Where is the nuclear industry headed? Four top executives share their thoughts at ANS Utility Working Conference 2023

One good reason to attend industry conferences is to be able carefully listen to the thoughts of industry leaders, especially during unscripted panel discussions. When the executives are among colleagues and aren’t delivering prepared, vetted speeches with polished slides, it’s possible to glean valuable information that can help form the basis for future actions.

As a member of a decision-making team at Nucleation Capital, I try to listen to nuances and watch body language for industry insights – both general and specific – that help form the basis for investment choices.

Though the executive panel at the 2023 UWC included leaders from four companies, none of which is a candidate for venture capital investments, it still provided a valuable basis for forming opinions about the future of nuclear energy in a world that faces both energy supply constrains and a pressing need to take rapid, effective action to reduce CO2 emissions and air pollution.

The four companies represented included two public utilities that operate nuclear power plants – TVA (Tim Rausch, Chief Nuclear Officer) and Energy Northwest (Bob Schuetz, Chief Executive Officer) and two nuclear system vendors – GE-Hitachi (Sean Sexstone, Executive Vice President, Advanced Nuclear) and Holtec (Pierre Oneid, Chief Nuclear Officer, Holtec International).

Several important points of optimism emerged:

• Where possible, utilities are going to add incremental capacity by upgrading their existing plants. They also plan for “subsequent license renewals” that will extend the lives of those plants to 60 or 80 years.
• Utilities are planning to build dozens of new nuclear plants during the 2030s and 2040s
• Nuclear plant vendors have been designing new nuclear plants for a decade or more and are now close to being able to both license and build those designs.
• A major portion of the new plants that utilities are willing to discuss in public are smaller than operating nuclear plants.
• Utilities are starting to experience significant load growth for the first time in several decades. It’s coming from electrification initiatives like EVs and heat pumps, from population increases, and from a manufacturing boom driven partly by efforts to “reshore” important industries.

The execs also leavened their optimism with some concerns and warnings.

• Nuclear plant operators must continue to achieve operational excellence for their existing units. It’s widely believed that this is a fundamental “ticket to the game” that provides the foundation for growing interest in new nuclear development.
• Successful construction projects require solid teamwork.
• Skilled technicians in the trades (crafts) like welding, electrical, piping, mechanics, chemistry, earth-moving and pouring concrete are in short supply. Effective training programs are important, but it might be even more important to convince influencers – including parents, guidance counselors and other mentors – that fulfilling careers do not necessarily need a college degree or include working in an office.
• Jobs requiring people with degrees in nuclear engineering are only a small part of the workforce needed to build and operate new nuclear plants.
• Nuclear power has gone through a long period in which it was not “sexy” or widely attractive. There is going to be a high level of demand for people who are already well-trained. Atomic Insights readers should recognize the immediate implication of that situation – constrained supply and increasing demand always leads to increased prices. Workforce constraints mean increased costs for salaries, benefits and wages.
• Plans for sustained building programs lasting several decades are providing incentives for utilities to add direct employees.

Utility company perspectives

TVA is a vertically-integrated utility with a formal Integrated Resource Planning process (IRP). Tim Rausch told us that TVA is working on a new version that will including shutting down all of its remaining coal plants (8600 MWe) and replacing their generation with non-carbon emitting power sources. With demand increasing by about 3%/year, TVA is looking at 15-30 GWe of new clean power in next 20 years. That will roughly double the generation and transmission capacity of their system. With that kind of growth, TVA will need to be a heavy construction company for the next 20 years. It might not stop there.

Energy Northwest is a much smaller utility than TVA and has one operating plant compared to TVA’s fleet of seven units. Bob Schuetz told us that Columbia Generating Station, his company’s single unit, is in the process of an 18% power uprate and major component replacement program that will be completed in stages during the next 7 years. That project will add more than 200 MWe of new nuclear capacity to the grid. Assuming a 90% capacity, the uprate will result in an additional 1,700 GW-hrs of clean electricity.

By 2025, Energy Northwest will close its remaining coal plants and stop importing electricity produced by burning coal in Idaho and Montana. Unlike TVA, it is not directly responsible for detailed planning, but the responsible agency is projecting new capacity requirements of 6 GWe by 2030. Energy Northwest partnering with TerraPower and PacifiCorp in the Natrium project in Wyoming and partnering with X-Energy in a project that will add nearly 1,000 MWe of new nuclear generating capacity to the Hanford site in Eastern Washington the form of up to 12 Xe-100 modules, each generating 80 MWe.

