Accelerating U.S. Nuclear Leadership

This transcript is from a CSIS event hosted on October 1, 2024. Watch the full video here.

Joseph Majkut: Hello and welcome to CSIS. Nuclear power provides about 10% of global generation around, and in the U.S. it's even more. 20% of the generation we get in the US comes from nuclear power and it accounts for about 50% of carbon free generation in the United States. To date, nuclear power is widely regarded as one of the potential solutions for addressing emerging power needs. At the same time, we are reducing greenhouse gas emissions around the world, but it's also challenged for financial, environmental, cultural reasons. The ability to build new nuclear power or to continue using nuclear power needs to be rebuilt if it's going to realize its potential. At COP 28, the world set the new ambition to triple global nuclear capacity around the world by 2050, and I think that should be really the guiding star for our conversation today because I'm joined by one of the most interesting and senior experts in the global nuclear industry. Ahmet Tokpinar. Ahmet is the general manager for the nuclear business unit at Bechtel, the firm which builds many of these reactors around the world. Ahmet, welcome to CSIS.

Ahmet Tokpinar: Thank you, Joseph. Thanks for the invitation.

Joseph Majkut: I'm very excited that you're here today. I really want our audience and myself frankly, to benefit from your insights about how we really realize the potential of nuclear power. As we look forward toward net zero economy in the 2050s, there are so many linkages to growing demand, to reducing emissions to the geopolitics of technology choices that we can get into. But maybe we can just start with the idea of the potential.

Ahmet Tokpinar: Yeah, so I mean when you look at the nuclear reactors, they're the only source of power that provides carbon-free, base load, reliable energy. They can go on a very high capacity at 94, 95% in the new reactors that you can achieve that level of operation and capacity with other sources of energy. And it has obviously other benefits in the world where we are fighting climate change. Nuclear will have to play a role. Renewables are great wind and power, but there's a limit to what they can do because they're intermittent sources of power and they need to be paired with storage. Even then, they really risk the reliability of the grid. So you need base load and the U.S. and the world used to get their base load from coal plants. That's no longer an option. The other option is by far the energy security. And when you at this really started out primarily in central Eastern European countries, even before Russia's invasion of Ukraine, they wanted to wean themselves off the Russian gas and they started talking and making plans to develop their nuclear sector. Some of those countries had only had Russian reactors in operations, others had a mix. And with the invasion of Ukraine it became a clear choice that, and they don't have their natural gas resources, they had to rely on exports from other countries and some of these countries are landlocked. Even building a receiving terminal is not feasible. And the third dynamic that is more in the last year is this AI driven data centers and their significant need of power and all these hyperscalers, they have pledged to use green sources of power. They don't want to be explaining to their shareholders, employees why they're building gas plants or coal plants to power up. It would just be contrary to the climate goals. So all of this is emerging. I think there is a much wider recognition on the role of nuclear, the role that it can play. The fears about nuclear, the waste I think is not at the same level that it was maybe a couple of decades ago. The only challenge is what it costs to build it. Can it be built on time? Can it be built to expectations and how do we go do this? So looking back at the lessons learned, the industries I think is on a better path today and I can talk about that later.

 Joseph Majkut: I'd love to, I mean you kind of got to this at the end of your question, but it feels to me that with the load growth conversation, which AI is sort of the most pressing of the new power load categories, but we were going to face that problem anyway with broader electrification of the economy using hydrogen based fuels. We've got these new targets for global nuclear ambition, tripling of global capacity. You and I are speaking in October of 2024. Just a couple weeks ago, constellation announced that they were going to restart one of the reactor units at Three Mile Island. There's, there's a basket of new policy supporting nuclear here in the United States and I think abroad, which I want to talk to you about. But do you get the sense that nuclear is having a moment?

