Giving Thanks & Getting

anksgiving isn't typically a time for making investment decisions . . . but it should be.

Americans give thanks in many ways, notably through the national holiday we call "Thanksgiving." We celebrate the abundance of the land we inherited centuries ago by feasting on turkey and other delicious indigenous foods, which sustained our existence as pilgrims. The holiday of Thanksgiving has survived generations of tumult, crisis and even war relatively unchanged. But we've arrived at a point at which we must recognize that humanity's current path—dumping fossil fuel waste into the atmosphere that is rapidly heating our climate—is disrupting those same ecosystems which have long supported us. Thus, it might be time to consider celebrating Thanksgiving both by honoring the bounties of nature that we have enjoyed and by working to save the ecosystems that have always supported human life and reverse the damage that we are doing by investing in climate solutions.

Given how large the climate problem is, the personal actions we might take, such as turning down the heat or even buying an electric car, will not make sufficient difference. Sadly, scientists tell us that the whole world must reduce emissions by a matter of gigatons in rapid fashion and we are running out of time to act, so our modest personal actions won't make enough difference. We must seek to find things that we can do which provide greater leverage. It turns out, investing in innovation is one of the ways that small individual actions can accumulate to make a big difference.

Why innovation? We know that climate change is caused by humanity's use of fossil fuels. While we want to stop burning of coal, oil, petroleum and natural gas, at the same time, no one wants to have to go without reliable sources of electricity, heat or transportation. Thus, the dilemma we face is that clean renewables like wind and solar don't provide a direct, reliable replacement for the widely available sources of fossil fuel energy.

What we need are better clean energy alternatives. We are forced to burn these dirty, carbon-emitting fuels to have comfortable, warm, well-furnished homes and functioning societies because we don't have better options available. We don't want intermittent lights, intermittent refridgeration, intermittent heart monitors or even intermittent Youtube videos. This is what makes addressing climate change so challenging for Americans: we're not willing to go cold turkey on the quality of life that we have enjoyed as a result of the abundance of fossil fuels. This is why we desperately need better options!

Investing in innovative ventures can accelerate their success in commercializing better energy alternatives. We have very few clean energy options and they all have significant downsides—such as intermittency—and there simply is nothing that is a runaway winner in terms of competing with natural gas or petroleum fuels. Which is why it is time for investors to step up and invest in those ventures innovating to create these improved technologies. These may be risky investments but if they can produce a broader set of clean energy options that enable us to maintain our lifestyles while reducing emissions, they will be very successful investments.

This is what Nucleation Capital is doing. Providing an investment vehicle that allows more investors to invest in some of the most exciting, most competitive clean energy alternatives coming out of the advanced nuclear sector. For many, investing in solar or wind power is appealing because they think "renewable" energy is what's needed. In fact, wind and solar power will always be intermittent—and that will never compete directly with fossil fuels. What's needed to replace fossil fuels is clean, reliable, dense energy and many energy experts see next-gen nuclear as our best option.

Nuclear energy may not yet be as popular as renewables but what's popular doesn't necessarily translate into great investment returns. Even winning consensus investments don't beat winning contrarian investments. Which is why, for those looking for impactful investments that are off the beaten path and which, by their nature, can produce extraordinary returns, nothing can beat nuclear energy innovation, which we believe will be the black swan of clean energy.

The advanced nuclear sector is the most under-appreciated clean energy sector that is innovating as fast as conceivably possible. This sector, more than any other, holds out tremendous promise for a technological solution to our climate dilemma, yet these innovators need access to more capital. Next-generation nuclear innovators are solving safety, scalability, cost, construction time and all the other issues we have long associated with traditional nuclear and making it into the energy source of our future. They are, for example, developing reactor designs that won't require water cooling or siting next to bodies of water. Innovators are also working to solve other problems that have held back the growth of nuclear, namely closing the fuel cyle and providing safe, permanent waste storage, among other things.

