America's Nuclear Renaissance

The Real Estate Espresso Podcast

America’s Nuclear Renaissance

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America’s Nuclear Renaissance

Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce.

Sometimes in life you have amazing foresight and insight, and then other times you’re just lucky. Well, this is one of those cases where you’re just lucky. I’ll gratefully accept the luck when it happens to benefit us. The truth is we have no choice; we have to accept unlucky balances as well.

Well, this week there was an announcement of a major new nuclear power installation for Brigham City, Utah. This suburb of Salt Lake City has a population of about 20,000 people. We know this area well because we happen to have a 21-acre project currently under development just off the Interstate 15 interchange and across the street from the Walmart Supercenter.

Our project will consist of a Marriott TownePlace Suites hotel, 104 townhouses, and 60,000 square feet of flex industrial.

The nuclear project will consist of an array of somewhere between four to ten modular nuclear reactors. The country has finally woken up to the notion that the U.S. is going to need a vast increase in the amount of electricity-generating capacity.

The area around Salt Lake City could be a candidate for data centers and for manufacturing, were it not for the fact that the area has, in fact, insufficient power to sustain the growth of these data centers and new manufacturing.

But small modular reactors are different from your grandfather’s nuclear reactors. I mean, think about it. The technology in the current generation of nuclear reactors dates back to the 1950s. These are the days when Westinghouse was the predominant name. There’s been very little in the way of new development of nuclear technology in the United States. Most of that has happened in Japan, Korea, Russia, China, France. Those countries are way ahead of the United States at this point.

Now when I say 1950s, or maybe even 1970s technology, think about your 1950s automobile and compare that to a current-generation vehicle designed and introduced in the last year or two. They’re vastly different.

These old nuclear reactors were all custom designed and engineered from a blank sheet of paper. They were stick-built on site, the most expensive and time-consuming way to do it, where the reactors and all the components were assembled on site.

The idea behind an SMR, small modular reactor, is that you take a standardized design that is small enough to be built in a factory environment and then ship that to the site completely ready to go, sometimes even with the fuel already pre-loaded inside. You don’t have a lengthy certification process because it’s a pre-certified design and it’s being shipped in its entirety from the factory.

There are a number of SMR projects that have been announced around the United States. There’s the TerraPower Natrium project in Kemmerer, Wyoming. Construction is already underway for a demonstration plant next to a retiring coal plant, and it’s aiming for completion in around 2030. Normally, a large nuclear power plant takes from seven to ten years to build. This is going to take a bit less.

There’s the GE Hitachi facility. This is a boiling water reactor in Clinch River, Tennessee. It’s part of the Tennessee Valley Authority and it’s a first-of-a-kind deployment.

Holtec is working on a product called SMR-300. This is a light pressurized water reactor. The first one is going into Covert Township in Michigan, and they’re planning to put these on site at the site of the existing Palisades nuclear plant. That same technology is what’s being introduced in Brigham City. It’s part of that larger nuclear energy ecosystem and it’s in partnership with Hitech Solutions.

And then there’s a couple of advanced technologies. There’s one from a company called X-energy. It’s on the Texas Gulf Coast in collaboration with the Department of Energy. And then there’s the NuScale VOYGR small modular reactor. This is part of the Idaho National Laboratory.

Now, the biggest obstacle to widespread small modular reactor adoption is, frankly, economic uncertainty, specifically the challenge of proving that SMRs can achieve competitive costs through economies of series, meaning mass production, rather than the traditional economies of scale, meaning building a massive nuclear plant.

While SMRs promise lower upfront capital costs as well as enhanced safety, the financial viability hinges on moving past that very expensive first-of-a-kind deployment. Getting that first one certified is where all the risk is. That’s what can cause delays and that’s what can cause overruns in costs.

So the primary goal of an SMR is to be mass-produced in a factory to reduce costs. But if you can’t achieve that, at least in the first couple of units, those first few units are going to bear the full R&D cost, making them significantly more expensive on a kilowatt-hour basis than the large established reactors.

That risk is what caused the cancellation of the NuScale VOYGR SMR in Idaho, and it was largely due to an estimated rise in the cost of electricity because it was one of those first-of-a-kind situations.

We’ve also heard about how the U.S. is going to be changing its procurement methods for the military and securing its major military installations with local power sources that also rely on SMRs.

Now, I don’t want to be starting any rumors prior to public announcements, but this too is an arena where there will be major investments coming in new nuclear power plants. This is an area that is on our radar.

These projects will bring a lot of employment to a small area. For example, the project in Brigham City is going to add about 1,300 people during construction and eventually somewhere between sixty to a hundred permanent jobs.

Every single energy transition through history has gone from a less efficient, more polluting source of energy to one that’s higher density with less pollution. We saw that in the transition from wood to coal, from coal to oil, from oil to natural gas, and now from natural gas to nuclear.

The U.S. nuclear renaissance is a matter of national security. It’s also essential for the U.S. economy to grow, and we consider ourselves fortunate to have one of these coming up in the backyard of one of our projects.

As you think about that, have an awesome rest of your day. Go make some great things happen, and we’ll talk again tomorrow.

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