Biden Signs the ADVANCE Act

By Rod Adams, Nucleation Capital Managing Partner and founder of Atomic Insights.

(Click to expand)

President Biden has signed S. 870, “A bill to authorize appropriations for the United States Fire Administration and firefighter assistance grant programs, to advance the benefits of nuclear energy, and for other purposes.”

NRC’s Newly Aligned Mission Will Accelerate Nuclear Energy Deployment

With resounding bipartisan, bicameral support that also achieved enthusiastic support of the Executive Branch, the US has enacted a new law announcing its support of nuclear energy. It has the potential to make an even larger impact on global atomic energy use than the combination of the Atomic Energy Act of 1954 and President Eisenhower’s Atoms for Peace program of international nuclear energy expansion.

Seventy years ago, that earlier combination of law and policy partially removed the blanket of tight security that had locked up fission energy in the years immediately following WWII. President Eisenhower’s clearly stated goal in enabling commercial atomic energy was to develop “the greatest of destructive forces” into a “great boon, for the benefit of all mankind.”

The “great boon” produced a wave of nuclear power plants that now produce the energy equivalent of Saudi Arabia’s oil production. That energy comes at a low marginal cost without air pollution or greenhouse gases, but nuclear power’s contribution to world energy production leveled off at roughly 2600 TWh/yr 20 years ago.

A growing fraction of the world’s science, engineering, environmental and political leaders agree that the situation needs to be changed. In November 2023, the United States led a coalition of two dozen nations in a promise to take action to triple world nuclear energy production by 2050.

Even before the U.S. signed that declaration of intent, House and Senate Republicans and Democrats began holding hearings, listening to constituents, debating with colleagues and engaging in what used to be considered the normal order of business to produce the ADVANCE Act of 2024.

I’ll say that again, Republicans and Democrats from both the House and Senate worked together in a sustained manner to pass a bill important to all of us in 2024.

That bill was passed in May with a vote of 393-13 by the House of Representatives. It was passed in June by the Senate with a vote of 88-2.

The bill’s title – ADVANCE – is derived from “Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy.” The name might be dismissed as a clever acronym, but each of the words helps to convey the intent of the authors and approvers.

The new law of the land is clear; the United States has decided that it is moving forward at an increasing speed – accelerating – in the important task of deploying multi-function, advanced nuclear energy so we can spread the benefits of clean atomic energy to all mankind.

Mission alignment

A key accelerant is the Act’s direction to the Nuclear Regulatory Commission to update its mission statement. The new law tells the NRC that its modern mission is to provide a reasonable assurance of adequate protection of public health and safety in “a manner that is efficient and does not unnecessarily limit” the use of radioactive materials and nuclear energy to benefit society.

Here is the complete provision from Section 501 of the Act

SEC. 501. MISSION ALIGNMENT.

(a) Update.—Not later than 1 year after the date of enactment of this Act, the Commission shall, while remaining consistent with the policies of the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.) and the Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.) (including to provide reasonable assurance of adequate protection of the public health and safety, to promote the common defense and security, and to protect the environment), update the mission statement of the Commission to include that licensing and regulation of the civilian use of radioactive materials and nuclear energy be conducted in a manner that is efficient and does not unnecessarily limit—

(1) the civilian use of radioactive materials and deployment of nuclear energy; or

(2) the benefits of civilian use of radioactive materials and nuclear energy technology to society.

Ted Nordhaus, the Executive Director of the Breakthrough Institute, supports the mission realignment. He is quoted by Axios as follows. “When we look back on this thing five years from now…. no one will remember anything else that happened in this piece of legislation, except for the change in the statutory mission.”

Nuclear energy opponents have sharply questioned the act’s NRC mission realignment section. Their opposition indicates the importance and the value of the provision in the national effort to more promptly deploy nuclear energy facilities.

In a piece published in the Montgomery County Sentinel, Karl Grossman provided reactions to the ADVANCE Act from a host of historically antinuclear groups and individuals, some of whom were most upset by the mandate given to the NRC.

Senator Ed Markey testified against the Act during the Senate floor debate, aiming particularly at the mission realignment section. He revealingly stated that the “Commission’s duty is to regulate, not facilitate.”

He is correct in noting that the new mission effectively tells the NRC to facilitate nuclear energy development, but wrong in implying that regulators shouldn’t facilitate the technology that they are assigned to regulate. FDA (Food and Drug Administration) staffers help us all retain access to both food and medicinal drugs while the staff members at the FAA (Federal Aviation Administration) work hard to ensure that air travel is both safe and available.

