Nuclear’s new horizon: Q&A with Ben Reinke

 
Nuclear energy is gaining traction due to accelerated technological advancements and increased global power demand. In this Q&A, Rumina Velshi, Strategic Advisor to Torys LLP, and Ben Reinke, Senior Vice President, Global Business Development and Deputy Chief Commercial Officer at X-energy, discuss the evolving nuclear industry and what it means for the wider energy supply chain.

Rumina: What are the biggest opportunities and challenges facing the nuclear industry? What developments in the nuclear and wider energy industry are you most excited about?

Ben: There is massive growth and opportunity in energy. There is a transition happening from various sources of energy to new (often low emissions) sources. However—while there's been worldwide recognition of the importance of energy reliability, resilience and security—we still have billions of people in energy poverty globally. Layered onto that is a step change in global energy demand, due to the growth of AI and global data centre demand. When you look back to the mid-2000s, we had a global decoupling of power demand from energy-driven GDP growth. That decoupling made it look like demand, for the foreseeable future, would remain flat or experience relatively low growth versus GDP. Because of current global compute opportunity and requirements, we are seeing demand growth that is accelerating beyond GDP growth, and that was not predicted five or ten years ago.

Nuclear sits in the middle of the Venn diagram of competing priorities for more sources of low emissions energy, more sources of firm energy and more sources of dispatchable and flexible power. On top of that, new nuclear power technologies that have not yet been brought to the market at scale offer various applications that can provide an even greater overall benefit. The opportunity was great two-to-four years ago but is massive today and I think it's only going in one direction.

Of course, there is a challenge in meeting the overall demand growth and having incredibly pinched supply chains. There will be significant demand for high-quality labour, especially field labour welders, electricians, etc. and that's going to put pressure on infrastructure project development. The challenge will be whether we can grow supply chains, attract more talent and learn how to run projects more efficiently than we have in the past. That's a macro challenge that affects all sources of energy, and nuclear has a great opportunity within that subset.

Rumina: How has the industry changed in recent years?

Ben: The industry is changing demographically, with people from all kinds of backgrounds, skill sets and industries joining. At X-energy, for example, we have brought in a lot of new voices. By taking experience and acumen from the oil and gas sector to LNG export terminals, petrochems, renewables, high quality manufacturing processing industries (like aviation and semiconductors) and development deployment, we are trying to take the best and brightest from other industries to do nuclear in a different way than in the past. That is a great benefit that the technology enables and is reflective of the nuclear sector writ large. There are all kinds of new voices joining the chorus of support for nuclear power, not only from a technical perspective but from a business, leadership, political and general stakeholder perspective.
 

 
 
The industry has also been heavily driven by technology and business innovation—not just business case, but business methodology. The whole model of how companies think about making money and generating value for their shareholders and customers is being disrupted. One of the core features when you are building a large-scale individual reactor project is the sources of capital needed that can afford to build something of that size. It typically requires a state-owned enterprise, a provincially owned Crown corporation or a private utility that can handle that type of major capital investment.

What we're seeing now, when you go down an order of magnitude to a slightly smaller bite-sized individual cost for the asset, is that it frees up the opportunity for new capital to join projects. The lifecycle of a nuclear development project with a small modular reactor (SMR) is shorter than with large reactors, and the head count in the field is often less. This means that there are other sources of capital and different types of customers coming into the industry and that's changing how we do business.

Rumina: What changes do you expect to see in the global nuclear market as the appetite for AI (and the energy needed to power it), continues to grow?

Ben: The opportunity globally is certainly growing. In addition to having a larger base of customers, the technology itself is solving more problems. For example, our project with Dow Chemical and the state of Texas involves us providing power and heat from our system to meet steam and electricity requirements for an existing large ethylene, and ethylene derivatives, manufacturing facility. That's a piece of the addressable market that did not previously exist for nuclear.

When you take a broader customer base, lower capital requirements, a total addressable market that has a larger size of direct applications and add in rising demand for power coupled with a global push to transition to more resilient sources of power, you get an increasing global demand for nuclear power.

Rumina: As someone who has worked in government, what are your thoughts on how both the Canadian and U.S. governments are supporting nuclear innovation? Where could they improve? Are there any playbooks from other countries you think are doing nuclear innovation very well that we can look to?

Ben: We are seeing a thoughtful approach from several governments who want to enter the nuclear power industry or want to extend and/or build out their current nuclear capabilities. Of course, there is no one right answer. In the case of the U.S. and Canada, each state or province has its own way of thinking about the market and its own levers to enable the deployment of nuclear.

