RE: SMR FT31 Aug 2023 23:10
First part
Last month Sam Altman, the (in)famous founder of OpenAI, posted a picture on social media of an elegant A-frame wooden building in a verdant tropical setting.
It looks like a billionaire’s weekend pad. However, what the image actually depicts is the putative design of a small modular (nuclear) reactor invented by Oklo, a company that Altman has chaired since 2015. And it was posted because Oklo has just merged with a special purpose acquisition company created by Altman and Michael Klein, the Wall Street dealmaker, valuing it at $850mn.
That will make some observers wince. The acronym “Spac” became toxic two years ago because the concept was badly abused during the last credit bubble. Adding “nuclear” into the mix risks making it doubly radioactive, in the public mind, given past accidents at the Chernobyl and Fukushima plants (and current Russian threats to Ukraine’s Zaporizhzhia plant).
Nevertheless, investors and policymakers should pay attention. On Thursday the United States Air Force announced plans to use Oklo’s reactor for the Eielson Air Force Base in Alaska — seemingly the first potential use of commercial SMRs by the Federal Government on American soil.
And activity — and investor interest — around SMRs is rising elsewhere. A rival company called TerraPower, backed by Bill Gates, is also developing reactors. So is NuScale, which listed via a Spac last year and recently received $275mn in funding from variety of governments for a Romanian project.
Industrial giants such as Britain’s Rolls-Royce are jumping into the action while GE Hitachi is building an SMR plant in Canada. And last month Britain launched an international competition for the best SMR design, pledging to take “up to a quarter of the UK’s electricity from homegrown nuclear energy by 2050”.
There are three factors sparking this. One is a recognition that demand for electricity will soar in coming years, because of global growth and the fact that digital innovations such as AI need “a lot” of additional electricity. This creates, as Altman admits, “urgent demand for tons and tons of cheap, safe, clean energy at scale”.
Second, relying on fossil fuels to generate this electricity will exacerbate global warming — but renewable sources, such as wind and solar, cannot plug the gap without major breakthroughs in battery storage.
Third, the nuclear tech has changed. In the 20th century, this was generated in massive power plants that were costly and time-consuming to build.
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