Dr. Ed Lyman of the UCS, provided the following comment.

“The change to the NRC’s mission effectively directs the agency to enforce only the bare minimum level of regulation at every facility it oversees across the United States.”

Leaving out his emotionally laden modifiers, Dr. Lyman is correct in noting that the change essentially directs the NRC to impose the minimum necessary level of regulation. Safety rules should be viewed as a “pass-fail” assignment. If they are good enough, there is no reason to raise the bar, especially when the claimed improvement is in a calculated probability that is already tiny. Layered requirements do little or nothing but they inevitably increase costs.

How does changing the mission improve prospects for advanced nuclear energy?

The Nuclear Regulatory Commission has always attracted talented, well-educated, service-minded employees. Most of them are dedicated to mission accomplishment but they have been culturally encouraged to believe their safety mission should be interpreted as avoiding all appearances of favoring the use of nuclear energy. The Advance Act revises the mission to align with the societal need for nuclear; it will change the culture.

Applicants should find a new, more helpful attitude emerging among regulators. Instead of assiduously avoiding advice that might be classified as “consulting” to the benefit of industry, they might offer their expertise and guidance with the goal of improving regulatory efficiency and the overall safety performance of the project being reviewed.

Junior NRC staff members have expressed serious concerns about climate change and air pollution as reasons why they became interested in nuclear energy. They understand how data show that most of the energy not produced by nuclear power will be produced by burning fossil fuels. The change in law provides a tool that enables them to resist negative influence from longer serving staff members who habitually avoid facilitating nuclear power.

Nuclear energy opponents have asserted that regulating without imposing unnecessary limits is simply a way to increase industry profits and improve the financial health of its investors, but they say that as if it is a bad thing.

They don’t like nuclear energy, often for competitive or ideological reasons. They know that profits and investor returns will attract the skills and resources that are required to make nuclear energy flourish. They prefer to starve the industry and are willing to forgo the environmental, health, safety and security benefits associated with a vibrant, growing clean nuclear energy industry.

The rest of us aren’t willing to give up the benefits, especially when decades worth of experience has shown us that nuclear energy risks are lower than those associated with available replacement power sources.

Regulatory efforts that eliminate unnecessary limits will help nuclear project deployers overcome some of the few credible concerns remaining about expanding the use of nuclear energy. It’s true that nuclear plants cost too much and take too long between planning and project completion.

A mission-driven regulator that protects health and safety while recognizing the relatively larger human costs and environmental risks associated with competitive energy sources will enable fission power to increase its role in addressing all facets of the energy trilemma – energy security, energy equity and environmental sustainability.

An exciting, growing, problem-solving and respected industry will attract an increasing flow of talented people who can develop the skills needed to reinforce the industry’s growth potential.

Nuclear plants use the same power conversion technology as fossil fuel plants, but they have recently been costing several multiples more in Western countries. There are no good reasons for that situation to continue to be true.

If bureaucratic inertia prevents the mission realignment directive from producing the intended results, the Advance Act’s language provides licensees a tool for challenging NRC impositions when a legal case can be made that NRC regulations or processes “unnecessarily limit” the use of nuclear energy.

Though it’s not blindingly obvious, giving the NRC a new sense of mission will make a global impact. The US Nuclear Regulatory Commission has a well-earned reputation as being the world’s most influential nuclear regulator. Its altered focus and processes will inspire improvements elsewhere.

Additional features of the ADVANCE Act

Even though it has the potential for outsized impact, the word count of the “mission realignment” portion of the Advance Act is a minor fraction of the act itself. There are additional useful features and provisions of the important new law.

The Advance Act gives the NRC increased responsibilities in international nuclear regulations and trade, reduces fees for advanced reactor license applicants, establishes prizes for the first of a kind licenses in five different categories, delineates some considerations for licensing reactors for nonelectric applications, directs the preparation for licensing demonstration reactors on DOE or other national security sites, mentions fusion energy, requires new considerations and processes related to nuclear plant siting choices, establishes timelines for combined license application reviews, requires regulatory provisions for micro-reactors, modifies prohibitions on foreign ownership of nuclear power plants, directs a report on advanced manufacturing for nuclear energy projects, seeks to improve the process of qualifying advanced and accident tolerant nuclear fuels, authorizes special hiring authority and requires improvements in nuclear reactor environmental reviews.

