap, let's go ahead and guzzle the natural gas, because the economics is trumping that. Why would you go ahead and try to build a nuclear power plant first-of-a-kind, when you can get a beautiful, GE combined-cycle generator built in 18 to 24 months? No risk, natural gas is cheap, we have tons of it, we're going to have that. The economic driver is not there. And if you can even look and say the impact it's had on closing reactors, we closed San Onofre years ago because of a mismanaged project to replace a steam generator. Now, we probably would have replaced it and continued to operate it, but natural gas was so cheap, why would you even do that? And there was a huge amount of social opposition to that in the wake of Fukushima, mismanagement. The nuclear industry did not have stars on its forehead, they had crosses on its forehead. And as a result of this, there was a combination of social and economic issues that torpedoed the San Onofre Nuclear Power Plant, and also really delayed the development and commercialization of these advanced reactors. Another aspect, which I recognize is that there are a variety of different technologies that are emerging. There was a tremendous amount of innovation in the renewable energy space and in the oil and gas space that reduced prices significantly. The nuclear industry was sitting back relaxing, we don't have to do any innovation. Aha, you really do. That innovation was lagging, it's now coming to market much slower than anybody would like, but it's gradually coming to marketplace. So, there's confusion about what technology do you develop as a utility? Do I buy a small light water reactor? Or do I wait for a molten salt reactor or a high temperature gas reactors? So, there's confusion in the marketplace. All of these are unproven, so where do I place my bet? And then you'll have some pretty deep pocketed individuals - and I'll just pick out Bill Gates as one of them who has invested in several technologies - and so, if you are a venture capitalist, or you are a private equity firm, and you're looking to sort of help some advanced reactor get commercialized, and all of a sudden, one of the one of the directors said, Hey, listen, you got this guy over here in Seattle, who's got billions and billions of dollars and you don't want to bet against him, because he is placing bets on certain nuclear technologies. So, his presence is good for the industry, but it also can scare away some firms, eventually.

Bret Kugelmass
it's interesting that that's the perspective they might take, because, like, if you spend another five minutes to look at it, I would bet against him, not because I don't think he's a smart guy, but because, it's almost like the curse of money. You know how some of these Arab states, they get too much money from oil, and all they do is spend it meaninglessly, instead of building the real culture that they need to become a prosperous society independent of that money. The same thing happens with companies just get money dumped on them. They become scientific labs, instead of cutthroat entrepreneurial startups, which is necessary to survive. No matter how much money you're given, you're not going to survive in the energy business, unless you have the culture of being able to develop quickly and sell.

Chris Gadomski
Right. But also one of the things that Gates has done very, very well he's partnered with the Southern Company, okay, and so they're heavy coal, and they're desperate to go ahead with all the proposed legislation and ambitions of the current administration to get to carbon-free, you have utility who is pretty thirsty for some carbon-free technology and they have a relationship. So, what's really lacking is, I think some of the utilities are absent from active investors in the space, slowly coming around a little bit. But we don't have them really aggressively investing and placing orders. If you had an order for 10 SMRs, from five different utilities, that would change the demand. That would allow the acceleration of these technologies much better. There's one important also point that I'd like to make, is that there's a difference between a project that is technology driven, as opposed to one that's market driven. So, a perfect example is, some software, we can develop software to do this. And yeah, we can do it, develop software, but there's no demand from it. On the other hand, if there is demand for that software, it tends to be commercialized much faster. A good point would be, for example, the iPhone. People would line up to spend $1,000 for the iPhone and wait online overnight to get the newest one. That's market driven product, okay, as opposed to some technology projects, which, Hey, we know how to do this, let's go ahead and build it, but no one's coming. Someone could say that, at the time, some of the early SMR projects that are being developed, yeah, there's a need for it. But it's more technology driven. We can make a small reactor cheaper than a large reactor, but there's no utility saying, Yeah, I need a couple of them, can you get them going over here? If you had an order stream, 10 orders or so, a lot of the development process would have been accelerated and we would see more of them today. We didn't have that because natural gas was cheap and there was a social preference and a political preference for renewables. I mean, let's go ahead and do that. And the perfect example of that is the IEA report that was released today that says that 90% of the power generated in 2050 is going to be renewables.