In a separate conversation, I learned that the selection of Xe-100 over other competitors was driven by both a lower initial price estimate and Xe-100’s online refueling system. Energy Northwest’s service territory has a large installation of run-of-the-river hydro with significant seasonal production variation and a large quantity of wind power that often saturates the grid. Xe-100 can vary its output without wasting fuel. Reactors like Columbia can follow load, but reductions in output between scheduled refueling outages means that the fuel is removed while it still has more remaining energy.

Both TVA and Energy Northwest are lining up financing for their expansion projects. Even though they are non-profit public utilities, they are eligible for funding associated with the tax credit programs contained in the Inflation Reduction Act enacted in 2022 and from the loan guarantees available from the DOE Loan Program Office.

Vendor perspectives

In contrast to utilities that have responsibilities to serve the public in defined regions, GE-Hitachi is a global company that is seeing increased demand for its products and services in several nations. It’s not only planning to supply new Gen-III+ reactors like the BWRX-300 and Gen-4 reactors like Natrium in partnership with TerraPower, but it also supports the continued operation of the existing fleet with fuel, components and services. Sean Sexston told us that he recently returned to the industry because of the expanding opportunities. (Sexstone’s journey illustrates one of the ways that the nuclear industry will be meeting its workforce needs in the early stages of new growth. It will attract nuclear-trained people who left the industry during its various ups and downs.)

Sexstone reminded the audience that the three unit Browns Ferry site had recently (4 years ago is recent for the nuclear industry) added about 450 MWe by conducting extended power uprates that increased capacity for each of its three units by about 150 MWe.

Pierre Oneid provided useful insights by describing how the industry’s ups and downs have affected a long-time participant who never left. He described the arc of his 42 year career, starting as a field engineer with EPC contractors during the plant buildout in the years following Three Mile Island (TMI). During those boom years, his company expanded rapidly from 3,000 to 17,000 employees. He enjoyed the per diem and generous bonuses.

Aside: I remember those years quite well. I started my career in the Nuclear Navy 42 years ago. Many of my shipmates during the first decade of my career left the Navy to join the commercial industry. By the time I was considering a similar path, construction was petering out and I was inspired to try to address the problem. That’s when I developed the small modular reactor concept that led to Adams Atomic Engines, Inc., which was founded almost 30 years ago (Sep 1993). End Aside.

Later, Oneid experienced a down cycle when “everyone” thought that the plants would be shut down when their initial 40-year licenses ended, providing most opportunities in deactivation and decommissioning. He saw the optimism associated with rising natural gas prices and initial construction incentives during the 2000s followed by a period of contraction during the long spell when natural gas was cheap and all eyes were focused on building renewables like wind and solar.

Now he works for a company with a vision for abundant electrical energy, drawing inspiration from the words Eisenhower used during his Atoms for Peace speech in December 1953. Holtec’s action plan includes decommissioning existing nuclear plants and handling used fuel as way to prepare established nuclear sites for new construction projects using a proprietary reactor design called the SMR-160. Established reactor plant sites can also accommodate energy-intensive facilities like data centers and hydrogen production facilities that would be able to directly use the electricity and heat the reactor plants produce.

Part of Holtec’s plan for growth now includes restoring the Palisades Nuclear Power Plant, a project that will add 840 MWe to the grid in a few years for a cost close to $2 B. As Oneid said, a new project starting from scratch today would need about 5 years of planning and licensing before it is able to put a shovel in the ground. Oneid provided a good news story about the benefits to his company of becoming a nuclear plant owner and future operator. As an innovative products and services company, Holtec found a golden opportunity to learn more about the specific needs that operating companies have in the areas of security, insurance and low level waste handling.

That experience is leading to new ways to address those issues that will help it reduce its own costs while also having the potential to offer new products and services to other companies.

Workforce challenges

GEH has been adding about 60 new employees each month for the past year. It is competing with others in the nuclear industry and also with employers in other growing industries. Like the other companies sharing the stage, GE emphasizes the importance of sharing knowledge between older and newer employees and ensuring that the new employees adopt the company and industry culture of excellence. New people bring new ideas and have the potential for improving the company’s performance and adding new attributes to the established culture.