So, if you'd like to do more than just give thanks with your turkey, consider allocating some of your discretionary investment capital to a fund investing in the innovations that would allow us to end our dependence on fossil fuels. We expect that, over the next decade, the nations of the world will begin deploying any number of advanced designs to power cities, factories, campuses, ships, industry and homes without emissions, thereby maintaining energy security and grid reliability without needing fossil fuels. We'll even use nuclear to generate synthetic hydrocarbons (for where liquid fuels are still needed) and power carbon drawdown so can begin to reverse global warming.

Yes, investing in advanced nuclear is high risk. Yet it only poses the risk of losing your money (so allocate accordingly). Not solving climate change, however, risks losing everything we hold dear. Our propery, our children, our traditions. Which is why more investors are considering allocating a portion of their investible capital to investments that can meaningfully reduce demand for fossil fuels. Whether they can invest a lot or little doesn't matter so much: they will still get the satisfaction of knowing that they are using their money to make a difference in the final years that we have to rescue our future.

* The "Th" image above is the period table symbol for the element Thorium, and comes curtesy of the Thorium Energy Alliance, which advocates for the use of thorium along with uranium as a fuel for nuclear energy.

March 22, 2022

Tech Billionaires Rally around Nuclear

Billionaires are rallying around nuclear, according to a recent report from Pitchbook on venture investments in 2021. Notably, some of these billionaires, Elon Musk and Marc Andreessen, have spoken out about the need to both preserve existing nuclear and to "build 1,000 new state-of-the-art nuclear power plants in the U.S. and Europe right now."

This isn't exactly new, since billionaires like Bill Gates, Jeff Bezos and Peter Thiel have been both investing and advocating for nuclear for years but, nevertheless, 2021 was a banner year for nuclear venture fundraising. Not just are billionaires excited about the prospects for nuclear energy to solve climate, a lot of non-billionaire investors are as well.

According to Pitchbooks, which tries to track all venture investment deals, a record $3.4 billion was plowed by investors into nuclear ventures, which was more than the amount invested in the prior decade combined. Fusion ventures were a major beneficiary of this growing investor interest, despite yet having progressed past the "science project stage" with Commonwealth Fusion raking in $1.8 billion by itself and Helion Energy raising $500 million, but the majority of the 28 deals that were closed were likely in fission.

There is clearly a trend around an increased level of investor interest in next generation nuclear and a willingness by investors to jump in to the sector. Nucleation Capital was also launched and made its first investments in 2021—which were reported to and presumably included in the analysis by Pitchbook. Our ability to do so a function of the same factors that have stimulated the rise in venture activity, which include:

1. Widespread recognition that nuclear energy deserves inclusion in green taxonomies and is a critical rare source of firm, clean power that competes against fossil fuels, not renewables.

2. 60+ years of commercial operating experience provide ample evidence that the risks of a nuclear accident are grossly overplayed by the press and nuclear's opponents.

3. Overly hyped radiation fears have been muted by a broader understanding of the beneficial effects of background levels of radiation that occur naturally in our environment.

4. Mastery of next-gen nuclear technology is vital to both national and international security so that Russian and Chinese providers do not succeed in supplying the world's future energy needs and thus being in a position to apply geopolitical pressures on developing nations.

5. Grassroots climate and clean energy advocacy has made its mark on the world stage at COP 26 and demanded not just to protect existing nuclear power plants but also to deploy next-generation designs.

6. Fast-growing wind and solar development have not proven an ability to deliver the level of decarbonization needed to meet climate goals, due to their intermittency and dependence on natural gas.

7. Longer term decarbonization goals will require energy abundance that is not feasible with current dilute sources of energy but require nuclear's ability to repower coal plants with clean energy.

With the Russian invasion of Ukraine, the geo-political issues have risen to the top and have increased interest among many countries in eliminating dependence on natural gas even faster than previously planned. If there is a silver lining to the war being fought in Ukraine, it may be the added impetus that it has given to the global urgency to reduce gas dependence and build (or restart) nuclear energy. This reverses the prior trend, where gas (with externalized emissions) replaced nuclear energy, since the only fuel that really competes with nuclear is natural gas (so long as emissions can be externalized).