Bret Kugelmass
How did they come up with that? I didn't get a chance to read the report. But doesn't that imply some other fantasy storage technologies that don't exist yet or something?

Chris Gadomski
Yeah, I mean, there are only two paragraphs that I could find in the 250-page report that dealt with nuclear - I only looked at it for a few minutes this morning, so I may find some more, but two paragraphs saying - and the numbers are by 2050, 90% of electricity generated comes from renewables and of that, wind and solar will produce 70%. Most of the remainder comes from nuclear. Okay, and that's in two paragraphs in a 250-page report. And they didn't even talk about fusion at all. Fusion is something that a lot of heavy hitters are investing in, because the idea that fusion does not have some of the problems that, say advanced fission has, there are a lot of people who are looking at fusion and it's attracting some investment. We have developed the tools to develop fusion reactors - the software, the magnets, the materials - and we're developing very small fusion reactors. So, the nuclear advanced fission reactors may have some pressure on the back end, because if they don't have product up and running by 2030, the fusion people will say, Hey, instead of having a fission reactor, we'll give you a fusion reactor. You can sort of locate a fusion reactor in a place like Singapore, which is investing in fusion companies, as opposed to, they would never invest in a large reactor or SMR reactor because very densely populated, tsunamis, earthquakes, all that stuff, and they couldn't take the risk where they don't perceive that type of risk to exist in a fusion reactor.

Bret Kugelmass
Yeah, they don't perceive it now. But the problem that I see, oftentimes, is people like fusion because it doesn't exist yet. When they realize- I mean, there are two different types of fusion. There's the neutronic fusion and aneutronic fusion. The neutronic fusion is easier, right? It's got a 10 to 100 times lower Coulomb barrier to overcome. But I think the problem that most people don't realize is that, with neutronic fusion comes all of those things that you didn't like about fission to begin with: radioactive waste, proliferation issues. The whole point of neutronic fusion is that's producing all of these neutrons, and then these neutrons go on to become radioactive materials. I think the minute that any of these technologies actually do breakthrough, they're going to realize that they are in the same place that the fission is in and we should have dealt with the perception of radiation to begin with, rather than just hope some new technology will come along and people will magically learn to love it.

Chris Gadomski
You know, one of the things that I thought was very interesting about the fusion space is that, if you want to climb on top of a fusion reactor and wander on top of it, you can do that in Southern California. TAE technologies has built several prototypes over there and you can go ahead and climb on it. The day I visited that fusion reactor, there was a team of 10 or 12 Google scientists over there who were tired of sort of selling more ads on Google, so they figured, well, let's put you on another data collection. So, they got this thing wired to 10,000 data collection ports and they're analyzing that data. They want to keep those guys mentally engaged, so let's go ahead and have them help design a fusion power plant. And so you can do that. But where can you go in the United States to clamor on top of an advanced fission reactor? I would love to do so sometime, but I have not had a chance to do that. There are a lot of very small efforts that are very well funded and look at DOE, it's got four and a half billion dollars for fusion-related research in the next 5, 10 years or so, it's really quite amazing. Much more than advanced reactors have gotten.

Bret Kugelmass
Let's circle back to SMRs for a minute. Do see things coming to a head? I mean, okay, you mentioned that there's been some progress, but it's still a little too slow. Is that some progress a good sign and now we just need to kick it into high gear? What's the problem? How come they're not acting with greater urgency?

