An increasing number of investors are concerned about the impacts of carbon emissions on the climate. They wish to avoid investing in businesses which contribute to the problem. According to the CDP Carbon Majors Report of 2017, nearly all of the industrial carbon emissions since 1988 have come from the top 100 fossil fuel producers. This explains why most of the funds seeking to implement a “climate” screen simply avoid fossil fuel companies. While that is a relatively easy way to avoid investing in companies that cause the problem, what is harder is filling in that portion of the portfolio which needs to represent the energy sector. In looking at this problem, we saw that the largest segment of the economy which produces clean energy and is represented in public equities, is the nuclear energy industry.
Nuclear power is carbon-free energy which today provides 20% of our electricity, over 60% of our clean energy and which supports a plethora of industrial, commercial and medical applications. Energy investors, recognizing the demand for clean energy, have focused on renewables, storage and efficiency and have largely avoided recognition of nuclear energy’s contributions. The experts, however, have warned that in order to displace enough fossil fuels to meet the Paris COP goals, nuclear power must be expanded along with the other much more dilute forms of low-carbon generation. Unfortunately, traditional nuclear power, now in its third generation and sized at the gigawatt+ level, requires enormous up-front capital commitments and a long time frame for project completion, which partially explains why there are only two reactors being built in the U.S. It does not readily fit into the tight budgetary capabilities or demand-growth profiles of many jurisdictions.
Fortunately, a new generation of nuclear physicists, engineers and entrepreneurs are working to bring nuclear power into the 21st century by offering a vastly more energy flexible, modularly-sized and cost-effective range of nuclear reactors designs. These novel, fourth generation designs seek to improve substantially upon current operating characteristics to enable future reactors to provide electricity or high-temperature heat for industrial purposes, be sited underground, use alternative coolants rather than water, even to be able to use spent fuel “waste” from prior generations.
Since 2001, the numbers of students graduating with PhDs in nuclear engineering has steadily grown, creating a resurgence of talent, R&D, and a significant number of nuclear start-ups, spin-outs from academia and joint ventures. What is now called “Advanced Nuclear,” is an emerging technology sector that is working on both new applications and revolutionary nuclear power redesigns. This new sector has enormous potential to add flexible zero-carbon power to energy grids, meeting the dynamic power and energy stabilizing needs of advanced grids as well as many other energy applications.
In contrast today’s nuclear power utilizes the light water reactor, a 1960s-era design that was originally intended to power submarines, where high pressure and abundant cold water are innate features. Despite the challenges of replicating an underwater environment on land, Generations II and III didn’t move away from the light water design. They added additional layers of redundant safety systems and physical separation, which vastly increased new construction costs. In the post-Three Mile Island era, regulators and industry prioritized safety at the expense of cost-effectiveness and transformative development.
ABOUT ADVANCED NUCLEAR
Fast-forward to the 2000s. Concerns about climate change have amplified efforts to reduce humanity’s burgeoning carbon emissions, challenging a new generation of physicists to scour the public data from some fifty-two previous National Lab designs, some known for having had innate safety advantages over the light water reactor. Today, around the world, nuclear engineers equipped with advanced modeling software, miniaturization, advanced materials, artificial intelligence (AI), blockchain and other tools, are in a global race to develop the best advanced energy solutions to meet a range of needs.
Given the huge size of the markets and the catastrophic costs for a failure to eliminate emissions, it is no wonder that so many brilliant engineers have launched multiple innovative design efforts. Today, nearly 90 initiatives are looking to produce nuclear-powered batteries, industrial heat systems, flexibly-sized and mobile power stations, using scalable and modular designs suitable for mass production of reactors sized to power everything from remote villages up to mega-cities, along with a wide range of industrial, agricultural, medical, transit and residential uses. These entrepreneurs are pursuing game-changing visions of applying nuclear power to an increasing array of energy needs, and working to make them cheaper, easier to manage, faster to build and better suited for integrating into clean energy grids to serve the ecologic goals of nations around the world.
WHO IS INVESTING IN ADVANCED NUCLEAR?
TIA has observed that there are a number of very savvy investors who have already recognized the importance of nuclear energy to our success in rapidly reducing demand for dirty fuels. These include individuals like Bill Gates, Jeff Bezos, Peter Thiel, Ray Rothrock, Nathan Myhrvold, Carl Page and many others. While billionaires have the ability to conduct their own due diligence and place big bets, most of us do not. Regular investors, seeking clean energy opportunities, are primarily focused on renewable energy sources. Nevertheless, a broad array of NASA, IPCC, National Academy of Science and academic experts have been urging support for the expansion of nuclear power in order to best tackle our CO2 problems.
Beginning back in 2014, TIA’s “nuclear-inclusive” clean energy research led it to places where few investment professionals go: nuclear industry conferences. Through those experiences, we began to hear more and more about the Advanced Nuclear sector and our interest in the development in that sector has grown. TIA recognized the importance of public nuclear companies to its efforts to effect a quantitative approach to sustainable investing which includes an energy sector. Now we are looking to invest in the Advanced Nuclear sector as well.
Worsening climate impacts have increased the global urgency to eliminate emissions. While opposition to the use of nuclear energy remains, we have seen growing acceptance of nuclear energy as a clean energy ally in state policies in New York, New Jersey, Connecticut, Illinois and Ohio, which have all passed legislation that protects existing nuclear plants and even among environmental groups like The Nature Conservancy, the Union of Concerned Scientists and the World Resources Institute. There are now several new federal bills that support nuclear innovation which have been signed into law recently (see: NEICA and NEIMA) a growing pro-nuclear advocacy movement.
There is well over $6 trillion in pension and foundation investment funds that has already committed to “divest” from fossil fuels and which needs to be re-invested in alternative sources of clean energy. Fund managers are looking to find investments in truly game-changing solutions—especially those that can compete with fossil fuels on price—and be scalable at the gigaton level. When a nuclear reactor fissions, 200,000,000 electron volts of energy (EVs) is released without any CO2. Compared that to the 2 EVs of energy released when a hydrocarbon bond that is broken in burning coal, oil or gas, and we think you’ll see why fission is a truly compelling source of abundant energy that can help solve our globe’s energy and CO2 problems.
Following several years of research, education and development on a strategy and approach for facilitating private, diversified investment in advanced nuclear and other climatetech ventures such as carbon capture, utilization and sequestration (CCUS), a new and separate, pooled-capital venture fund called Nucleation Capital has been formed, now operating at AngelList. To learn more about Nucleation Capital, please click here to exit Tiemann Investment Advisors, LLC and access Nucleation Capital’s fund portal at AngelList.