Ahmet Tokpinar: It is definitely having a moment, but it needs a few more things for it to become a commercially deployable technology on a broader scale. There are good programs, DOE, when the U.S. Congress I think recognized maybe three, four years ago that U.S. is losing its leadership at the nuclear table to Russia and China, and they started passing legislation and giving broader authorities to DOE to come up with programs. So there's one called Advanced Reactor Demonstration Program, and one of our projects is benefiting from that terra power with the Natrium design. The other is the X Energy's high temperature gas reactor. So these programs are getting the benefit to build the full scale demonstration program is a public private partnership. 50% of the funds are coming from the U.S. government and the private sector is matching the other 50, but it's still large sums of money that you don't have too many private sector money willing to put the money in. There are new production tax credits, investment tax credits. I think they're very good, but that alone is not enabling utilities to jump in. There is still a risk on when you're building the SMRs advanced reactors, the first of a kind design risk, the construction risk, and as good as Vogel was after it was built and operated, people still look back in regulated markets, the rate payers, they're cautious about is this going to be another Vogel? So we have a lot of work to do to convince the naysayers that there's a better way to build these plants.

Joseph Majkut: Maybe I could ask you to dive in on that. I mean, Bechtel is in the building of industry, right? You're responsible for making sure that projects get delivered safely on time, on cost. Vogel is a great example of something that missed on a couple of those. It was expensive, it came late, but we also learned a lot in that process. Maybe you could help us and our audience understand a little bit about what kind of learning actually goes on, whether it's workforce supply chain that we risk losing if we don't try to keep maintaining our momentum.

Ahmet Tokpinar: Yeah. We took over the Vogel project in 2017 in the aftermath of Western House bankruptcy and taking over a project in the middle of construction is probably the hardest thing to do. It's much easier to start from scratch because when you jump in in the middle, you are not able to bring all your tools and processes and implements. You are more adapting to ad hoc tools to make it work. We had about 1500 people that work in and out of that project and we really did a good job. It was very challenging, long days, long hours for every single person, but we turned it around and brought those units online. That was the first in 30 years. But when you look, even before we took over the project, there were a lot of issues with the first of a kind nature of some of the equipment, the modules, some of the pumps, the design progression. The contractor at the time had mobilized at the site

With design barely started. And that's one of the biggest lessons learned in construction on a nuclear job. You cannot afford not having your design complete when you're at the site not having the materials and the equipment already delivered without any defects at the site. And all of these were problems. So when we look now on our new projects, there's one in Poland working with Westinghouse to build three AP 1000 reactors on the Baltic Sea for the Polish government and Natrium project for Terra Power in Wyoming. All of the lessons learned from Vogel, but not just Vogel. Because we are a mega project company, we have lessons learned from all other industries and when it's a mega project, it's a mega project. Yes, there are nuclear aspects. The regulation, the oversight is different. The things that we do is you look at the craft workforce, Vogel, those people weren't trained to nuclear safety and quality such that when they mobilized and start working, that culture wasn't there.

Joseph Majkut: This is people who are putting pipes together, pouring concrete.

Ahmet Tokpinar: These are people that are working at the site. It's very important that you train orient. They have an appreciation of what is nuclear safety and quality, and you start building that culture even before they step from at the site. Engineering is another big component on the two projects that we're working. We are ensuring and we're also designing ourselves along with the reactor technology companies that we are not going to mobilize at the site before. We're comfortable the design is done so that the construction is nothing more than putting the pieces together. We're going to ensure that the equipment and the materials are at the site that're ordered. We know what their design is going to look like. You want to eliminate all surprises with regards to design or the supply of equipment. Then your focus is if you have the skilled craft works force with the right safety and quality mind, then you organize, you plan the work and you execute. We use also, we're going to bring innovation, we call it the digital delivery, which is in essence you create a common data environment where the design data from the different parties involved reside in this one database.

One single source of truth and all your tools, whether it's design, construction, procurement, they all integrate to that database. Everyone uses the same information. So, you get real updates on what's happening. You do the monitoring, you do the planning, you do advanced work packaging, you are workflows through the system. Our goal on the next nuclear job is eliminate paperwork at the site. So, a worker wouldn't have to go to a file cabinet, spend two hours trying to find the document, he will be on his tablet.