Chris Gadomski
Well, the problem is hypocrisy in the industry and hypocrisy in the form of policymakers saying, Okay, we're gonna have a carbon-free electrical generating system here in the next 14 years. Okay, really? Oh, good. How you gonna do it? Oh, renewables, batteries, this and that. Hey, listen, you can't do it unless there is a significant contribution from a nuclear technology. Industry is full of hypocrisy, not the nuclear industry, but the energy industry. The politicians, they don't realize that if net zero is a real goal, you can't get there without nuclear power. I wrote an article about the closing of Indian Point. Why did they close Indian Point? The only reason they closed Indian Point was because it was in proximity to New York. Okay, maybe that's a valid reason. But the New York independent system operator did a study that said, you can close down Indian Point if it doesn't affect reliability. Well, what happened is that the natural gas industry said, Hey, listen, they're closing Indian Point. We built 1.8 gigawatts of fossil fuels in three different places that replaced that. Hypocrisy, I think, is rampant in the industry and we have to realize that, if we are serious about carbon-free technology, then we need to sort of go ahead and look at these SMRs that are coming down the line, which are going to be safer, and we need to get them built quickly and do so. Now, there have been goals identified by the the US Department of Defense and by the Canadians, to go ahead and have something operating in 2026, 2027. Well, that's pretty good. That's pretty fast on nuclear timescale. We need to make sure that they happen, because once we have those reactors built and operating, all of a sudden, you're going to create a demand from overseas clients and there are other utilities are starting to realize that, Hey, this is a real technology that works. You need to get a plant operating have it run for a year or two, then you will start to see the orders forthcoming. That's what the Russians are doing. The Chinese are doing that. They're building and having people entertained. So, I went to the nuclear energy NEA meeting in Washington a few years ago, 800 people over there. I was asked to speak on a panel about something, I can't remember. I was also invited, a few weeks earlier, to the Rosatom Atomexpo in Sochi. I went there, there were not 800 people, there were four and a half to 5,000 people, 80% percent of them are from outside the former Soviet Union, from Egypt, this and that. There's a lot of interest and a lot of effort, but the US government says, Hey, listen, the Russian government, we are developing this technology, come look and see and we'll take you anywhere you want. Go ahead and look at that. They're very, very smart in promoting the availability of Russian nuclear technology, small ones, large ones, whatever it needs to be. That doesn't exist in this country to the extent that it should exist and we don't spend the resources, there's no market pull. Once you have the market pull and you have one reactor operating, generating electricity, then others will follow. I'm a firm believer of that.

Bret Kugelmass
Is the new administration doing anything about this? Have you seen signs of support in one way or another to the industry?

Chris Gadomski
Yeah, they're throwing some nickels and dimes at it. So, that might help. But the critical thing right now is that we've already, in five or six months of the current administration, we've lost Indian Point, a large reactor, that's a very critical reactor. Now, next up on the list, the Byron and Dresden reactors in Illinois. What's going to happen there? The Illinois legislature is fooling around trying to come up with some support. If they don't come up with some support by the end of the closing session at the end of May, then all of a sudden, the signal is that that's going to close. That turns around to the federal government that says, if you guys want to help these reactors go ahead and operate with some sort of return for the investors, and the federal government then has an opportunity to sort of come up with some sort of bailout. So, you have politics on the state level and the federal level to go ahead and do something. If they go ahead and support those reactors, that's an indication that the ambitious goals of having a carbon-free electricity sector by 2035 could happen. If those reactors close, hypocrisy. It's just a bunch of-

Bret Kugelmass
Exactly, okay. But I want your opinion on, is it going to be hypocrisy, or when people say that they care about climate and emissions targets that they actually care about it, agnostic to technology and they care about fulfilling the goal? Or is it really all just a marketing scheme to win over voters?

