Vogtle & the Nuclear Renaissance that Wasn't

00:00:03:17 - 00:00:35:14

Chris Keefer

Welcome back to Decouple. Today I am joined by fan favorite returning guest Mr. James Krellenstein. And we have a very exciting show for you today. We will be chatting. I think the episode title is going to be the perfect storm of Boggle, but I think we're going to chat much more broadly in the way I'd like to lean into this again, a bit of an analysis of what went wrong at Vogel is by positioning ourselves in this moment where we're talking so much about a nuclear revival, where the word renaissance is a little bit taboo because it was thrown around a lot in the early 2000.

00:00:35:16 - 00:01:00:22

Chris Keefer

James I want to like time travel with you to the early 2000 when all the planning was going on for the relative of the brand new beautiful reactor, the AP1000 in America, in China and I want to get a sense from you that if you if you were, you know, your age now and you're in that time, do you think you could have foreseen how things went, how things fizzled in that renaissance?

00:01:00:22 - 00:01:26:09

Chris Keefer

The troubles we had was, I think, what you consider to be the world's greatest reactor and just how badly the rollout went, because I am I am a diagnosed. What is it again? It's a defensive pessimist. Doom burg. This great clinician gave me that that diagnosis It because of my Eastern European background I'm half Ukrainian. That country has just been rolled by one civilization or another in our entire existence.

00:01:26:09 - 00:01:51:15

Chris Keefer

So it's like baked into my genetics and those of a lot of my eastern European brethren do always, always assume the worst. And then occasionally to be pleasantly surprised when something not so bad happens. So I think part of what makes me an effective nuclear advocate is that I am constantly being pessimistic and that forces me into a real sort of triage based analysis of what's the lowest risk thing we can do.

00:01:51:17 - 00:02:14:14

Chris Keefer

And that guides a lot of my strategic insights and activism. I'm going at a little bit of a sidetrack, But but yeah, if we can if we can if we can jump back to those early 2000s and imagine ourselves, you know, in our current realities, in our current personalities, with everything we know back in those heady days, I think when there's a lot of enthusiasm which you've seen it coming, let's just have a little thought experiment and don't type.

00:02:14:15 - 00:02:16:22

Chris Keefer

Don't take the other way.

00:02:17:00 - 00:02:31:06

James Krellenstein

sorry. I was just looking up something just quickly. So here's here's a question that, you know, I'm also a pessimist because, you know, the good thing about being a pessimist is, on one hand, if the worst happens, at least you're right and then it's a good thing happens, you're wrong. But the good thing happens. So either way, you win, right?

00:02:31:08 - 00:03:06:18

James Krellenstein

Psychologically. So totally agree on being a pessimist. But maybe like most pessimists, I couch my pessimism pessimism in saying it's a realist. But, you know, I think we should be really, really clear here that, you know, the 1000 projects were not the only projects that we start saw getting started here. Remember, the United States Nuclear Regulatory Commission has issued combined operating licenses for over 17 gigawatts of new nuclear power plants in the United States, starting from the mid 2000 onward.

00:03:06:20 - 00:03:33:17

James Krellenstein

Right. We only saw about 2.2, 2.4 gigawatts of those actually ever come to completion, which of course is Fogel three and four. But it wasn't just the AP1000, it wasn't just Westinghouse, and it wasn't just, you know, these two sites had Vogel and Summer. Instead it was multiple reactor vendors. You know, we had this whole consortium of tenuous utilities with g H with the economically simplified boiling water reactor.

00:03:33:17 - 00:03:58:17

James Krellenstein

The BWR come together with Westinghouse, with DOE money to basically with U.S. government, taxpayer money to from New Start, which was a consortium that would help fund and do technical collaboration on all of these different reactor, sort of new new starts using the new NRC licensing procedure, which was part 52, which is the one step licensing rather than a two step licensing or part 50.

00:03:58:19 - 00:04:21:23

James Krellenstein

So your initial question, which I sort of gave you a little background of, would I, I foreseeing these challenges coming, I'm not so sure. One of the interesting things is I'm not so sure, even though I love the 1000, I'm not sure that's the reactor I would have built. It was 2005, 2006. The reason is it had never been built before, even in China.

00:04:21:23 - 00:04:53:10

James Krellenstein

Right. Which we're were just beginning to gear up that bill. It just hadn't been. And what I wish I could go back in 2005, I was 14 years old and actually I was following this IRA, oddly, but in a much more sort of less professional, sort of, you know, middle school procrastinating on my homework sort of way. And the the the question I would always ask them is, okay, so you just built the advanced boiling water reactor, the BWR, which is a G Hitachi Toshiba product, actually, all three of them that come together.

00:04:53:12 - 00:05:16:20

James Krellenstein

And we've just built two of the first of a kind reactors in Japan, and they were one of the fastest builds in nuclear build history I think ever right. They were, you know, from from nuclear construction start commercial operation was under 40 months. Right. And was under budget as well. And the BWR was already licensed in the United States.