The Clean Air Task Force issued a press release with the following comment on the importance of the Act.

“As we continue to decarbonize our nation’s energy system and address growing energy demand, we need all options available and nuclear energy will play an important role in making sure we are able to meet these challenges. The passage of the ADVANCE Act will bolster the United States’ ability to expand its capacity for this carbon-free, always available energy source,” said Evan Chapman, U.S. Federal Policy Director at Clean Air Task Force. “Nuclear energy has bipartisan support, and has a range of economic, national security, and climate benefits. This bill will address current barriers to deploying innovative nuclear energy technologies, help preserve existing nuclear capacity, and build capacity at the Nuclear Regulatory Commission, marking a significant step forward for American nuclear energy leadership. We applaud Congress for passing this important legislation and look forward to President Biden’s signature to turn this act into law.”

Sources

You can find more detailed information about the rest of the act from these excellent sources.

SIGNED: Bipartisan ADVANCE Act to Boost Nuclear Energy Now Law, Senate Committee on Environment & Public Works, July 9, 2024.
Rodgers, Pallone, Carper, Capito Celebrate Signing of Bipartisan Nuclear Energy Bill, the ADVANCE Act, July 9, 2024.
The White House, Bill Signed S. 870, July 9, 2024.
The ADVANCE Act—Legislation Crucial for a U.S. Nuclear Renaissance—Clears Congress. Here's a Detailed Breakdown by Sonal Patel, Power Magazine June 20, 2024
Congress Passes ADVANCE Act to Facilitate U.S. Development of Advanced Nuclear Reactors Sidley Austin LLP, June 26, 2024

Published by Rod Adams in Advanced Nuclear, Biden-Harris Administration, Brilliant thinkers, Energy abundance, Future of Energy, Government support, History Timeline, History-making, NEWS, Nuclear competitiveness, Nuclear innovation, Regulatory reform, US competitiveness, US technological leadership

November 10, 2023

About NuScale and implications of the CFPP cancellation

Why did the Carbon Free Power Project get cancelled? What does that mean for NuScale?

By Rod Adams, Nov. 10, 2023
Cross-posted from our related blog, Atomic Insights

I’ll start with a disclosure. I’m still long on NuScale in my personal portfolio and have no intention of changing that position in the near future. I believe that the company has a good product and excellent potential for growth. The image above with Jose Reyes and me is from a visit I paid to the NuScale test loop in October 2014.

Yesterday (Nov 8, 2023), an expected shoe dropped. NuScale and UAMPS (Utah Association of Municipal Power Systems) announced that they had decided to abandon their Carbon Free Power Project. The press release stated, “Despite significant efforts by both parties to advance the CFPP, it appears unlikely that the project will have enough subscription to continue toward deployment.”

A chorus of commentary has erupted on social media. Some are cheers from the usual suspects who have never met a nuclear reactor that they like. Others are from people who ardently support different designs that range from different water reactors to gas-cooled, molten salt or liquid metal reactors that don’t use water cooling and moderation.

Some believe that the decision proves that NuScale Power Modules are hopelessly uneconomic and that the CFPP cancellation proves that NuScale is on shaky grounds as a company. Self-admitted short sellers are doing everything they can to undermine investor confidence so that the company stock price falls quickly and profitably for those betting on that behavior.

My conclusions from the project cancellation are different. There is no doubt that a smooth first-of-a-kind demonstration of a 6-12 unit NuScale power plant would have been better for the company’s prospects in the short term. That result would have also helped to increase interest in new nuclear power projects and would have increased investor FOMO (fear of missing out.)

As a venture capitalist helping to manage a fund that is focused on advanced nuclear energy as a major, undervalued tool for the energy transition from high carbon fossil fuel combustion to ultra low carbon energy sources, that result would have been a welcome reinforcement of our investment thesis.

Competitive headwinds fighting Carbon Free Power Project

During the past few years, however, the prospects for success for the CFPP have repeatedly dimmed to the point where its cancellation was readily foreseeable. The initial 12-unit power plant was scaled down to a 6-unit facility. Individual members of the UAMPS association pulled out as it became ever clearer that a new, first of a kind nuclear plant built in the remote Idaho desert would produce power that was measurably more expensive than the low priced mix of coal, natural gas, hydro and wind they were used to.