Chris Gadomski
First of all, the problem is that the voter is not educated enough on some of the details, specifics, about what it takes to go ahead and realize net zero. If you ask people on the street, What is the level of carbon dioxide in the atmosphere, how much it's climbed? Most people don't know. If you drive around and you look at all the large pickup trucks and SUVs that people are driving around, climate change is not sort of driving consumer action. And so, people are believing the story that solar and wind is going to deliver the goods. I have lived in a solar-powered house for 15 years in California. I'm a little bit nervous now, because the last time I looked closely at those panels that I've had on my rooftop are starting to turn color, they're starting to wear. So, I'm scratching my head saying, my god, they're supposed to last for 20 years. I hope they go ahead and last for 20 years. Now, what happens after 20 years? How much of that can be recycled? What cost is involved in recycling that? So, the Biden administration wants to go ahead and put in 500 million solar panels in the next five years. Well, what's going to happen 15, 20, 25 years from now when you have 500 million solar panels that need to be recycled, reprocessed, whatever? It's an unanswered question. I know what happens to my nuclear waste. You put it in canisters and eventually we'll burn it in fast reactors and we're not going to have a problem. But I'm not so sure, they're already burying wind turbine blades in some places around the country and what's going to happen with these solar panels? So, if I was to be frank, I think it's more just talking points, because there's not the strength, the conviction that this is an existential crisis, you'll see those reactors saved. If it's not an existential crisis and it's all hypocrisy, they'll let them close. And that's something that is really problematic. If the Biden administration lets five large reactors close in the first 12 months of his administration, you have to really question whether or not the US public is going to sort of buy into the strategy that they're really serious about climate change.

Bret Kugelmass
Yeah. And how much of that - just because you've been in this space longer than I, and I've been in DC now for three years, but I actually still don't know how it all works - is Biden actually presented with a decision on this type of stuff? Or does it just kind of find its way to 10 or 20 experts somewhere in the administration and then one of them makes a decision, and then just brings it to him and he just signs it along with 20 other things? How involved is the president in something as significant as five nuclear plants? That is not a small amount of our country's total energy?

Chris Gadomski
At Bloomberg, we have a rule that, if it's not your area, don't talk about it. We have policy experts that are focused on what's going on in the administration. I was much closer to the previous administration. I had people who I knew personally, the undersecretary for energy for nuclear power. I had a better sense of what was going on with that. With the change administration, I have lost those contacts and, because of COVID, I haven't had a chance to sort of reestablish those contacts, which you need to do on a face-to-face basis. All I can say is, I hope that there is some serious effort to go ahead and do that. But there are a lot of people on the Green New Deal that, they just don't like nuclear and they want to close it down. They don't think we need it. And my thinking is that net zero without nuclear fission or fusion is just hot air. I'll leave it at that.

Bret Kugelmass
Okay, as we wrap up, any final thoughts for the audience? I mean, I like that STEEP plus W. I thought that was a really clever way of thinking about the space overall, any other good tidbits like that that we can wrap up on?

Chris Gadomski
Yeah, so, if you're a policy guy, or looking at the space, or even just a concerned citizen, there are a couple of things that you really need to sort of pay attention to. Well, make it three of them. Okay, so, one is, how real are national aspirations for net zero? Is it just a talking point? Is it really real? Are we really going to get there? How's it gonna go? How are we going to make that transition? So, that's the first question. Is it hot air or not? Okay. Secondly, what's the public perception going to be on the safety and economics of advanced reactors? How the public perceive them, do we accept that they're going to be safer than existing technology? And do we accept the fact that they will be cheaper to operate and that we won't have subsidies? One, the first question is global and the parameter of net zero. The second one is, here's a technological solution: do you believe that? Then, the third thing that is really very important to understand is, how will advanced reactors, fusion reactors, how will they complement the growing deployment of renewables? Will they fit nicely? And if they do, there's something. Will they be able to replace the fossil fuels that exist right now that do compliment the renewables? So those three points - net zero, how real is it; do we accept the promises of these advanced reactor developers that they're going to be safer and cheaper; and, how well will they be able to integrate with the increased deployment of renewables? Those are three things that I look at pretty carefully and I think that a lot of other people are watching that as well.

Bret Kugelmass
Chris Gadomski. Thank you so much for taking the time sharing your insight and hope to hear more from you soon.

Chris Gadomski
Thank you. It was a pleasure, have a great day.

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