Learn more at Bloomberg, Tech Billionaires Rally Around Nuclear as Energy Crisis Looms, by Lizette Chapman, March 22, 2022. [PDF]

Published by Nucleation Capital in Advanced Nuclear, Brilliant thinkers, Carbon emissions, Climate change, Climate innovation fund, Energy abundance, Future of Energy, Investor activity, LINKS, Nuclear financing, Nuclear innovation, US technological leadership, Venture capital support for nuclear, Zero emission energy

December 12, 2021

An historic investment opportunity

Until recently, nuclear innovation was not something an ordinary investor could invest in, even if you wanted to. For most of nuclear energy's history, most all design, development and testing was done through the National Labs with government funding and large corporations adapted those designs for the utilities. President Jimmy Carter defunded nuclear energy research and development and privatized that activity. By that time, however, a lot of work had been done to test a wide range of alternative approaches to generating electricity from fission and this work helps set the stage for today's innovations.

On December 20, 1951, the Experimental Breeder Reactor (EBR-I) made history, generating electricity from fission and proving the thesis that fissile material could be used for peaceful purposes. The National Labs worked on some 52 different designs and configurations over about fifty years. The second Experimental Breeder Reactor, the EBR-II, a liquid metal-cooled fast reactor, ran for more than thirty years between 1961 and 1994.

Eventually, the pressurized Light Water Reactor (LWR), which was preferred and purchased by the Navy, became the utility industry's reactor of choice. Over the course of three decades, the U.S. built approximately 110 LWRs. Then, in the mid-1990s, President Jimmy Carter ended federal funding for nuclear research within the labs and, like space exploration, further nuclear energy development was privatized.

Fortunately, innovation in nuclear energy didn't stop entirely. Quite a number of innovative engineering teams sought to move fission and fusion nuclear energy forward through private ventures. In 2016, when Third Way hosted the First Annual Advanced Nuclear Summit and Showcase, there were about four dozen ventures that attended. Since then, the field has continued to grow, with many of these ventures raising capital privately to fund their ongoing work. Today there are about 250 ventures or initiatives working to develop new energy generation approaches, spanning fission, fusion, subcritical reactors and a burgeoning area of Low Energy Nuclear Reactors (LENR) which, given the climate crisis are needed more urgently than ever to replace fossil fuels.

Interest in bringing atomic energy into the 21st Century is stronger than it's ever been. Congress has been strongly supportive of advanced nuclear, passing the Nuclear Energy Innovation and Capabilities Act (NEICA) in 2018, the Nuclear Energy Innovation and Modernization Act (NEIMA) in 2019, both signed by President Trump, and portions of the Nuclear Energy Leadership Act (NELA) and the Nuclear Energy Research and Development Act (NERDA) as part of the Energy Act of 2020, signed by President Biden. All of these major pieces of legislation seek to support the emergence of next generation technologies through a variety of mechanisms, including providing a growing amount of non-dilutive funding to help these ventures get their innovations certified and to market. Nevertheless, most all of the ventures developing solutions must still raise private funds in order to succeed.

Many ventures have had success attracting venture capital at various stages. Recently, Commonwealth Fusion announced a $1.8 Billion fundraise, which they hope will enable them to prove their approach to producing electricity from fusion, something that has never yet been achieved. From the list of well-known funders, it's clear there are a growing number of venture firms and wealthy individuals paying more attention to this area. This is good for the sector and for those institutions and individuals who can afford to play at the high-ticket level of traditional venture capital firms. But there hasn't been a way for the majority of accredited investors to invest in advanced nuclear.

Unfortunately, committing million dollar sums to a single deal or even a venture fund is out of reach for all but a few extraordinarily wealthy individuals in the top 1% of investors. That is until now. In the last few years, venture capital is been disrupted by tech innovations funded by venture firms (see how Venture Capitals are eating their own dogfood.) Specifically, investment platforms have been developed that profoundly automate most all of what historically has made venture capital very expensive. The AngelList rolling fund, which enables investors to participate in ventures funds through a low-cost subscription, has delivered exactly the kind of disruption that brings increased democratization to venture capital.