Joseph Majkut: You mentioned the need to have engineering and design done at the front end. One of the things casual observers have heard is that modularity in the kind of reactor designs you're using, building a lot of designs that look very similar is preferable from a cost and expediency standpoint to the sort of more bespoke designs that we've seen historically, at least in the United States. I'd be interested in your thoughts on that and whether these process improvements can kind of provide flexibility between the two.

Ahmet Tokpinar: So, modularization makes a lot of sense where labor is high, wages are high and there's a short supply of skill. When you're doing it in the Middle East, it may not make much sense because labor is cheap in an abundance, or you can bring from different sources. The degree of modularization I think is very important. You may make things very complicated if you over modularize nuclear plants, never going to be like Lego pieces you put together at the site. There's going to be some level of conventional stick building, but you do modularize. You look for opportunities that doing it off site, obviously in a controlled environment is better than doing in on site with the weather conditions and different set of labor. So, we look at all those and incorporate the level of modularization that makes the most sense.

Joseph Majkut: You mentioned the project in Poland. I'd love to hear more about the status of that project and what kind of lessons you're able to take in building a modern AP 1000 abroad.

Ahmet Tokpinar: So, Poland, it is going to be the first for them.

They had a nuclear reactor that was started building by the Russians in early eighties, but then it was abandoned after their independence and the revolution and they never looked back. So this will be their first. We are working with a state-owned entity that has the oversight as the developer and future operator. It's going to be a transformational project for them because nuclear at three units, 3.6 gigawatt will get them closer to achieving energy security, fight climate change, and the whole program is going to generate opportunities for their supply chain, workforce development, university collaborations. So they're very excited and this is one thing that separates Bechtel from other state-owned enterprises. We obviously look at U.S. market for exports, but our focus has always been how do we localize most what makes sense in the country? So we source it there. We help those supply chain companies if they have the capability, increase capacity. If they don't have the capability, how do we work with them along the way so that they can develop the capability to do nuclear safety related cable and conduit and steel. So we're in that phase right now.

Joseph Majkut: And this is in contrast to either the Russian or Chinese firms which have much more vertically integrated supply chains.

Ahmet Tokpinar: They're vertically integrated, even the Koreans Allied nation, but their model is mostly maximizing exports. Yes, that does bring a nuclear power plant to the country, but that doesn't help the economy in the country.

Joseph Majkut: And how much does that reverberate? So, if we're thinking about if we're building this unit in Poland, does that supply chain that you then can help create, does that reverberate through other countries in eastern Europe?

Ahmet Tokpinar: So, when we look at Poland, we actually look at it more regionally. We look at Poland, Czech Republic, UK, potentially Slovenia, so that it's a larger supply chain portfolio that we want to develop because no one country will have full capacity to support a project of this magnitude. So this is three AP 1000 units. It's a very large amount. It's the requirements we're going to have over 10,000 craft at the site. Even Poland is not going to be able to provide all of that. So yes, it resonates. It also provides opportunities. At the end of this project, you're going to have competent, you polish construction contractors, Polish suppliers that will be exporting their services to neighboring countries or even to UK as nuclear program picks up and the renaissance is realized. So it creates not just boosting, but export is going to be huge opportunity for them.

Joseph Majkut: This has been widely seen as a success by the U.S. government. There's been government support for this initiative. Obviously when we're talking about nuclear technology, there are security and geopolitical implications. What would be your advice to the U.S. government thinking, okay, how do we repeat this success if we want to help give the US a leadership role in building out a larger and very productive nuclear sector to respond to climate change and provide power for the 21st century? What are the key elements that you think that the state should be working on?

Ahmet Tokpinar: So I think the model on Poland is a great example of government private sector collaboration, and I give a ton of credit to both administrations because this project was conceived under the previous administration, but it may be one of the rare programs that the Biden administration embraced with no hesitation.

