new nuclear update 25nov14

8/10/2019 New Nuclear Update 25NOV14

1/25


2/25

New Nuclear

Summary Points

The Case

The developing countries of the world need massive amounts of low-cost energy to buildtheir economies and to lift their citizens out of poverty.

Base-load power is essential to economic growth, and fossil fuel plants are the cheapest,most accessible alternative.

Data from the US Energy Information Agency (EIA) and the International Organizationfor Economic Cooperation and Development (OECD) is unambiguous; China, India, andthe developing countries of the world are telling us that they will continue to build coalpower plants to supply the lions share of their energy needs they have told the worldthat they will build more coal plants over the next 20 years than all other energy sourcescombined (i.e. natural gas, wind, solar, geothermal, nuclear, hydroelectric, etc. seeAppendix A).

Clean water, sanitation, and indoor air quality are public health priorities in developingcountries. China and India serve the near to mid-term public health of their citizens bytrading outdoor air pollution and CO2 emissions from burning fossil fuels in exchangefor affordable water/sewage treatment and displacement of indoor cooking fires (seeAppendix A).

Time is of the essence if we want to steer China and India from building out massivefossil fuel economies that in all likelihood will accelerate worldwide CO2 emissions tothreatening levels regardless of our own domestic energy choices. We need to show

them a concrete alterative within 5 to 10 years to make a difference. Fortunately, a new generation of nuclear technology (New Nuclear) is on the drawing

boards, created by American entrepreneurs and scientists. New Nuclear is both safe andpotentially cheaper than fossil fuel-based energy if the US government will allow the


3/25

Allow progressive, nuclear-powered testing at appropriate stages in the licensing processto validate computer models and to verify performance, safety, and cost predictions.

Tailor the licensing review process and costs to credit innovate risk reduction, and to takeinto account different reactor designs (e.g., smaller vs. larger power output reactors);different physical sites (e.g., nuclear reservations vs. commercial utility sites); and specialpurpose applications (e.g., nuclear waste disposal, weapons-grade materials destruction,nuclear medicine).

Fast track nuclear exports to states with well-established nuclear capabilities and cultures,particularly China and India, negotiating the slowdown and ultimate phasing out of fossilfuel use in their domestic economies as well as in their ROW (Rest of World) exports.

Establish a United States Nuclear Power Agency, specifically chartered to promotedevelopment of low-cost energy and a secure energy supply to US citizens. The agencywould address policy and business (domestic and international) aspects of nuclear energywhile coordinating with DOE as a technology provider and NRC as a regulator.

Nuclear technology is here to stay. Countries around the world will continue to develop nuclear

technologies for energy, medicine, weapons, and other uses regardless of US national will orpolicy. We can lead or we can follow. If we lead, we can innovate, influence, and prosper; itwill protect everyone from the threat of global climate change, enhance our national and energysecurity, and quickly add a huge world-scale, high-growth industry to the US economy. If wefollow

We recommend assembling a small team with members from Congressional Staff, DOE, NRC,the nuclear industry, private investors, and business process/new product development experts.

This team should be tasked with identifying realistic, actionable steps that can be taken now andin the future to allow the US to regain and then to maintain its leadership position in the nuclearindustry.


4/25

The Challenges and Opportunities ofCleantech and New

Energy

Joseph B. Lassiter, IIISenator John Heinz Professor of Management Practice

In Environmental Management

&Faculty Chair, Harvard Innovation Lab

Harvard Business School

September 2014

Copyright @ 2014 President & Fellows of Harvard College

Appendix A

1


5/25

!"#$%&' )* +,, -./-0 123

*"4&' 5"66"789: ;&94


6/25

So,What Do We Know?

Its tough to make predictions,

especially about the future.

Yogi Berra

3


7/25

!"#$%&' 123

*"4&' -./. $&Q&%4> O8>4"$8%


8/25

!"#$%&' 123

*"4&' -./. $&Q&%4> O8>4"$8%


9/25

!"#$%&' 123

*"4&' -./. $&Q&%4> O8>4"$8%


10/25

China Leads and India Follows in

Reducing Poverty & Increasing Disparity

7


11/25

!"#$%&' T&U$8&>0 OVA'WW777CH#>89&>>89>8P&$C%"DWS&U&$8&>R%O89R&A8%RA"66#B"9R8>R>R-./XR/

*"4&' )>&> +;Y ,#H68% ;&

Premature Deaths, Air Pollution

& the Choices of Nations

8


12/25

!"#$%&' 123

*"4&' -./. $&Q&%4> O8>4"$8%


13/25

Probabilistic Temperature Estimates for Magnitude and Timing of AR5 IPCC scenarios

Biological & economic models arelikely to be invalid at these levels!

