Talking about Advanced Nuclear’s emergence into the private sector and what that means for its funding

Valerie Gardner, TIA’s cofounder and principal, was invited to speak at the US Nuclear Infrastructure Council’s first-ever New Nuclear Capital Conference, held July 16th and 17th in Washington, DC.  In a talk entitled “Why Advanced Nuclear is Changing the Nuclear Energy Financing Paradigm,” Ms. Gardner reviewed the changes that have been transpiring since funding for nuclear R&D was ended in the 1990s and where that has left the industry.

Prior to the Three Mile Island and Chernobyl accidents, all nuclear R&D was funded by the federal government, in an “open loop of exploration” within the National Labs.  From the point of view of the scientists, this was a safely “capital free” zone. Teams of engineers created prototype reactor designs. The federal government paid the bill and eventually large utilities financed the construction of commercial plants typically with power rates tied to “cost-plus” returns of the new capital. There was little incentive to keep costs down or, for that matter, to vet competitive designs.

But things changed in the early 1990s, when funding for nuclear R&D was cut and even projects deemed extremely important for our energy future, were shut down. In the nearly thirty years since then, ownership of R&D and the corresponding funding allocations have not resumed but the DOE has created, within the last few years allocations to provide smaller seed grants for private-sector nuclear energy R&D.  These new allocations, being granted through the DOE’s GAIN program, reflect the fact that, indeed, there’s been a growing number of private companies conducting engineering for advanced nuclear designs.

In fact, today’s nuclear engineers, who want to work on developing new nuclear technologies, may qualify for a GAIN grant but, after that, they are at the mercy of the private capital markets for the remainder of their funding needs.

But can the private sector afford to support an enormous undertaking like redesigning nuclear power? Absolutely!

In 2018, the DOE’s total budget was $28 billion, down $1.7 billion from 2017. In contrast, the private sector allocated $28 billion just for early-stage startups and $130 billion went to all stages of Venture Capital funding—surpassing even the dot-com era!

So yes, there’s far more money available through the capital markets, through which a very diverse range of investors provide capital to fund all sectors of the economy and all stages of business.  Nuclear developers simply need to start thinking like entrepreneurs, learn to pitch their ideas to investors, and go out and compete for those private dollars.  This is called “capitalism,” because the drive to generate a profit from the use of capital is at the heart of investors’ decisions.

Click the image to download the presentation slides for “Why Advanced Nuclear is Changing the Nuclear Energy Financing Paradigm.”