And same on the police side. The governments changed their too. It's under the intergovernmental agreement umbrella and it's more than just building. It's also collaboration between the regulators providing access to U.S. national labs. DOE just opened the virtual energy center. So, U.S. is also doing their part and financing is going to be part of the deal because they need that financing to execute a project. It's a great example. I cannot thank enough to our ambassador in Poland, Ambassador Brzezinski, the leadership at DOE, the White House, the State Department. They pull this together. But obviously there is a want from the Polish side because geopolitically having an American investment in Poland is very important to them. So it's hitting the geopolitics, energy security, climate security, and it's helping U.S. exports. It's a win-win.

Joseph Majkut: It sits firmly in the nexus of all of those considerations.

Ahmet Tokpinar: So the U.S. government is now looking at other countries for similar IGAs. There's one with Bulgaria, Romania, obviously these IGAs don't work with every country. Sweden may not be interested in an IGA, but where it makes sense in central eastern Europe, U.S. government is following through.

Joseph Majkut: So the two projects we've already talked about, Vogel and the project in Poland are both AP 1000, right? This is American large water cooled reactors. You're also working in the innovative smaller modular reactor space, new reactor designs. What's your sense of where we are today in terms of these new technologies and what is the balance going to be going forward or what will determine the balance going forward between large modern but legacy designs and these new technologies?

Ahmet Tokpinar: Just to caveat, the large gigawatt reactor Westinghouse has, it is also an advanced reactor with passive cooling. So, it has very good features. It's just its coolant is the light water.

Joseph Majkut: Yeah.

Ahmet Tokpinar: So with the SMRs advanced reactors, by the way I call SMRs, they usually refer to light water reactors, but small advanced reactors are using coolants other than light water, like liquid metal sodium.

Joseph Majkut: Salt. Yeah.

Ahmet Tokpinar: Salt. In the case of high temperature gas reactor gases, the common the way I see they are still in their early development. The government has a program under which two are building their demonstration reactors. GE BWRX has a contract with on Ontario power in Canada. They started building their demonstration reactor at the Darlington site. TVA in the U.S. wants to follow OPG with couple of years lag. So they are getting involved, they are participating in the standard design development as part of a consortium of TVA, OPG ,and Polish firm out of synthos out Poland. So these projects will have to demonstrate that they can be built, they would operate efficiently and that's going to be towards the end of this decade. In the meantime, when their construction permit applications are approved, there are other utilities interested. They're going to start jumping in maybe in the next two, three years. But the mass scale commercial deployment in my view is not going to happen before early 2030s.

Joseph Majkut: I see.

Ahmet Tokpinar: At scale right now everyone is a little nervous. No one wants to take the risk. They're looking for first movers and then they're going to follow so that they can get the benefit and the lessons.

Joseph Majkut: And there also seems there's a lot of technical options here.

Ahmet Tokpinar: There are a lot of technical options. In my view, it's too many technical options because you can't build eight different technologies and create different supply chains. It's not a good use of the workforce and then you won't get the replication or the nth of a kind benefit as quickly. There will be some natural consolidation and I think we're kind of seeing that today. GE on one hand, Terra power, you look at the customers that are showing interest and it's going to be more and more prominent. I don't think you're going to see 10 customers running to 10 different technologies. It's going to be consolidated around two three small advance, and then you have the only Westinghouse AP 1000 reactor. While this is happening, you have a design AP 1000, and I'm not marketing AP 1000 here, but just when you think rationally the risks are retired, the design is built, all the utilities needs to do is replicate the design. The supply chain matured for that design. It can be built because it's a large amount bigger capital requirements and the utilities are in discussions. They're talking, they're going to mandate their IRAs in the coming months so that they have the option to build more. But they're looking for a little bit more protection from the government. You have this investment tax credits great, but they want to be able to analyze that on an ongoing basis so that they can bring in the cash early. They want a cost overrun insurance partly funded by the US government so that there's a level of protection in the events. Things don't go right. So I think the discussions are in the right place and then the hyperscalers are now jumping in. They're mostly focused on the backend making commitments to buy the offtake. The entire offtake.