10


14/25

So, What Do We Do Now?

When you come to a fork in the road, take it.

Yogi Berra

11


15/25

To Materially Change The Worlds Climate Future,

Cleantech & New Energy Alternatives

Must Be Cheaper Than Coal In China and In India The Chinese and India governments are committed to raising the standard of living in their countries to Western per

capita economic and public health standards

The Chinese and Indian government actions say that the certain short-run benefits of low-cost coal energy are likely

to offset the uncertain long-run costs of coals climate change impacts to their citizens.

The Chinese and perhaps Indian government actions say that they will build green supply chains if needed for

export sales to Europe and North America while serving themselves and their ROW exports with brown supplychains. The Chinese and perhaps the Indian governments will clear up local pollution that impacts their own citizens

directly even if that energy required for that clean-up increases their net CO2 emissions.

The world will need to adapt to their choice.In my opinion, there is a material likelihood that our world is very

already changed forever ..

In my opinion, most of the rich will not materially feel these changesBut, many of the poor will materially

suffer from these changes

In my opinion, we need to use markets to drive efficient, effective change by fully-pricing each uniquesource of energy to consumers, utilizing tax-revenue neutral escalating carbon taxes, catastrophe/

remediation taxes and security-of-supply taxes, enforced with international border tariffs

In my opinion, all nations should encourage the hunt for an energy miracle that can significantly impact

Indian and Chinese energy choices and CO2 emissions as well as their own within 5-10 years..No nation is inthe lead.. It is an open game for the bold. That energy miracle is probably *new* nuclear

In the end, in my opinion, we will all need to move to zero net carbon emissions as well as quite possibly supporting

a geo-scale carbon dioxide capture and storage miracle in the next 10-20 years. And, we all need to prepare foradaptation to what quite possibly is an already very changed and rapidly changing world.12


16/25

The Challenges and OpportunitiesFinancing New Nuclear

Joseph B. Lassiter, IIISenator John Heinz Professor of Management Practice

In Environmental Management

&Faculty Chair, Harvard Innovation Lab

Harvard Business School

October 2014

Copyright @ 2014 President & Fellows of Harvard College

Appendix B

1


17/25

Time

Value, Money&

Information

Produced

Seed

Stage

1st

Round 2nd

Round

3rd

Round

Value

Progression

Time

PurchasedIn Round

Cumulative

Cash Flow

Staged Investment: Cash Flows , Information and Value

2


18/25

Staging & Experiments

Staging is the central entrepreneurial method of financingthat is distinct from the traditional capital budgeting method

Allows for

A series of experiments

Information-gathering

Option to abandon

Option to re-negotiate

Option to pursue

You raise money to buy time for experiments, you buy

experiments to produce information, you produceinformation to make decisions, you make decisions to open orclose options.You raise enough cash at each stage to getyou to that decision point and to deal with its consequences

UNCERTAINTY- REDUCTION

and PAY-OFF DEFINITION

3


19/25

62.4%

20.1%

9.1%

5.3%

3.1%3.5%

12.6%

15.3% 15.7%

52.8%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

10X

%o

fTotalCostorTerminalV

alue

Multiple on Invested Capital

Venture Capital Return Profile 1995 - 2009!"!#$%&'()&$('

$1,200 MM Cost / $3,000 MM Value - 2.5X

% of Cost % of Value

Does the Fund get into the Big Deals?4


20/25

*+)

*+,,-

*+,- *+-

.,,, .,,+ .,,/ .,00

Open Source +

Horizontal Scaling Cloud +

Amazon Web

ServicesDevelopers Start

Companies

The Number of Internet Ventures Has Exploded

As the Cost of Experimentation Has Fallen

12345&6

7((8699:::;8&73$?>$

%59

5


21/25

Private Investors Runs Multi-Billion Dollar Experiment

When the Payoff Is Promising and the Rules Are Fair

Research Spending Per New Drug

Company TickerNumber of drugs

approvedR&D Spending Per

Drug ($Mil)Total R&D Spending

1997-2011 ($Mil)

