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NuScale Co-Founder on new nuclear energy: 'It’s a whole different way of building power plants'

NuScale Co-Founder & CTO Dr. José Reyes joins Yahoo Finance Live to discuss the latest in nuclear energy technology.

Video Transcript

AKIKO FUJITA: Well, in our week-long series, Planet Earth in Crisis, we are taking a closer look at the issue of climate change and the solutions to address the crisis. Clean energy is certainly a big part of that discussion. Nuclear energy accounts for 10% of the world's electricity. But the industry has been plagued by concerns about safety and cost overruns. One company says its technology can change that. We spoke to NuScale Power co-founder and CTO, Dr. José Reyes, and started the conversation by asking him why small modular reactors they're developing are likely to change the game.

JOSE REYES: Oh, yeah, the differences are tremendous. You know, you think about the designs from 50 years ago and what we can offer today, advanced computers, modeling a digital INC, that's a whole different way of building power plants, operating and maintaining them. So small modular reactors are kind of a new wave and very innovative in design.

AKIKO FUJITA: And what makes it innovative? Because when you think about the nuclear industry there's certainly been a lot of questions around not just the safety, but really, about cost overrun issues. How does building this on a larger scale and having this template in place, how does that allow you to scale at a quicker rate, but also a cheaper rate?

JOSE REYES: Right, yeah, so what we've done is we have a reactor vessel, which is inside a containment vessel. And they're relatively small, so about 15 feet in diameter, 70 feet long. But the secret is that it's all built in a factory. So you're doing all your nuclear construction fabrication in a factory, and then separately, you're doing your civil construction on-site. So it's a parallel construction approach that greatly reduces the schedule in cost.

AKIKO FUJITA: Schedule in cost there. Let's talk about where things stand. You've got a plant that you are building out over in Utah. What's the timeline on that right now?

JOSE REYES: So the customer drives that, the operating decision. So their commercial operation date is currently at 2029. That's when they plan to replace some of their coal-fired plants. But NuScale has been preparing for this well in advance. We now have our final design approval from the US Nuclear Regulatory Commission. So we're the first SMR to get that. And we can start delivering modules as early as 2027.

AKIKO FUJITA: You were talking about the cost and scale benefits of this technology. But if you look at the budget right now on that particular project, we've seen it go from $4.2 billion to $6.1 billion. When you look at that, does that go against the argument that you've made about the benefits of pushing forward with SMRs, as opposed to what is seen as more traditional nuclear technology?

JOSE REYES: Yeah, no, it's really interesting to note how cost estimates are developed. So right now, we're at a class 3 estimate. And so that has uncertainty on it. And then we go back to the customer, and we inform them, this is what we're estimating in terms of the price that we could provide for you. They add on top of that, then, their local costs, the costs for site-- the engineering and things like that. And now we talk to them again and say, well, is this the size plant that you want?

Now one advantage that we have that has not been available in the past is that we can go to four modules, six modules, or 12 modules. And so that of course reduces the cost, depending on what they need. And so we're tailoring our design so that it's very responsive to customers as opposed to what was done in the past. The one-size-fits-all just doesn't work anymore. So we can offer them a four or a six-pack at a much reduced cost. And we try to meet their not only their capital cost requirements, but also, the levelized cost of electricity. So for this first project, they've set a target of $0.055 per kilowatt hour. And so that's what we're working towards right now.

AKIKO FUJITA: But how do you address the cost overrun issues or concerns?

JOSE REYES: So one of the-- we've done quite a bit of studying on the cost of overruns and what's been done in conventional nuclear power today. So this is very different. This is something that can be built in a factory, shipped by a truck, rail, or barge-- they'd be the individual components-- and then installed in a pool. So it's a much simpler construction than in the past. So we have a good sense of cost there. And it helps reduce the schedule because you're doing this parallel construction and fabrication.

Now another novel part of what we're doing is that we've gone smaller. And so with smaller components, much fewer components, we can access forgings from all over the world, whereas in the past, we were very limited as to where you could get your parts because they were so large and so specialized. So we're looking at a much different design.

And lastly, what we've done is in studying what's driven some of the cost overruns, I think there's a couple of things. Well, first, I think having a design that's 80% complete is really needed before you begin construction. And that hasn't been done in the past. So our design will be at least 80% complete before we go to the field. And there's always some site engineering that has to be done.

I think the second thing that can be done to reduce costs is to really develop the infrastructure of our country. Our nation has really lost a lot of manufacturing and construction capability in the nuclear field. And so, they're having to relearn a lot of things. So I think we have an opportunity right now to do something that's different, to deleverage what's being done by this administration in terms of infrastructure development, to make sure that we can meet schedule and cost.

AKIKO FUJITA: On that front, we have heard from the White House talking about establishing a clean energy standard, if you will, to find the right energy mix to get to net zero by 2050. How are you looking at nuclear in that energy mix? How significant do you think nuclear is likely to be, the role it's going to play, in getting to that ambitious goal of net zero by 2050?

JOSE REYES: Yeah, net zero is a challenge, right? We're going to have to use all the resources we have at hand. And so nuclear power right now represents 60% of the carbon-free electricity produced in the United States. So we need to include that as a tool. Now there's been at least two or three different studies that have been released. One was an E3 study out of California. They did a study for Washington State. And the other was Rocky Mountain Institute. They did a study for New Jersey. And MIT has done a very comprehensive study looking at the future of nuclear power.

And what all three of these studies show is that the least path cost to net zero is to include nuclear power. Once you get to a certain fraction of energy production with renewables, you have to worry about grid stability. And you have the overbill. So, you need at least 30% of the power coming from stable nuclear power in order to meet your objectives and be able to afford it.

AKIKO FUJITA: That's certainly the case for what supporters of nuclear energy have said. But when you look at some of these targets, we're talking potentially of a Biden administration looking at slashing emissions in half by 2030. And yet, NuScale's first project isn't expected to come online until at least 2027 or 2030. What do you say to those critics who say, what's the point in investing in scaling this technology now when we won't even see it until the end of the decade?

JOSE REYES: Well, that's a great comment. And I think it's just reflective of the process for nuclear reviews and approval. I think that's part of it. And the other part of it is that, again, aligning that manufacturing base within the United States. So I think that's the other part of it. But of course, as right now, we're talking to lots of other customers, that's exciting. Ever since we got our design approved by the Nuclear Regulatory Commission, we've been receiving requests not only in the US, but all over the world.

And so, this is a huge market. So we're excited about that. And potentially there may be some projects that come online sooner in other countries. I mean, we're still looking at that. But we have agreements with Bulgaria, the Czech Republic, Jordan, Canada, Ukraine, and the United Kingdom. So this is a big market. And we're predicting about $100 billion by 2035. So we're looking at that. And there's opportunities not just in the US, but all over the world.