Remote and hybrid workforces add a new wrinkle to the challenge of transferring knowledge and building company cultures. Those aspects of developing teams and competence are more challenging when meetings happen during video conferences without the benefits of casual drop-in conversations and gatherings after normal working hours.

Companies have always had some involvement with trade schools and universities as part of their on-going recruitment efforts, but they are stepping up those activities and expanding them into primary schools. They’re building a line of people thinking about careers in nuclear. Schuetz reminded the audience that it’s important to include craft people in the contingents of people that attend job fairs and school outreach programs.

TVA reported that its current workforce hiring and development program has to change quickly. If it sees the growth it is currently projecting in its generation and distribution assets, it will be 8,500 people short in the next 4-5 years. Of course, having a worker shortage of that magnitude would significantly slow the expected growth.

It is stepping up its recruiting and improving the efficiency of its onboarding process, which includes background checks and security clearances for many employees. It plans to rely on workers from union halls as well as direct hires, but it knows that it will be facing competition from other projects in their seven-state service territory. A primary example is the planned new stadium for the Tennessee Titans football team. That project alone is expected to need 5,000 people, many in the same trades as those needed to build new nuclear plants. Large factory construction projects are also in the works.

As a utility operating in the steadily growing South, TVA will also face worker competition from Southern Company, Duke Energy and NextEra.

As an example of the challenge of finding technicians compared to college-educated engineers, Schuetz said that a job opening for an engineer might attract 50 applicants while one for a welder might attract just one. He joined the rest of the panel in telling the audience that our society needs to start encouraging and valuing skilled trades and hands-on work.

We’re not going to miss our clean energy targets due to a lack of engineers. We’re going to do it because we have a lack of fitters and electricians.

Bob Schuetz, CEO Energy Northwest

Workforce diversity received special emphasis, with a nod to the recent Women in Nuclear conference and its 700 attendees.

Finance

While Energy Northwest senses that money for new nuclear is beginning to rain from the sky, TVA says it is living under a different sky with significant challenges in finding ways to finance the growth it foresees. TVA has not been selected for the Advanced Reactor Development Program, (Note: TVA / GEH submitted a proposal for the ARDP based on using the BWRX-300, but that technology was evaluated as not advanced enough to qualify) so it is not getting direct money from the DOE.

Being outside of the ARDP seems to be impacting TVA’s ability to obtain loan guarantees, but it was not clear why that might be true.

Though public utilities like TVA and Energy Northwest are eligible for incentives from the IRA, those incentives do not have a direct impact on their funding decisions because the money doesn’t flow until after the project is complete. That situation is similar to the traditional challenge for investor-owned utilities that often have to complete facilities before they get added to the rate base.

Everyone is waiting for the rules for the IRA tax credit programs to be completed and published by the Internal Revenue Service.

Conclusion

The nuclear industry seems poised to become a hustling, bustling place to work. There will be worker shortages and there will be a significant upward pressure on salaries and wages. As an investor, I am supposed to be worried about such things. As an American that is a member the the vast middle class I’m happy to think about the incredible career opportunities, the communities that will thrive and the schools that will see increased resources to match a growing body of motivated students.

It is incumbent on the nuclear industry and its volunteer advocates to help manage expectations. It’s not going to be easy or cheap to transition from fossil fuels, but it wouldn’t be easy, cheap or environmentally sound to avoid the transition. All energy sources are going to be under similar pressures because they need some of the same kinds of workers and require the same type of capital investments.

Power and heat are parts of the foundation of our society. Moving more people into the tasks associated with building long-enduring components of our society’s infrastructure will be a challenging, but rewarding endeavor. America needs more skilled welders, pipe fitters, electricians and mechanics than it does design engineers or lawyers. The nuclear industry executive panel made that abundantly clear.

Here’s a teaser for a coming post: When I was a submarine Engineer Officer, I regularly challenged my sailors and officers to think about activities that they would stop doing if they had to change from peacetime routines into a wartime footing. A nuclear industry that is planning for the kinds of growth described here with the workforce constraints that have been highlighted needs to think about activities they can stop doing or that they can do with vastly increased efficiency.

My first suggestion will be eliminating the Aircraft Impact Assessment rule.