AngelList is not the only group pioneering new structures. For the first time in history, a range of crowdfunding, angel investment communities and online venture platforms now make it possible for investors at many levels to access a very rich variety of venture deals through both funds and SPV syndications and participate at far lower and more affordable capital levels, not just in advanced nuclear but across nearly every sector where innovation is happening.

Nevertheless, at every level, venture investing remains a high risk/high return asset class. Before one invests in a private angel deal (typically an earlier-stage funding round) or in later-stage venture rounds, such as a Series A or Series B fundings, one needs to assess one's own appetite for risk and interest in doing some homework to vet the opportunity, called "due diligence." Investing in private equity can boost returns but, at the same time, it often takes work and mature judgment to reduce mistakes, because an investor cannot easily sell their equity, once cash has been exchanged. One has to plan to hold on to the equity while it remains illiquid, even when it is clear that the venture is failing. This can result in the total loss of one's capital. The SEC, in fact, deems venture investing too risky for any but sophisticated investors, or those deemed "accredited investors." These are people or firms with sufficient assets that they are deemed capable both of assessing their investment risks but also being able to afford to lose their capital, without serious impacts, should their investment fail.

Online platforms further open up the possibility for a much more diverse range of fund sponsors and managers with unique types of expertise to create specialized investment vehicles in areas previously overlooked by the large pool of generalist venture funds. Which is great news for innovations happening in many sectors, including advanced nuclear, since highly technical sectors can be very challenging for generalists. This has enabled many new funds, like Nucleation Capital, to develop unique investment theses and connect with the growing numbers of accredited interested in investing in this area. Investors who are deemed accredited are finally able to access private equity at capital levels that work for them.

With the climate crisis driving demand for new types of safe, affordable clean energy, this is an exciting and historic moment of convergence. Not only is there a growing swell of next generation nuclear ventures seeking to create technologies to address the world's urgent demand for clean energy and carbon management, they are raising capital right when access to private equity has finally become affordable to millions more investors, some of whom are motivated to invest their values.

As new and unfamiliar as it is, there are growing numbers of investors looking to diversify their portfolios with angel and venture investments. Hopefully, they will take the time learn more about what venture capital is and select their investments wisely. Fortunately, the use of venture platforms are providing both guidance and deal flows, which enables new investors to achieve a level of diversification which, just as with public market portfolios, has been shown to improve returns for angel investors and venture capitalists alike. Diversification is particularly important in venture, however, since the goal of venture investors is to invest a wide enough range of ventures that the few that do succeed more than compensate for those that don't.

For further reading about venture capital, here are some additional articles that provide more background but there are plenty more.

- Understanding Traditional Venture Capital, part of FundersClub's VC 101 series
- How Venture Capital Works by NerdWallet, Dec. 6, 2021
- AngelList Pioneers Rolling VC Funds in Pivot to SaaS, by TechCrunch
- The Rolling Fund vs. the Syndicate Explained, by Groundbreaker.

March 24, 2021

Clean Firm Power is the Key to California’s Carbon-Free Energy Future

California faces a very tough choice. Politicians and many environmental advocates would like to solve the need to eliminate emissions by building renewables as much as possible, and allowing natural gas (and its well-heeled donors) to thrive and grow hidden behind the curtain of renewables. They'd prefer that the back door given to natural gas to stabilize the grid not be given that much attention—or the fact that spending double or triple to let everyone get into the action, renewables, gas and battery manufacturers—not get much focus.

Unfortunately, these charades don't stand up to any economic analyses for the most effective or even cost-effective pathway to full decarbonization and three separate analyses all show the same result. Despite distinct approaches to the calculations, all three models, done by froups from Princeton University, Stanford University, and Energy and Environmental Economics (E3), a San Francisco-based consulting firm, yielded very similar conclusions. The most important of these was that solar and wind can’t do the job alone (as some environmentalists want you to think).

