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.

December 10, 2021

New Nuclear Capital reflects nuclear’s paradigm shift

Nucleation Capital founder and managing partner, Valerie Gardner, joined an impressive roster of virtual speakers at the 2021 New Nuclear Capital conference, December 8-9, 2021, focused on the financing necessary for setting the foundation for the deployment of the next generation of advanced reactors.

Speaking on a panel entitled, "Perspectives on Private Financing: Emerging Financing Arrangements and the Role of Financial Institutions," Ms. Gardner represented the voice of the first venture capital fund and its LP investors focused on investing in the advanced nuclear sector, which represents a major paradigm shift for the nuclear industry.

Ms. Gardner spoke of the "reframing" that becomes possible when, rather than trying to finance large, grid-scale projects, a bevy of small, private ventures are raising capital in order to design small, manufacturable, modular reactors. The fact that these ventures are developing technologies that will be meeting a huge need in the market from which they will generate profits, opens up financing mechanisms that were otherwise not possible, specifically venture capital, which invests in the equity of private, high-growth enterprises, which have set their sights set on meeting the demand of a huge and growing market for clean energy.

The fact that Climate Change is barreling down on the planet and forcing the widescale transition away from dirty sources of energy plays an important, critical part of the reason investors, especially climate investors, believe the future market for Advanced Nuclear is huge.

While it is not entirely clear that the nuclear community understands just how much of a paradigm shift this is for the future of the nuclear industry, investors are searching high and low for clean tech options. Experts have made it clear: we need nuclear to solve the energy problems, and nuclear may be the "greenest" investment there is. These factors together fundamentally shift nuclear's relationship to venture capital, as investors will accept risks in order to achieve both climate solutions and returns. This forces the industry to look past "Alpha Particles to Alpha Generation."

Generating "Alpha" is the term investors use for generating investment returns that beat the market. Venture capital seeks this type of outperformance. Given nuclear's dense, always on clean energy, venture capitalists are taking note of the ability of top ventures to achieve alpha, particularly in light of the extraordinary risks.

Yes, every venture capitalist is wrong more than they are right and some 80% of returns are generally produced by a mere 5% of invested assets, which is why VCs must be very picky as to whcih ventures they invest in, and only select those they believe could be homeruns.

Once the exclusive purview of institutional investors and the wealthiest investors, disruption within the venture industry itself has made venture capital accessible to a much broader class of accredited investors.

Online investment platforms, such as that used by Nucleation Capital, now enables accredited investors to access and elect to support a much broader range of fund managers and fund types, invest at lower levels and see decreased costs and risks. This enables those who really understand the value proposition of nuclear to be able to invest in this next generation of private ventures. The demographic of potential investors has been effectively increased by these platforms, translating into nearly 15 million more investors and nearly a trillion dollars of private capital that can flow into worthy ventures.

Ms. Gardner noted that these combined trends—private ventures seeking to deploy smaller, manufactured systems, climate change and the democratization of venture—have important implications for Advanced Nuclear ventures and bodes well for the sector's future ability to follow the more standard venture capital pathways for financing growth with equity fundraising rounds, and scaling their future deployments with access to the regular public markets and standard capital stack financing channels.

ROSTER OF SPEAKERS

NNC SPONSORS

Published by Valerie Gardner in Advanced Nuclear, Brilliant thinkers, Capital reallocation, Climate change, Construction costs, Corporate decarbonization, Corporate purpose, Energy abundance, Land Use by Energy, NEWS, Nuclear competitiveness, Nuclear financing, Nuclear innovation, Private companies, Public companies, Solving climate, US competitiveness, US technological leadership, Zero emission energy

November 5, 2021

A plan to convert coal-fired power plants to advanced nuclear—efficiently

Bryden Wood has revealed plans to repurpose the world’s coal-fired power stations to house modular nuclear reactors as part of a ‘major initiative’ to decarbonize the energy sector. "Repurposing Coal" is a proposal drawn up in collaboration with Terra Praxis, a non-profit organization focused on action for climate and energy, along with experts from MIT, the University at Buffalo, Microsoft and KPMG.

Unveiled at COP26 in Glasgow, the strategy sets out how coal-fired boilers at existing power plants could be replaced with Advanced Heat Sources (Generation IV Advanced Modular Reactors) to deliver a substantial portion of the clean electricity required to achieve net zero carbon emissions by 2050, and to do so eliminating the emissions that have come from coal power, which amount to almost 45% of the global annual emissions.

The collaboration is focused on creating a platform solution that enables plant conversions at scale by "transforming how projects of this kinds are financed, designed, approved and delivered."

Bryden Wood founder Martin Wood said: ‘Instead of thousands of individual projects, we must have a unified approach where the design is simplified and standardised so that a much wider pool of designers, manufacturers and contractors can be involved to make this a reality as quickly as possible.’

To achieve this approach, the group has sought to standardize and optimize the following key elements:

- All processes including procurement, investment and environmental approvals
- Building and engineering systems
- Design, manufacture, assembly and operation
- Interactions between different supply chain organizations.

Read more about this plan at Architects Journal Bryden Wood Reveals Plan to convert coal-fired power stations to nuclear, by Richard Waite, published November 5, 2021.

Published by Nucleation Capital in Advanced Nuclear, Carbon emissions, Climate change, Construction costs, Energy abundance, Future of Energy, History-making, Land Use by Energy, LINKS, Nuclear innovation, Reduced ecosystem impacts, Solving climate, Zero emission energy

November 4, 2021

Nuclear—Best Climate Solution by Far

Opinion authors Andrew Fillat and Henry Miller are highly critical of how politicians have handled addressing climate change. Whether it is a lack of critical thinking among politician or whether it is a highly calculated view of the lack of critical thinking among their environmental supporters is not entirely clear but "wishful thinking and flawed assumptions" do clear abound within the spheres setting policy in places like California, New York and elsewhere.