Joseph Majkut: I mean casually, casually. They'll say as much as we can, as much as we can buy.

Ahmet Tokpinar: TMI is a good example. I mean they don't want to wait 10 years. TMI provides the opportunity. They can get that power in three years time and they sign a 20 year power purchase agreement probably at a premium to the market rate, and that's a good enough incentive for Constellation to say, I can start this plant. Unfortunately, you have maybe another two or three maximum Palisades is another one. The ones that are retired 15 years ago. It's just two costly to bring them up. So that's just part of the solution. My understanding the hyperscaler, they want to put their money, their capital on the data centers, but then commit to buy the power at the backend.

Joseph Majkut: Yes.

Ahmet Tokpinar: If that changes, if they start thinking differently and they want to enable and put some equity on the front, it will make these projects go.

Joseph Majkut: Big qualitative difference.

Ahmet Tokpinar: In the industry, they could make a difference single handedly.

Joseph Majkut: So last week we also saw the announcement of a number of large banks saying that they wanted to be back on the field and helping to finance nuclear power. They might also be able to fill in some of that risk capital. What's your advice to the financial community as they're once again looking at nuclear? How do they engage thoroughly without getting scared away?

Ahmet Tokpinar: Yeah, I mean it's being tested right now in the marketplace. There's some alternative to utilities. Developers are emerging. These are retired executives from utilities or different fields. They are trying to put a package, bring traditional utilities for operation, bringing hyperscalers for power purchase agreements and trying to bring companies like us or technology providers. The challenge in that model is someone still has to underpin the risk. Who's going to underwrite that? A commercial bank would love to come in, but they're not going to put their loan at risk for cost overruns and delays. That's a big risk for them. So, there are long guarantees available from the Department of Energy, so that could be part of the solution. But with advanced reactors, SMRs, because it's still the first of a kind, I don't think there's a private equity willing to underwrite all of that.

Joseph Majkut: I see.

Ahmet Tokpinar: Today that will enable also the commercial banks to come into the project. There's one model being tested as we speak really we'll find out in the next six months whether that model's going to work.

Joseph Majkut: And I'm guessing that's sort of a commercial discussion that we're not able to really have out loud yet.

Ahmet Tokpinar: Exactly. I can't talk about it, but there's one utility trying this build and transfer model. They have an offtaker who's an hyperscaler, and they are trying to see if this, a developer without utility putting any money in can bring in the financing all the right players to make this happen.

Joseph Majkut: Well, I hope we can have you back when we have some more resolution because it feels to me that nuclear is having a moment and it is such a compelling solution for many of the problems we face. I know there's a sense of frustration in the industry. There's a sense of frustration amongst many analysts, gosh, can we just go build nuclear and help resolve a lot of our challenges? So I'm really grateful that today that you came and shared some of your insights and some of the on the ground thinking as you look toward the next decade or the next 15 years, what are the mileposts that we should be watching for to really indicate that we're on the right track?

Ahmet Tokpinar: I think this is, there's a discussion right now. How do you enable a utility with backing from the U.S. government commit to a fleet of the same technology, six to ten, let's say.

Joseph Majkut: Instead of one off by four or five.

Ahmet Tokpinar: And then the government's role could be providing the long guarantees which can be done, and then this cost overrun insurance that I think could be done. It's just a matter of political will. Then you will see utilities take this approach and say, I'm going to build six of this technology at this site with this sequence. When you get first, you're sending a signal to the supply chain that, Hey, I am going to build six of these, and then the suppliers will stop tooling up, increase their capacity, and then you're going to say, this is also very important in the lessons learned from the past, the technology providers will say, I have one standard design that I will use wherever I go. This is so important. In the past, we had a variation of designs in the seventies, eighties of the same technology because each customer wanted different features and then you never learn if the design keeps changing with that mindset. So you have the same technology, same design, you're replicating the first two, you're kind of learning kinking out the issues, but the third, the fourth, the fifth, the sixth, you're doing this in a way that you are able to roll over your professional staff, the craft workers, the suppliers, and by the time you reach the sixth unit, you kind of reach the…

Joseph Majkut: Point of maturity.