That cost disadvantage only grew as it became less and less likely that there would ever be a price on carbon in the states UAMPS serves. Rising interest rates also reduced the economic viability of capital-intensive power plants compared to established, depreciated plants burning cheap local coal, low capital cost plants burning natural gas from nearby places like North Dakota or onshore wind located in sparsely-populated windy plains near mountain ranges.

As coal demand falls throughout the US as a result of changing air pollution regulations, increased production from natural gas, solar and wind and continued excellent performance by existing nuclear plants, coal prices soften. The long term prospect is that they will remain affordable and perhaps decline considerably, especially in places that are close to established mines. UAMPS member power systems have ready access to local coal sources.

The UAMPS-served areas are close to productive oil shale formations that contain substantial quantities of associated natural gas. Sometimes North Dakota gas is almost given away – even in the dead of winter – because it is an annoying byproduct of oil production. Associated gas is still flared – burned without serving any customers – for safety reasons. Regulators are increasingly enacting rules that discourage the practice. There are also financial incentive programs that encourage operators to find customers that will pay something.

UAMPS members also benefit from their favorable wind locations. They have wide open spaces and good wind associated with nearby mountains. On-shore wind turbines are well proven and numerous developers have cost effective processes and experienced installation teams. The Inflation Reduction Act provides long term certainty for clean energy subsidies, ensuring that the power prices are consumer friendly. It also opens new avenues for non profit utilities to directly benefit from tax credit programs. A nuclear power project like the CFPP would be eligible for the same subsidy level as other clean energy sources but the tax credit programs in the IRA start paying real money only after projects are completed. A wind project can be finished in just a year or two in places where there isn’t much opposition. Earlier monetary flows are more valuable than later flows.

Even if they are led by people who would like to decarbonize, municipal power systems have a mandate to provide the most cost-effective power possible within the given constraints. They have access to relatively low cost, tax exempt debt, but bond issues needed to access that debt capability are often tenaciously debated, political choices. The interest rates paid may be lower than commercial rates, but rates for new debt are still linked to those paid in the rest of the borrowing market. Rising rates affect all borrowers.

Munis have no access to capital markets where investors have more understanding and appetite for a certain amount of financial risk. It is highly unlikely that they could convince their customers to pay catalytic prices for power from new technology with significant room for growth.

in summary, economic conditions for the Carbon Free Power Project have been deteriorating for several years. The total expenditures associated with that project have not been publicly released, but the amount spent is nowhere near the amount of money that was earmarked. UAMPS only submitted an application for “Limited Work Authorization” to the NRC in August of 2023 and it has only been a few weeks since the NRC accepted that application for review. No dirt has been moved at the site, other than that needed to conduct environmental impact studies.

Where does NuScale go from here?

This commentary is not supported by any direct communication with NuScale. It is based on publicly available news and announcements.

The CFPP was an important project for NuScale, but it is not the only sale that the company is working on. UAMPS is not the only customer attracted by a passively cooled, light water reactor using established fuel forms, materials and chemistry refined through many decades of operation in large fleets of nuclear power plants.

NuScale’s power modules have been issued a design certification at a time when none of the alternative choices have submitted an application for review. Submission is needed to start a regulatory calendar that moves at an excruciatingly slow pace. Though we hope the next review will be quicker, it took more than six years from the time NuScale submitted its Design Certification Application until the 5-member commission issued the final document. (Dec 31, 2016 – Feb 21, 2023)

According to Fluor, which still holds its large stake in NuScale, 18 active and signed Memorandums of Understanding from 11 different countries were in effect at the end of 2021.

Though none have yet achieved the status of a signed contract, there have been public announcements of serious interest in Romania and other Eastern European countries. NuScale is one of the six finalists selected for the Great Britain Nuclear light water reactor SMR program. Standard Power announced its interest in using NuScale power plants for two data centers, one in Ohio and one in Pennsylvania.

In March, 2023, an early stage start up company named Blue Energy visited Houston, TX – arguably the energy capital of the United States – for CERAWeek. The founders gave a presentation on their concept for offshore power plants that combine NuScale power modules with proven technology from offshore oil and offshore wind. They shared some startling numbers about the cost reduction potential available for NuScale power modules when using the ocean for the ultimate heat sink instead of a giant man-made pool that must be protected from aircraft impact.

