The growing concern over energy independence and the need for clean, reliable energy sources has never been more pressing. Despite the advancements in renewable energy technologies like solar and wind, the world is still heavily reliant on fossil fuels, which accounted for 81% of total energy consumption in 2022. This reliance not only contributes to environmental degradation but also exacerbates geopolitical tensions. As we’ve examined in our previous pieces, energy nationalism is replacing globalization as the geopolitical chessboard realigns.
Amidst these challenges, there is a strong case to be made for a nuclear energy renaissance. Nuclear fusion, while the holy grail, is still decades away from large-scale commercial use. Fission, a technology which has existed for nearly a century, is a top candidate for generating clean energy in a safe, and scalable manner. By examining the economic benefits, the energy potential of nuclear power, policy failures of the past and present, and new technologies coming online, we can better understand the importance of embracing this technology as a critical part of our sustainable future — and see why venture investors are placing their bets.
The quick and (not so) dirty
Simply put, nuclear fission is a process in which the nucleus of a heavy atom such as uranium splits, creating a large amount of energy in the form of heat. This heat can be harnessed to warm water surrounding a nuclear reactor which creates steam, spins a turbine, and produces electricity for distribution. This process produces about 10% of the world’s electricity across 440 different active reactors worldwide.
Nuclear power plants provide baseload power, ensuring grid stability even when other sources, such as wind and solar, are intermittent. Nuclear plants have an average capacity factor of over 90%, meaning they generate power at their full capacity for more than 90% of the time. In comparison, solar and wind have capacity factors of around 25% and 35%, respectively. This is because it may not always be sunny nor always windy where solar panels or wind turbines are installed. In the case of nuclear power, the plant is capable of always running, regardless of environmental conditions. The ability to provide a consistent power output makes nuclear energy an essential component of a diverse and resilient energy mix, and one that can stand up to things like oil embargos or gas pipeline failures.
One of the most critical benefits of nuclear energy is its ability to significantly reduce greenhouse gas emissions. Nuclear power is responsible for a large portion of global carbon-free electricity, and increasing nuclear capacity can accelerate the transition to a low-carbon energy system. As of 2021, nuclear power plants worldwide prevented the emission of over 60 gigatons of CO2 (two years worth of global energy-related emissions) that would have resulted from using fossil fuels. This is key to global decarbonization efforts as countries around the world seek to meet their climate goals under the Paris Agreement.
Nuclear energy has the potential to revolutionize the way we meet our energy needs while minimizing environmental impacts, making it ideal for addressing increasing energy demands without contributing to land and resource degradation.
Furthermore, the construction, operation, and maintenance of nuclear power plants create long-term employment opportunities, providing a boost to local economies. According to the Nuclear Energy Institute, a single nuclear power plant in the United States generates 500 to 800 direct jobs, employing up to 7,000 workers at peak construction. Communities surrounding nuclear facilities often benefit from increased tax revenues and economic development. These factors make nuclear energy an essential tool for creating jobs and promoting economic growth, especially in rural areas where economic opportunities may be limited. A recent example of job creation in a rural area is the ongoing development of Bill Gates-funded TerraPower and its Natrium plant in Kemmerer, Wyoming. It aims to employ up to 250 people, 110 of which previously operated the town’s coal facility.
A series of policy blunders
One of the most significant barriers to the widespread adoption of nuclear energy has been policy failures and public perception. The historical fear of nuclear energy, rooted in high-profile accidents like Three Mile Island, Chernobyl, and Fukushima, has led to the politicization of abundant energy which hinder the development and adoption of nuclear. One of the challenges of using fission as a power source is controlling the nuclear chain reaction. If the chain reaction is allowed to proceed unchecked, the result could be a nuclear meltdown. To prevent this, control rods made of materials that absorb loose neutrons are inserted into the nuclear reactor. By adjusting the position of these control rods, the rate of the reaction can be finely controlled. However, there still is room for human error.
The Chernobyl disaster in 1986 resulted in a few dozen direct deaths and long-term health effects for many more, while the Fukushima incident in 2011 led to the displacement of over 150,000 residents. Notably, 1979’s Three Mile Island incident, the only major nuclear meltdown on US soil, resulted in zero deaths and no notable radiation increases in the surrounding area. These incidents have contributed to public alarm and skepticism (exacerbated by country-wide campaigns by figures like Ralph Nader), making it difficult for politicians to openly support the industry.
Overregulation and lack of political support have stifled innovation in the nuclear sector, causing projects to become delayed and more expensive than necessary. For example, the Vogtle nuclear expansion project in Georgia, has seen repeated delays and cost overruns, with the budget ballooning from an initial $14B to over $30B. While safety should always be a priority, the nuclear industry has been subjected to a level of scrutiny not applied to other energy sources, leading to an uneven playing field.
Public opinion on nuclear energy is often based on misconceptions and outdated information. Contrary to popular belief, nuclear energy is among the safest and cleanest sources of power. Recent studies found that nuclear power results in just 0.03 deaths per terawatt-hour (TWh) of electricity, making it safer than combined coal products (57 deaths per TWh), oil (18 deaths per TWh), and even wind (0.04 deaths per TWh).
There is reason for hope, however. In an April 2023 survey, Gallup found that American support for nuclear has reached its highest point since 2012. The Biden administration recently committed over $1B to keeping nuclear plants open (i.e. Diablo Canyon), considering it a key element to achieving 100% clean electricity in the US by 2035. Nuclear support is growing to become a bipartisan topic in the US.