Ahmet Tokpinar: Maturity and then the kind of realizing now the nth of a kind benefit. Maybe that's 30 to 40% lower than your first of a kind cost, and then the second utility jumps in maybe with two, three years lag and they commit to another six.

Joseph Majkut: If you think about that as a sort of buying in bulk model, which is maybe a little loose speaking, but does that, I can see how that really reduces a lot of risk. Does it also diversify the risk, right? If particular projects get delayed because of engineering challenges on a site that might allow you to sort of shift supply chains to, well, we'll focus efforts over here. Is there a diversification that can come from that number that isn't the same? It's not the same as just the volume.

Ahmet Tokpinar: I mean diversification in what sense.

Joseph Majkut: Overall, if you're sort of portfolio this risk, if you're basking it at all across multiple projects.

Ahmet Tokpinar: I think the only thing you're doing; you are creating an ability to learn on a smaller scale so the learning can be faster.

Joseph Majkut: Got it. Okay.

Ahmet Tokpinar: Learning on a gigawatt scale from one to the next is more costly than learning from small.

Joseph Majkut: Investment, and you're providing the suppliers a real strong demand signal, right?

Ahmet Tokpinar: That's so important. The market has to see this is real. It's going to happen, and then you do this different utilities with different technologies. So maybe you have, I don't know, three different technologies in the U.S. sponsored by different utility or utility consortiums taking this approach. Then I was looking at a curve that DOE had just published commercial liftoff of by 2040, you can reach a level where you are installing or bringing to the grid 13 gigawatt electric a year because we need between now and 2050 net 200 megawatt of nuclear to reach the climate goals.

Joseph Majkut: Yeah, net 200.

Ahmet Tokpinar: Gigawatts. So, in the beginning, you're learning to how do you get to enter of a kind fastest so that you can then huge deployments.

Joseph Majkut: Right.

Ahmet Tokpinar: The beauty of the gigawatt scale is today it's done, but it's a bigger capital cost but big also provides better economy scales when built compared to building three small is going to be more costly than building a single one. My prediction, because that's the opportunity you talked about, what do you do with the resources? We have 1500 people. Supply chain is today still alive and robust for the AP 1000 reactor, and I think utilities will start ordering as soon as they have their IRAs amended and submitted. Maybe next year we're going to see some announcement for more AP 1000. There's a huge benefit as you're trying these SMRs trying to reach their end of a kind. You keep the build out on the large reactors because the industry you develop for the large reactors benefits fully the small module reactors. So, it's a win-win, and by the time you get to maybe mid 2030s, maybe it's just going to be at that point, smaller scale reactors, not the gigabyte reactors.

Joseph Majkut: But you'll have a workforce and a supply chain that is ready to supply whichever technology pathway ends up winning out.

Ahmet Tokpinar: So workforce is a major challenge. In the U.S. we have about a hundred thousand construction workers. The need to build this out, you need over 350,000 in the next 20 years. So, it's a huge challenge. Every company, including ours, we're taking a lot of initiatives, trying to bring more women into the workforce. Vocational schools, working with the unions on training program, we're looking at pilot projects, bringing the military into construction. There's a lot of programs, but the governments not just the federal, but the state level and the unions, they have to do a lot too. There is a huge gap.

Joseph Majkut: And for any young people watching, we encourage you to consider nuclear engineering or construction services as a growth industry.

Ahmet Tokpinar: It's a high paid job.

Joseph Majkut: Yeah, I am well aware. Ahmet, I'm really glad that you joined us today. Thank you so much. Not just for this illuminating discussion, but for all the work you're doing on behalf of the industry and to some degree our country. Thank you very much.

Ahmet Tokpinar: Thank you. Thanks for having me.

Joseph Majkut: Thank you audience for joining us today for digital programming. My name is Joseph Majkut. I'm the director of the Energy Security and Climate Change Program here at CSIS signing off. Until next time.

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