00:05:16:20 - 00:05:40:14

James Krellenstein

In fact, the advanced boiling water reactor was the first nuclear steam supply system and standardized plant designed to actually receive a part 52 design certification and the first to get a rulemaking. So in the design certification process, the NRC literally makes a rule and codifies in the code of federal regulations. So they can't they themselves can't wiggle with the regulatory things.

00:05:40:14 - 00:05:59:15

James Krellenstein

That's ten CFR 52 Appendix A, which is the BWR rule. That was 97 design cert comes in 94. So here we have the A BWR, it's like it just hit it out of the park, right? And then the Japanese are building four or five more, which means we've got a hot running supply chain or we've got Hitachi works, right?

00:05:59:15 - 00:06:26:10

James Krellenstein

Really building those modular modules out excuse me. And almost no one with the exception of two sites. Right. We did actually issue two calls to combine operating license for AVR at South at South Texas Project Unit three and Unit four, which don't exist. But there was a license, a full colt issued for the ABM. But besides that, it's just basically the SBW BWR, the AP1000, none of which had been built before.

00:06:26:10 - 00:06:57:16

James Krellenstein

And believe it or not, there's a lot of interest in the EPR. We had multiple sites in the process of getting what was called rather than the European pressurized reactor, the evolutionary power reactor, but it was the same EPR that did so well at o L3 in Farmingville that was being evaluated for sites like Bell Bend next to Susquehanna Units one and two in Pennsylvania, nine mile point unit number three up in upstate New York, and, you know, even Suffolk, Calvert Cliffs.

00:06:57:18 - 00:07:27:02

James Krellenstein

And so we had actually a bunch of different reactors being evaluated by the industry and actually going through and having hundreds of millions of dollars per site, being running through the licensing process. I made a concerted effort. And the thing that that strikes me then and strikes me now is we kept on doing that. We keep doing the same thing, which is we keep on building an unbuilt reactor thinking.

00:07:27:02 - 00:07:46:04

James Krellenstein

I think as we've talked about ad nauseum in your fans, no doubt listeners are sick of hearing me saying this whole thinking that these new designs will just fix everything that has ever happened where we left on this sort of on the map, the BWR. And now I feel like we're doing it with the AP1000 as well. So I see that continuity happening.

00:07:46:08 - 00:08:12:07

James Krellenstein

So sure, I could have predicted all of the, the real challenges that we saw with the AP1000 construction. Once again, I was a teenager, but it there's one common lesson that I see, which is that the industry and utilities started to elect a reactor design based on, you know, a lot of the paper advantages of this reactor design rather than going with a design that they could have gone with, which was the AP are.

00:08:12:10 - 00:08:33:03

Chris Keefer

Right. Right. But, you know, it's interesting in terms of the perspective I have on nuclear, it's you know, in terms of my my my personal experience and the time I've spent really delving into this, that's only five years. You know, I've been doing a little more reading around the early days of, say, the Canadian nuclear program and getting a broader sort of historical perspective from talking with folks like yourself.

00:08:33:05 - 00:08:53:02

Chris Keefer

But, you know, it really does seem like five years ago when I started, these were some of the darkest days for nuclear Fukushima had happened. There was still some inertia of, you know, some nuclear activity that was ongoing from this early renaissance. And what the British, you know, refer to as the 2000 2010, I love it. They call it the naughties because not it means zero there.

00:08:53:02 - 00:09:24:15

Chris Keefer

But so during this period of the nineties, there was enough momentum going even if a lot of the projects fizzled out or were going well behind budgets, they were still been started and there was enough path dependency that they survived Fukushima. And so I'd argue even right after Fukushima, nuclear was in a better place. And then we hit this real sort of hangover, you know, with with the failures to construct on budget, on time with the EPA and be one thousands that were really dark days, I'd say, when I got into this 2017 2018.

00:09:24:15 - 00:09:52:04

Chris Keefer

And so the delta between that low point that I'm perceiving at the beginning of my nuclear advocacy career to now, it feels exhilarating. That being said, this is kind of sad compared to, I think where we were at in the noughties with tons of, you know, licensing procedures happening with lots of projects going ahead. Yes. Making the exact same era that we're seeing now of whatever exists at the moment that we've even just recently build state of the art reactors like BWR is not good enough.

00:09:52:04 - 00:10:14:17

Chris Keefer

We're going to move on now. It's an interesting parallel, but I'm just again, reflecting on, you know what, how amazing those noughties were. I think both of you and I would be incredibly excited if there were, you know, 17 sites being prepped in the US, multiple technologies being considered. We probably had some of the same criticisms. But anyway, it's just just a little footnote and a thing.

00:10:14:17 - 00:10:37:17

James Krellenstein

Of interest, I think. You know, I think we should we should note that a huge part of this, especially in the United States, was, you know, natural gas. I mean, there's there's just nuclear is much more of a straightforward economic case in the early not in the noughties, I guess, to adopt that term but in the mid 2000 because you have you just like Henry Hub Price right.

