Nuclear power developers need those rarest of creatures: rich folks prepared to wait. That goes double for the more exotic niche of small modular reactors (SMRs). Now one developer, Kairos Power LLC, appears to have landed a patient whale in the form of Alphabet Inc’s Google.
Kairos, based in Alameda, California, announced late on Monday it had signed an agreement with its near neighbor under which it would develop and build several SMRs, with Google buying the output beginning in 2030 and reaching full capacity of 500 megawatts in 2035. Kairos received a permit in December last year from the US Nuclear Regulatory Commission to develop a pilot project in Tennessee to demonstrate its molten-salt technology, which might offer safety advantages compared with traditional water-cooled reactors. The US Department of Energy is backing the effort with a US$303 million grant.
Something of a pattern is emerging in the effort to revive nuclear power in the US, whereby technology-sector billionaires, such as Bill Gates, Jeff Bezos and Sam Altman, put money into start-ups at the cutting edge. The technology companies are needed to actually buy the eventual output.
Thus far, this has been confined to contracting power for new datacenters focused on artificial intelligence (AI) from existing nuclear power plants. Those deals make sense for big tech, because they offer zero carbon power that is, above all, available relatively quickly to aid the race for AI dominance.
ROOM TO MOVE
However, they are inherently limited — there are only so many existing, unspoken-for reactors to go around — and also carry the seeds of a backlash, since they are effectively repurposing existing nuclear generation, leaving everyone else on the grid to take other, mostly fossil fuel-based, sources.
The most recent case, involving Microsoft Corp and the Three Mile Island site in Pennsylvania, finessed this by using the tech giant’s purchasing power to justify restarting a recently retired reactor. However again, the scope is limited.
ENTER GOOGLE
Google’s offer to take the power from Kairos’ SMRs offers genuine “additionality,” as the phrase goes, by encouraging the construction of brand new reactors and, potentially, seeding a whole new industry in the US. This was noted in the otherwise relatively sparse announcement. Kairos could tout the contract of a giant, credible off-taker for its promised electricity to raise more money to develop the plants.
Meanwhile, Google gets bragging rights about fostering a new zero carbon source of power for its long-term AI efforts — very useful given the likelihood that a large portion of the expected near-term boom in AI-related electricity demand is likely to be gas-fired.
Meanwhile, Google’s upfront cost appears minimal. Both parties are tight-lipped about terms, including pricing. However, there is no mention of Google making an upfront, equity-like investment in Kairos itself, and given the nuclear industry’s long history of delays and busted budgets, it seems inconceivable that Google has not negotiated some sort of exit clause if Kairos’ design does not work out.
Think of this in terms of a contingent liability. Assume Google offered to pay, say, US$150-US$200 per megawatt-hour — higher than even the premiums paid in recent deals with existing plants — and it implies the first payment for full output of 500 megawatts in 2035 would add up to about US$100 million in today’s money.
MIXED PROSPECTS
That is still a big deal for tiny Kairos and its competitors. Shares of Oklo Inc, the SMR start-up backed by Altman, perked up Monday on renewed expectations of a deal with OpenAI. So, too, did NuScale Power Corp, whose stock was crushed last year by the collapse of its own agreement to supply Utah Associated Municipal Power Systems.
That setback is pertinent here, demonstrating that even a signed power purchase agreement does not guarantee success if price estimates start to spiral out of control.
The most salient fact about SMRs is that none have actually been built and commercially operated in the US. That said, it was always a little strange that this leading edge of the vaunted nuclear renaissance was, with NuScale, predicated on the backing of a group of obscure electricity co-operatives in Utah. Google makes for a likelier consort.
Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s “Heard on the Street” column and wrote the Financial Times’ “Lex” column. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
A nation has several pillars of national defense, among them are military strength, energy and food security, and national unity. Military strength is very much on the forefront of the debate, while several recent editorials have dealt with energy security. National unity and a sense of shared purpose — especially while a powerful, hostile state is becoming increasingly menacing — are problematic, and would continue to be until the nation’s schizophrenia is properly managed. The controversy over the past few days over former navy lieutenant commander Lu Li-shih’s (呂禮詩) usage of the term “our China” during an interview about his attendance
Bo Guagua (薄瓜瓜), the son of former Chinese Communist Party (CCP) Central Committee Politburo member and former Chongqing Municipal Communist Party secretary Bo Xilai (薄熙來), used his British passport to make a low-key entry into Taiwan on a flight originating in Canada. He is set to marry the granddaughter of former political heavyweight Hsu Wen-cheng (許文政), the founder of Luodong Poh-Ai Hospital in Yilan County’s Luodong Township (羅東). Bo Xilai is a former high-ranking CCP official who was once a challenger to Chinese President Xi Jinping (習近平) for the chairmanship of the CCP. That makes Bo Guagua a bona fide “third-generation red”
US president-elect Donald Trump earlier this year accused Taiwan Semiconductor Manufacturing Co (TSMC) of “stealing” the US chip business. He did so to have a favorable bargaining chip in negotiations with Taiwan. During his first term from 2017 to 2021, Trump demanded that European allies increase their military budgets — especially Germany, where US troops are stationed — and that Japan and South Korea share more of the costs for stationing US troops in their countries. He demanded that rich countries not simply enjoy the “protection” the US has provided since the end of World War II, while being stingy with
Historically, in Taiwan, and in present-day China, many people advocate the idea of a “great Chinese nation.” It is not worth arguing with extremists to say that the so-called “great Chinese nation” is a fabricated political myth rather than an academic term. Rather, they should read the following excerpt from Chinese writer Lin Yutang’s (林語堂) book My Country and My People: “It is also inevitable that I should offend many writers about China, especially my own countrymen and great patriots. These great patriots — I have nothing to do with them, for their god is not my god, and their patriotism is
RSS