Key among the authors' multitude of complaints, what they call the single greatest sin is the "demonization of nuclear power, including the shutdown of existing nuclear plants that remain serviceable." We could not agree more. So, while this opinion piece levies some harsh judgements for politicians and climate activists, these pronouncements are paired with some really important metrics that more people should be aware of.

The authors seem to have culled their collection of numbers from Jacopo Buongiorno of MIT, a renowned nuclear engineering professor and author of many important research papers about nuclear energy—unfortunately without linking to their sources. Professor Buongiorno has studied the life-cycle of power plants of all kinds, from mining and construction to decommissioning and disposal of waste and ultimately buildings. We have seen many of his reports and are delighted to find these numbers pulled out for easy reference.

According to the authors, Buongiorno has found that:

- the lifecycle greenhouse gas emissions for nuclear are 1/700th those of coal
  1/400th of gas, and one-fourth of solar
- Nuclear requires 1/2,000th as much land as wind and around 1/400th as much as solar
- For any given power output, the amount of raw material used to build a nuclear plant is a small fraction of an equivalent solar or wind farm.
- Although nuclear waste is obviously more difficult to dispose of, its volume is 1/10,000th that of solar and 1/500th of wind (this includes abandoned infrastructure and all the toxic substances that end up in landfills.)
- One person’s lifetime use of nuclear power would produce about a half-ounce of waste.
- Even including the Chernobyl disaster, human mortality from coal is 2,000 to 3,000 times that of nuclear, while oil claims 400 times as many lives.

Read this opinion piece in the Wall Street Journal's Nuclear Power Is the Best Climate-Change Solution by Far, by Andrew I. Fillat and Henry I. Miller, published November 4, 2021.

Published by Nucleation Capital in Advanced Nuclear, Carbon emissions, Climate change, Future of Energy, Land Use by Energy, LINKS, Nuclear innovation, Reduced ecosystem impacts, Solving climate, Zero emission energy

April 30, 2021

The Zero-Carbon Economy’s Possible Land Footprint

We need to cut greenhouse gas emissions in half by 2030, which will require an enormous transition in how we generate energy. While many people support renewables, they have little concept of how much land deploying renewables will require. For example, a 200-megawatt wind farm might require 19 square miles of land to replace a natural gas plant with the same generating capacity, that fits onto a single city block.

To fulfill President Biden's goal of an emission-free grid by 2035, the U.S. needs to increase its carbon-free capacity by at least 150%. Expanding wind and solar by 10% annually until 2030 would require a chunk of land equal to the state of South Dakota, according to Bloomberg and Princeton University estimates. By 2050, when Biden wants the entire economy to be carbon free, the U.S. will need up to four additional South Dakotas to develop enough clean power to run all the electric vehicles, factories and more.

To be clear, Biden’s plan doesn’t need to entirely rest on wind and solar. Nuclear energy, which requires far less space, is also emission free. Same for hydroelectric power. Plus, wind farms can be installed at sea. Solar panels work wonderfully on rooftops. And plenty of companies are placing bets that fossil-fuel plants can be retrofitted to burn hydrogen or equipped with systems to capture their carbon dioxide emissions.

Estimates vary widely on how much land the U.S. will need to satisfy Biden’s clean-energy ambitions but, regardless, the U.S. will need to rethink land use for an emissions-free future. This article provides some graphical illustrations of how researchers at Princeton University’s Net-Zero America project estimate it can be done and what the land implications of those pathways would be.

Read Dave Merrill's article and see his graphical analysis in "The U.S. Will Need a Lot of Land for a Zero-Carbon Economy," published by Bloomberg Green.

Published by Nucleation Capital in 100% Renewables, Advanced Nuclear, Carbon emissions, Climate change, Land Use by Energy, LINKS, Solving climate

September 8, 2016

Energy Sprawl is Impacting Open Spaces

American energy demand already has posed huge impacts on land use but, as we transition to ever more dilute forms of energy, primarily solar, wind and biofuels, the land required for these sources far exceeds that used for drilling, mining or fracking for coal, oil or gas. The team analyzed both direct sitings and what they call "landscape-level" impacts for all major sources of energy, both electricity and liquid fuels. By far the lowest direct+landscape footprint was provided by nuclear power, at 0.13 km²/TWhr. The highest foot comes from biomass, clocking in at 809.74 km²/TWhr. Click here to download their chart of Land-use Efficiencies.

This study endeavors to quantify projected energy sprawl (new land required for energy production) in the United States through 2040. They found that between direct siting and spacing requirements, over 800,000 km² of additional land area will be affected by energy development, an area greater than the size of Texas. The pace of development in the United States seen recently is more than double the historic rate of urban and residential development, which has been the greatest driver of conversion in the United States since 1970, and is higher than projections for future land use change from residential development or agriculture.

The authors were clearly concerned that meeting energy demands while conserving nature will be a very difficult feat and they believe that to have the least impact, we will need to reduce energy usage considerably and seek appropriate siting and mitigation.

Read more at "Energy Sprawl Is the Largest Driver of Land Use Change in United States an study published by Plos One.

Published by Nucleation Capital in Carbon emissions, Climate change, Climate policy, Distributed grids, Environmental support for nuclear, Fossil fuels, Future of Energy, Land Use by Energy, LINKS, Solving climate, Zero emission energy

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