Role models for others
Countries like France and Sweden serve as successful examples of the potential for nuclear energy to contribute to a clean, reliable, and affordable energy mix. In France, nuclear power provides over 70% of the country’s electricity and has allowed the nation to maintain low electricity prices and reduce greenhouse gas emissions. As a result, the country enjoys some of the lowest electricity prices in Europe and is the world’s largest net exporter of electricity due to its very low cost of generation, gaining over €3 billion per year from this. The French nuclear program has been successful due to consistent government support and a standardized reactor design, which has reduced construction costs and facilitated efficient operation.
Sweden’s nuclear power program has also been a success story, with the country deriving approximately 40% of its electricity from nuclear power. Sweden’s commitment to nuclear energy has helped the nation achieve one of the lowest per capita CO2 emissions in the European Union, at around 3.41 metric tons per capita in 2019, compared to 7.9 metric tons per capita in the same year by Germany, for example.
Germany has unfortunately caved to long-standing anti-nuclear pressure and closed its last three nuclear power plants in April 2023. While this was a highly anticipated decision and expected since 2011, it has left many confused. Germany found itself center-stage when the Ukraine conflict broke out as it imported tremendous amounts of Russian gas via the Nord Stream pipelines. In an effort to curb back that reliance, and with the shutting down of its nuclear facilities, Germany now generates more than a third of its electricity via coal-fired power plants, and burns more coal than any other country in the European Union.
The strategic decision is perplexing and highlights the growing reality that energy nationalism is quickly replacing globalization. Nuclear energy is an important piece to this transition and the decision to revert back to dirty fuels and dependence on other nations will likely (and already has) prove to be a huge mistake by Europe’s largest economy.
Energy nationalism as the best path forward
Structurally higher energy prices (via OPEC) will accelerate efforts to globally transition to renewable energy alternatives. The world is witnessing an era of unprecedented investment in clean energy, but securing the supply chain will be critical to ensure resilience.
Saudi Arabia has consistently been one of the largest oil exporters while US production has fallen due to declining productivity and higher drilling costs. In the last year and a half, the US Strategic Petroleum Reserve (SPR) has been depleted by 42%, or 267M barrels, as part of Washington’s efforts to counteract the OPEC production cuts from last year. The SPR no longer poses the same level of threat to oil prices.
China, on the other hand, aims to be the Saudi Arabia of clean tech hardware. In 2022, China accounted for over 90% of the investment in low-carbon manufacturing. Almost all electronics, including clean-energy technologies, require rare earth elements as essential materials. China produces over 90% of the world’s downstream rare earth products and technologies and even supplies 98% of the EU’s rare earth elements.
Transitioning to renewable energy demands substantial basic and critical minerals. The challenge lies not in mineral abundance, but in securing a reliable supply from countries with higher geopolitical risk. Resource nationalism, heightened environmental scrutiny costs, and mining and processing expenses pose significant hurdles.
Nuclear is a platform which enables clean energy without the burdens of global supply chain reliance. Advancements in domestic innovation, government support, and overall spending will help the United States (and other countries) migrate away from not only fossil fuels, but also economic foes. A nuclear renaissance is energy nationalism.
Venture taking notice
Over the past few years, there has been a surge of advanced nuclear startups focused on developing innovative fission reactor designs and technologies. These companies aim to address the challenges associated with traditional nuclear power, such as safety concerns, waste management, and high capital costs. Some notable startups which have received considerable venture funding include TerraPower (responsible for the Kemmerer Natrium plant, $750M Strategic Financing in August 2022), NuScale Power ($380M SPAC in May 2022), and Radiant Nuclear ($40M Series B in April 2023). These companies are working on novel reactor designs spanning traveling wave reactors (TWR) to small modular reactors (SMR).
In addition to investments into nearer-term fission technologies, venture capitalists are also turning their attention towards fusion. Fusion works in the opposite manner of fission reactors — rather than splitting atoms, fusion combines them. While attempts at fusion have been ongoing for decades, the first demonstration of ignition (net energy gain) happened only in December 2022 at the Lawrence Livermore National Laboratory in California. This is a major step in the path towards sustainable fusion, but years if not decades of research and development remain. Commonwealth Fusion Systems raised a $1.8B mega-Series B in November 2021, while Sam Altman-backed Helion Energy raised a $500M Series E the same month. Interestingly, Microsoft recently inked a deal, obligating Helion to provide it fusion power starting in 2028. Investors are clearly becoming more confident in the potential of advanced nuclear technologies to address the global energy challenges.
The time is now
The world needs a nuclear energy renaissance to address the challenges posed by climate change and the increasing global energy demand. By correcting policy failures, changing public perception, and leveraging the economic benefits and energy potential of nuclear power, we can embrace nuclear energy as a key component of a sustainable energy future. The examples of countries like France and Sweden demonstrate that with the right policy support and technological advancements, nuclear energy can play a significant role in meeting our global energy needs while minimizing environmental impacts. Meanwhile, venture investments in domestic innovation may prove to be the spark needed to catalyze a switch to nuclear. As we work towards a cleaner, more secure energy future, it is crucial that we harness the immense potential of nuclear energy and give it the attention and investment it deserves.
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