Instead, the modeling finds that almost any combination of firm clean power—existing nuclear, geothermal, advanced nuclear or even natural gas with carbon capture and sequestration—could deliver a 100% carbon-free electricity supply with generation and transmission supply costs of about 7–10 cents per kilowatt-hour, which compares well with the current average of 9 cents per kilowatt-hour, and is about one-third less than the cost of an all-wind-and-solar approach.

Read more in Issues in Science & Technology's Clean Firm Power is the Key to California's Carbon-Free Energy Future, by By Armond Cohen, Arne Olson, Clea Kolster, David G. Victor, Ejeong Baik, Jane C.S. Long, Jesse D. Jenkins, Kiran Chawla, Michael Colvin, Robert B. Jackson, Sally M. Benson, Steven P. Hamburg, published March 24, 2021. Also see the full report, published by EDF and available at edf.org/cleanfirmpower.

Published by Nucleation Capital in Advanced Nuclear, Brilliant thinkers, Carbon emissions, Climate change, Climate innovation fund, Climate policy, Construction costs, Future of Energy, International support for nuclear, LINKS, Macro Energy Systems, Nuclear competitiveness

February 10, 2021

Investments in nuclear energy could help solve the economic and climate crises

Biden can solve multiple problems facing the U.S. by investing in clean energy climate solutions, according to Todd Allen and Suzy Hobbs Baker—and he appears on track to do so.

"Biden ran on a sweeping clean energy plan, pledging to achieve a carbon-free electricity sector by 2035 with net zero emissions economy-wide by 2050 as part of his “all of government” plan for climate. The president’s proposed tech-neutral approach opens the door for an inclusive plan to combat climate change, which includes nuclear power — the nation’s largest carbon-free source of energy. This marks the first time nuclear power has been a part of the Democratic platform since 1972."

"Additionally, we have seen increasing bipartisan congressional support for nuclear energy over the last decade. The new administration can build on this strong foundation by accelerating its investment in advanced nuclear energy to create new opportunities in the clean power sector and take meaningful steps towards cost-effective decarbonization. The nuclear industry can be ready to accomplish this with advanced technologies and a commitment to align with the equity-centered approach of the new administration."

Read the full OpEd at "Investments in nuclear energy could help solve the economic and climate crises," published in The Hill.

Published by Nucleation Capital in Advanced Nuclear, Brilliant thinkers, Capital reallocation, Climate change, Climate innovation fund, Climate policy, Government support, LINKS, Nuclear innovation, Nuclear R&D, Regulatory reform, Solving climate, US technological leadership

November 17, 2020

Boris Johnson’s green plan puts advanced nuclear in top three

Boris Johnson, the UK Prime Minister, penned an oped in the Financial Times calling for a 12 billion-pount, 10-point plan to effect Britain's green recovery. Johnson wants to create 250,000 new jobs and turn the UK into the world's number one centre for green technology and finance. It is worth quoting the first three points of his plan verbatim.

"One — we will make the UK the Saudi Arabia of wind with enough offshore capacity to power every home by 2030. Two — we will turn water into energy with up to 500 million pounds of investment in hydrogen. Three — we will take forward our plans for new nuclear power, from large scale to small and advanced modular reactors."

Britain, which hosts the COP26 global climate change summit in Scotland in 2021 and has committed to a net zero carbon economy by 2050, seeks to use its commitment to tackling climate change to help build a strong partnership with U.S. President-elect Joe Biden. Johnson even uses the phrase "build back better," to show that he's in synch with Biden, who has used those words for his transition plannning site.

According to Fortune, the most radical policy is the phasing out diesel and gas car sales by 2030, 10 years earlier than previously scheduled, and head of France and Spain, which have 2040 target dates. Interestingly, the Greenpeace U.K. head of politics, Rebecca Newsom, welcomed the "landmark announcement" signalling the end for polluting cars and vans, as "a historic turning point" in addressing climate change. "Although there are some significant question marks and gaps, overall this is a big step forard for tackling the climate emergency," Newsom said.

