251. Fission Impossible: the SMR Gamble - Oct26

SPEAKER_1 (0:07)

With Laurent Segalen from London and Gerard Reid from Berlin, this is Redefining Energy.

Laurent Segalen (0:13)

Today on Redefining Energy, Gerard, this is our yearly episode on nuclear, but we're going to concentrate probably on small modular reactors.

Gerard Reid (0:23)

Well, Laurent, I was thinking of you recently because I was in Brussels and I just happened to listen to the French nuclear lobby telling me that the future is nuclear, and it just made me think of you for some reason.

Laurent Segalen (0:38)

The good thing is once a year we have the Bible of industry, almost 600 pages, which is called the World Nuclear Industry Status Report 2026 and we'll put a link in the show notes. So you will have all the data of all the countries, of all the nuclear reactor being built. There's a lot of things around China, SMR, so really it's the Bible if you want to have a bit of an independent view and not just listening to lobbyists all the time.

Excellent, excellent.

Gerard Reid (1:08)

Well, listen, I'm looking forward to this conversation because I really think that the SMRs are the great and maybe even last hope for nuclear.

Laurent Segalen (1:16)

This industry has great tailwinds. You have hyperscalers who are gobbling whatever short-term nuclear capacities are available. They restart decommissioned plants. There is the deal that Google did in Finland. So they took one gigawatt of existing nuclear. And the US nuclear startups have raised five billion this year.

So we thought it would be a good idea to bring a nuclear specialist to dig a bit into all those investments.

Gerard Reid (1:44)

Absolutely. What we decided to do was to bring on Andrei Utkin, who is the nuclear specialist at S&P Global. I think we should bring him on the show.

Laurent Segalen (1:54)

Andrei, welcome to the show.

Andrei Utkin (1:56)

Thank you for having me.

Gerard Reid (1:57)

Well, Andrei, maybe we should have kick off with a simple question from my side, which is, are we really seeing a renaissance in nuclear or what is it? Because there's massive activity, whether it's people building large-scale reactors, SMRs, it seems to be massive amounts of capital flowing into the area.

Andrei Utkin (2:16)

We are definitely living in the time of nuclear renaissance, and there's many drivers or catalysts, positive catalysts that are happening at the same time, right? So number one is we're living in a time where we have multiple crisis all around the world, which kind of shape the way how we produce, consume, and move energy all around. Then there's definitely an emphasis on energy security by many countries out there.

So nuclear is clean, reliable, it can run 24 per 7, and with this advanced nuclear, which we will be discussing later today, you can even untap and unfold new applications which the conventional nuclear cannot achieve. There's definitely also another catalyst, which is hyperscalers, right? They're hungry for 24 per 7 power, not only today, but in 10 years from now, for AI and data centers. But broadly speaking, electrification is a major theme, and as we decarbonize more and more our grids, some portion of clean farm power is needed in order to, from the system perspective, make it more efficient. So yeah, nuclear has been a source that decades before, we knew how to build on time and on budget. Back in the day, also, it was an energy security question, and demand has been growing. We are now living again at the same time. So there's never been a better time in the recent decades for nuclear to prosper. And now whether we will achieve that, that is a question to be answered.

Laurent Segalen (3:42)

Legacy Nuclear has proven, as you say, extremely valuable for greats, but every attempt to build new plans, whether it's in Europe or in the US, have seen budget going like bananas. And of course, everybody's gonna point towards Okiloto III in Finland that they bought for 3 billion, but what they forget to say is it cost 12 billion to Areva to build it, which basically made it bankrupt. So the Fin really had a great deal with Okiloto.

Let's put those big government program aside. And I think that's because that cost explosion, that all of a sudden people start talking about SMR. So when did that SMR craze started to emerge, probably with Bill Gates?

Andrei Utkin (4:28)

Why exactly do we try to build SMRs? And as you correctly said, in particularly recent decades, we completely lost touch. And by we, I mean in the Western world, because I also want to raise a distinction between Western world and say China or Russia, who has actually not lost that touch. And they are building more than anyone else combined. And China now has under construction more reactors than the entire world. And they are actually building on time and on budget. And they are also having the first small nuclear reactors already in operation since some years. It's true that since demand has not been growing in the Western world in the past couple of decades, we moved from the standardization point of big nuclear to the mega project, right? So each project has become some sort of a unique thing. We started to add and modify a little bit technology and finance and each and every aspect, as well as we kind of completely lost the transfer of experience and knowledge. And therefore, SMRs, which stands for Small Modular Reactor, small because it's supposed to produce just a fraction of a power output, the big nuclear, but this modularity is the key because small nuclear reactor is trying to achieve what other industries achieved being produced in a factory fashion. So the whole point is that you bring it to a factory in a controlled environment, you design once, you license once, and then you deploy many, many, many times. You don't really change it massively, probably incrementally, you change a little bit to make it better and better and better each unit. But ultimately, that's essentially the nutshell. So whether or not we're going to achieve that yet to be seen, some of the projects already on the construction, not necessarily 100 percent they're built in that kind of factory fashion, but the idea is there. So to build it smaller, to have smaller amounts of capital that are needed to deploy them, therefore to reduce the financing part and run them essentially on time and on budget.