In Canada, what we saw with the deployment of the first SMR in Canada (Ontario Power Generation’s Darlington New Nuclear Project (BWRX300)) is that this approach works well in Canada. It is a great way to drive a first project forward. On the other hand—while the regulatory pathway at an existing nuclear site in Canada is straightforward and the Canadian Nuclear Safety Commission (CNSC) is a great regulator of nuclear power—the regulatory pathway for follow-on projects in non-nuclear operating communities is a little bit fuzzier. Finding a way to accelerate the licensing pathway and decrease the burden is going to unlock more capital investment for projects. We see a lot of interest across many provinces for the deployment of nuclear power but, without having developed all the provincial and federal pathways, we have not seen true acceleration of new nuclear project deployment yet. You hear the right words and signals coming from many leaders both on the corporate and government side, but we haven't seen the industry take off here like it has in the U.S.
 

 
 
In the U.S., the toolkit is different. The U.S. federal government has relied on large grants to develop and deploy initial reactor technology. For example, X-energy is a beneficiary of a large U.S. Department of Energy grant to deploy our first reactors with Dow. There are also other tools in the U.S., including a substantial set of tax credits for new nuclear deployment and access to the loan programs office of the U.S. Department of Energy, which is a method for providing competitive debt to support U.S. based energy innovation projects.

While there are similar supports in Canada, those are two different flavours. What we have seen as a huge support in Canada is the regulators working to hopefully find a pathway for a reactor that's licensed in one country to be able to move more efficiently through the licensing process in another country. That kind of regulatory cooperation is a true game changer in nuclear. Ultimately it will translate to a faster pathway to deployment in Canada.

In the U.K., they often use market mechanisms as well as government support. They have found ways to build large nuclear power plants using tools like the regulated asset base model. We announced a six-gigawatt targeted partnership for deployment in the U.K. with Centrica, the premier U.K. utility group. We are targeting a first deployment in Hartlepool, in the northeast of England. We have been working in that community for quite some time, but our work with Centrica has really advanced over the last six months or so. That strong pathway to market is due to the U.K. government’s support. While our relationship with Centrica is a business one, it's enabled by the right policy framework.

Rumina: Can you share insights around what the Centrica partnership means for U.S. x U.K. collaboration, licensing, and the supply chain?

Ben: The U.S. and U.K. have been great partners in the nuclear industry since the dawn of the industry. There is a strong degree of understanding and cooperation between the industries, and the regulators have a long history together. None of which is born overnight. Our subsidiary XEUK worked under existing government grants to build out our business case for entering the market, including working with various potential commercial partners, off-takers and customers, and ultimately an acceleration of our relationship with Centrica. Behind all of this was U.S. and U.K. collaboration under multiple administrators on both sides of the Atlantic. This desire to drive collaboration between the two nuclear sectors has led to regulatory cooperation and a wider understanding of the licensing environment.

Rumina: You recently published a study, funded by Emissions Reduction Alberta, which highlighted the feasibility of repurposing an existing thermal generation site in Alberta—using the Xe-100 Small Modular Reactors. What other unique opportunities does the Canadian market present?

Ben: The Canadian market is rich in opportunity for the deployment of nuclear technology. When we look at the entire country, there are many opportunities for deployment of our technology but no province represents a greater density of opportunity than Alberta. Alberta has, by and large, built its economy on the extraction of rich natural resources and upgrading those resources into the products that build our modern-day lives. There is a combination of opportunities—ranging from the extraction of heavy oil from oil sands, to operations like steam-assisted gravity drainage. Steam-assisted gravity operations require a substantial amount of steam and electricity, and that is a perfect use case of a reactor technology like ours. Our reactor is ultimately a really good heat maker and therefore an efficient electric maker. Downstream from that is manufacturing of all kinds, and that offers the opportunity for industrial heat and/or electricity, depending on the fit and need. Canada is also quite rich in the desire for data centre growth and the resources to meet its requirements.

Rumina: What is your 20-year forecast for the industry?

Ben: When we look at the opportunity in the U.S. alone, we believe demand growth is going to accelerate. You could deploy a brand-new grid scale renewables project today and in about 20 years it's likely at the end of life, which means that you have to recapitalize and redeploy just to meet the make up in power from the renewables projects that cycle offline in that period. Nuclear plants are typically 40, 60, 80 or even 100-year assets, and so when you're looking at nuclear deployment in that time frame, there is a tremendous amount of potential for nuclear to provide makeup power for assets that exist today. In 20 years' time, we believe there will be a platform for deployment of multiple nuclear technologies that offer a better safety case, a more robust set of uses and which ultimately are changing lives for the better. We will have matured the industry to the point that these projects are seen as great opportunities and deployed like gas plants are today.

We expect significant power growth driven by data centre demand, with the deployment of capital to data centres leading to strong value growth. This, coupled with the fact that billions of people need to come out of energy poverty globally, is fuelling overall demand growth and so the use of nuclear power will continue to grow.