AstraZeneca AZN 5 11,790.93 58,955

GlaxoSmithKline GSK 10 8,170.81 81,708

Sanofi SNY 8 7,909.26 63,274

Roche Holding AG RHHBY 11 7,803.77 85,841

Pfizer Inc. PFE 14 7,727.03 108,178

Johnson & Johnson JNJ 15 5,885.65 88,285

Eli Lilly & Co. LLY 11 4,577.04 50,347

Abbott Laboratories ABT 8 4,496.21 35,970

Merck & Co Inc MRK 16 4,209.99 67,360

Bristol-Myers SquibbCo. BMY 11 4,152.26 45,675

Novartis AG NVS 21 3,983.13 83,646

Amgen Inc. AMGN 9 3,692.14 33,229

Sources: InnoThink Center For Research In Biomedical Innovation; Thomson Reuters Fundamentals via FactSetResearch Systems

6


22/25

The Investors Context.

Staged Capital Supply Chain Probably Variants of

Biotech for New Nuclear

Money-Time-Information-Value

7


23/25

FDA Approval Process

Stage

Elapsed

Time

(years)

Capital Required

($ million USD)

Purpose and

Objective

Market Value

($million USD)

Historical

Success

(probability)

Pre-clinical 1 5 10 50 Pre-human

validation

10 20 10%

Phase I 1 2 5 20 Safety 10 50 65%

Phase II 2 3 20 50 Efficacy and dose 50 100 50%

Phase III 3 40 100 Registration Trial 200 400 65%

New Drug

Application

1 20 50 Manufacturing

and FDA

Approval

500 1000 90%

!"#

!$%&'$()*

+,-.

!/00$1

2"1.,

3.4%/5$1#*

6-7-4%

89:9

8


24/25

A New Nuclear Approval ProcessDiscussion with Ray Rothrock

Stage

Elapsed

Time

(years)

Capital Required

($ USD)

Purpose and

Objective

Market

Value

($million

USD)

Historical

Success

(probability)

Science &

Economics

1 3 $5-10M Economic and technicalconcept, computer simulation,

critical materials or neutronics

assessments

1st Option to

Abandon

Phase I

Viability

2 3 $10 150M Sub-critical pile to testneutronics. thermal hydraulics

test Update economics. NRC

prelim review.

Phase II

Scalability

2 5 $200 500M Build, characterize and testcritical pile. NRC review.

Phase III

Full Power

2 $500M Small scale reactor forpower. Produce steam only (at

DOE facility), but full run and

final modelling, economics,

control, and training process.

Full NRC approval

1st Utility

Evaluation

1st Option

for Financial

Exit

Approved

NPP IPP

Total 5-7

yes

$1B Including

Licensing

Site-Specific Licensing,

Training & Supply-Chain

Audit

9


25/25

New Nuclear Approval ProcessDiscussion with Jack Devanney 24 November 2014

Martingales ThorCon Reactor 2x250 MWe MSR Converter

No New Technology & Physical Testing-Based-Development &Licensing

Stage

Elapsed Time

(years)

Capital Required

($ USD) Purpose and Objective

Market Value

($million USD)

Historical Success

(probability)Seed

Full-Scale

Prototype Bidding

& Vendor Selection

1 $10M Prepare Specs for Yard /

Vendors , Get Quotes &

Execute Selected

Experiments. Raise

Phase I Round

Phase I

Non-Nuclear

Full-Scale

Demo

1 - Build

1- Non-

Nuclear Test

$50M Build, commission, then

full scale pre-nuclear

tests, Confirm thermo-

hydraulics, stresses at

operating temperature,exercise instrumentation,

safety, replacement

systems.

Approval of zero power

tests. Raise Phase II a

&b Round

Phase IIa

Nuclear

Full-ScalePrototype

1 $130M Ramp-Up by Must

Pass Test Stages to

Full Power then

CharacterizationApproval of Design Basis

Casualty Tests.

Phase IIb

FOAK Nuclear

Power Plant

1 $225M Staged Physical Testing

of Design Basis

Casualties , Training &

Supply Chain Audit

Approved

NPP IPP

Total 4-5 yrs $415M

SupportingLicensing

Site-specific Licensing

50GWe/yr Reactor Yard

Test-While -Licensing- Build at Korean Yard- Move to Nuclear Prototype Park

License-by-Testing- Sell Power to Grid

- Operator Training

new nuclear update 25nov14

Documents