Blue Energy is “productizing” nuclear fission by manufacturing pre-certified light water small modular reactors in shipyards as fully-completed, transportable nuclear power plants that are leased to industrial facilities and countries seeking energy security, price stability, and turnkey decarbonization. We leverage existing oil & gas platform manufacturing infrastructure and a simplified plant design to shrink the construction schedule from 10 years to 24 months and the overnight capital cost from greater than $6,000/kW to less than $2,500/kW while putting nuclear on a learning curve down to $1/W.

CERAWeek presentation “Blue Energy | Offshore Nuclear Power” Mar 7, 2023

The news of the demise of the CFPP should not discourage nuclear energy advocates for very long. It’s not good news, but no one should expect 100% good news with new nuclear development. CFPP’s demise should not – but certainly will – provide PR fodder for those who have never met a nuclear project that they like. It should not – but certainly will – provide a reason for “I told you so” commentary among nuclear energy cheerleaders who are rooting for a different kind of nuclear power system.

I am neither a registered investment advisor nor a broker-dealer and I do not provide stock market recommendations. As a managing partner of Nucleation Capital, I invest solely in private equity. My personal public market portfolio, however, includes some SMR (NuScale’s NYSE ticker symbol) stock that I have no intention of selling.

Additional References

Nov. 22, 2023: The Clean Air Task Force published Lessons learned from the recently cancelled NuScale-UAMPS project, with yet another very powerful argument against reading too much into the cancellation of NuScale's demonstration project as a reflection of the prospects of the broader SMR and advanced reactor market in the United States or globally.

Published by Valerie Gardner in Advanced Nuclear, Advanced Nuclear Customers, Carbon emissions, Climate change, Climate innovation fund, Construction costs, Corporate decarbonization, Energy abundance, Future of Energy, Government support, Investor activity, NEWS, Nuclear competitiveness, Nuclear financing, Nuclear innovation, Nuclear R&D, US competitiveness, US technological leadership, Venture capital support for nuclear

February 27, 2018

Advanced nuclear energy primed for private investment

Rod Adams' Atomic Insights blog published a piece in 2018 that asked an important question: “How do we match the ingenuity and enthusiasm of atomic innovators with the large magnitude financing sources needed to advance the field so it can become a major success story?”

This post reflected Mr. Adams' ruminations following the conclusion of the 5th annual Advanced Reactor Technical Summit, hosted by the Nuclear Infrastructure Council. It seemed that difficulty obtaining financing had been identified as a hindrance to those groups working to develop new nuclear technologies, causing some aspiring entrants to slow down efforts and others to drop out entirely.

Although there were no clear successes yet, the field nontheless was maturing and Mr. Adams opined that it was "ripe for investors willing to side-step conventional wisdom so that they can be in at the ground floor." Taking the metaphor even further, Adams wrote, "In my opinion, the foundation and basement level investors have completed enough of their tasks to declare that the remainder of the structure is ready for construction."

Recognizing that investing in nuclear remained too risky for "widows, orphans or near term retirement funds," there were some "Impressive opportunities available for those with a greater appetite for risk or who understand the importance of long term, patient investing."

On the plus side, the addressable energy markets where advanced nuclear could sell into are enormous, leaving plenty of opportunity for numerous contenders within a universe of potential suppliers of new technologies that was limited in size.

On the other hand, a problem was seen in the fact that virtually all of the then participating companies were either small, not-yet-public start-ups only accessible to investors of a certain sophistication or wealth, or they were very large public companies with just modest levels of involvement in advanced nuclear compared to their overall size.

These two features made it "difficult for people with modest resources but significant professional understanding of the opportunities to make strategic, long term, focused investments in the field."

At the end of this article, Mr. Adams exhorted anyone in his audience to reach out to him "with thoughts about developing mechanisms for investors with moderate resources and long time horizons to focus part of the portfolio in this potentially high payoff field." This is what initially motivated Valerie to reach out in the spring of 2018 to discuss her thoughts about launching a fund to invest in advanced nuclear.

Read Rod Adams' Advanced nuclear energy systems are ready for investors who seek ground floor opportunities, the 2018 Atomic Insights post that caused Valerie to reach out to Rod and inspired the formation of Nucleation Capital.

Published by Nucleation Capital in Advanced Nuclear, Brilliant thinkers, Capital reallocation, Climate innovation fund, Future of Energy, LINKS, Nuclear financing, Nuclear innovation, Venture capital support for nuclear