Published by Nucleation Capital in Advanced Nuclear, Brilliant thinkers, Capital reallocation, Carbon emissions, Carbon negative, Climate change, Climate innovation fund, Climate policy, Government support, LINKS, Nuclear financing, Nuclear innovation, Nuclear R&D, Politicians supporting nuclear, UK Climate Policy

October 21, 2020

DOE announces funding for three advanced reactor builds

The US Department of Energy (DOE) has selected two teams—one led by TerraPower in partnership with GE Hitachi, building a 345 MWe sodium fast reactor with a molten salt energy storage system and one led by X-energy, which has designed a modular 80 MWe (scalable to a 320 MWe four-pack) high temperature gas-cooled reactor—to receive $80 million each in initial funding annually under the Advanced Reactor Demonstration Program (ARDP).

In this program, DOE provides initial funding to develop, test, license and build advanced nuclear reactors within five to seven years of the award. DOE plans to invest about $3.2 billion over seven years in these projects that will be matched by the industry.

Simultaneously, the DOE approved a $1.4 billion multi-year cost-share award to the Utah Associated Municipal Power Systems (UAMPS) for the development and construction of the Carbon Free Power Project (CFPP), a 720 MWe NuScale small modular nuclear power plant, made up of 12 small 60 MWe modules, to be located at DOE’s Idaho National Laboratory site. NuScale (shown in the image) is the first of the new designs to be approved by the Nuclear Regulatory Commission.

Read more in Forbes: "America Steps Forward To Expand Nuclear Power."

Published by Nucleation Capital in Advanced Nuclear, Capital reallocation, Climate innovation fund, Future of Energy, Government support, History Timeline, History-making, LINKS, Nuclear competitiveness, Nuclear financing, Nuclear R&D

July 23, 2020

DNC draft climate platform includes nuclear power

A draft of the Democratic Party's policy platform backs aggressive climate change proposals to reach net-zero emissions as quickly as possible using a technology-neutral approach that values "existing and advanced nuclear" alongside other methods.

The draft language specifically says: “recognizing the urgent need to decarbonize the power sector, our technology-neutral approach is inclusive of all zero-carbon technologies, including hydroelectric power, geothermal, existing and advanced nuclear, and carbon capture and storage.” Methods include challenging "the best and brightest scientists, innovators, and entrepreneurs in the world to pursue breakthrough opportunities in . . . direct air capture and net-negative emissions technologies. We will advance innovative technologies that create cost-effective pathways for industries to decarbonize, including carbon capture and sequestration that permanently stores greenhouse gases . . ."

Read more analysis of the platform by Timothy Cama at E&E News: "DNC draft Climate platform more progressive than 2016."

Published by Nucleation Capital in Carbon negative, Climate change, Climate innovation fund, Climate policy, Future of Energy, History Timeline, History-making, LINKS

July 14, 2020

Microsoft will be carbon negative by 2030

Microsoft has grabbed the corporate high ground with a commitment to be carbon negative by 2030. The senior executives have studied the issue and write: "If we don’t curb emissions (given that human activity has already released more than 2 trillion metric tons of greenhouse gases), and temperatures continue to climb, science tells us that the results will be catastrophic."

Read more at Microsoft's Blog: Microsoft will be carbon negative by 2030.

Published by Nucleation Capital in Carbon negative, Climate innovation fund, LINKS, Public companies

July 10, 2020

Nuclear power has a big role to play in the energy transition

Nuclear plants today provide 10% of the world's electricity, all of it carbon-free – that's almost twice the combined contribution of solar and wind. To meet the key energy goals of the United Nations Sustainable Development Goals (SDG), the Paris Agreement has set a specific ambition for nuclear, targeting the doubling of present installed capacity by 2050. For the nuclear industry the challenge is double; it is about progressively replacing plants reaching the end of their lives, and adding new plants to the existing fleet. However, there is need for innovation.

Read more at: World Economic Forum: Nuclear power has a big role to play in the energy transition. Here's why.

Published by Nucleation Capital in Carbon negative, Climate innovation fund, Future of Energy, International support for nuclear, LINKS, Nuclear innovation