00:10:37:17 - 00:11:05:17

James Krellenstein

It was like like you know, it peaked at $15 before the financial crisis in $2,000 per MMBtu. That would start it like $3 and with low that per annum BTU. So the economic case for having nuclear generation on the grid was just in the United States was far more attractive just straight up in that period than it is today, you know, prior to the fracking revolution.

00:11:05:18 - 00:11:35:06

James Krellenstein

Right. That really just dramatic, drastically transform for North America. And the United States in particular are what what was attractive as baseload or baseload capable generation. And, you know, I also want to just point out that one of the more interesting things that we are seeing now, I think, is that we had utilities really, really working to build nuclear and were eager customers.

00:11:35:08 - 00:12:24:09

James Krellenstein

I would argue some of them today are still eager customers. The thing that happened was we should not understate as much as I am apparently being known as an AP1000 fan boy, the disaster that was at summer and we should not underplay it. And one of the things that when I first reentered into this space in a more professional capacity, the thing that shocked me was about how little people talked about it in a rigorous way and how much, you know, the industry and advocates seem to have created some really nice fairy tales about what happened there and why it ultimately wasn't the industry's fault.

00:12:24:09 - 00:12:48:18

James Krellenstein

It was everyone else's fault. But I think if you actually go down and study this one, it's a just a treasure trove of lessons learned that are invaluable that every person, in my opinion, who is considering getting into nuclear wants to do something in Union Square, should study, should learn. We spent my company, we spent two years working through every piece of paper that is available on this.

00:12:48:18 - 00:13:12:06

James Krellenstein

And one of the you know, one of the bad things about the AP 1000 situation at summer in particular was it devolved into a lot of litigation, which obviously is never good. One of the upsides of that, if we can call it that, was is that some of this stuff that you would never see that are hidden behind utility file cabinets, in vaults and in Westinghouse Vaults and CB and ISE?

00:13:12:06 - 00:13:36:19

James Krellenstein

Well, some of that's now seen the light of day and in public. And we can read sort of the real time correspondence going back and forth between, you know, the different project participants sort of documenting this this disaster as it unfolds. And and I think that gives us a real, you know, objective view of what was going on, at least from the point of view of the project participants.

00:13:36:21 - 00:14:06:23

James Krellenstein

The other thing I have to say, though, is we need to be honest about this and we need to understand that if, you know, in my humble opinion, one of the biggest things that is keeping back nuclear today is what happened at Vogel in summer. And the solution cannot be just not to not talk about it. It must be that we are willing to talk about it, confront it and be honest about what happened and why we are taking steps that will never happen.

00:14:07:01 - 00:14:23:06

Chris Keefer

Right, Right. So, you know, I can't think of anyone better to have on than to talk about the since, you know, your company has been deep diving this and trying to learn those lessons. But again, I began to be fascinated with the noughties and with this historical period. So let's talk a little bit about this before we get into what went wrong at Vogel.

00:14:23:06 - 00:14:29:00

Chris Keefer

What went wrong at some or maybe even what went wrong at Sandman? I'm blanking on the Chinese sites right now.

00:14:29:01 - 00:14:30:07

James Krellenstein

Simon and Hyang.

00:14:30:09 - 00:15:02:03

Chris Keefer

Hua. I'm kind of impressed myself, remembering man. But anyway, before we get there, like, we live in a radically different time. I mean, this is just this this for me, this is fascinating, this comparison across 20 years, globalized Asia was really heading it was his heydays. China had opened up the idea at that point that, you know, we get China to do the first reactors, that they would build up a supply chain, that there was such kind of openness, I think, in that relationship, even over something as as geopolitical and strategic and tactical as nuclear.

00:15:02:03 - 00:15:17:13

Chris Keefer

But like, what was the vision there? Because again, transporting myself to that period, I'd be like, This is awesome, guys. This sounds like a great plan. Tell me a little bit more about, you know, and maybe we can confine this, you know, in terms we're talking nuclear renaissance. We are going to get into Vogel summer. So let's kind of stay with the AP 1000 thing.

00:15:17:17 - 00:15:24:08

Chris Keefer

What was that sort of nice PCE globalization vision of the AP1000 deployment?

00:15:24:10 - 00:15:50:13

James Krellenstein

Well, it wasn't just you know, I know what we what it could fight for if you a thousand. But we should be clear. Right. You know, China was had a very audacious and still has a very audacious nuclear power plant and nuclear energy development program. They're building dozens of reactors today. No one else's in that scale. And it wasn't just the AP 1000 who tried to build the first you know, the first two EPA's, of course, were are in China.

00:15:50:15 - 00:16:20:21

James Krellenstein

Right. As you may know, your your can do six even before this in the 1990s was built also in China right we had a real and the Russians were building VR cars and so our building VR is in China as well. So we had a huge amount of people say China is a hot market. There are looking to build initially Western technology and what a better place that has a really established construction workforce.

00:16:20:21 - 00:16:45:18

James Krellenstein

You know, we built they built stuff in China a lot. So I was into China before. It is just impressive. And they have now probably the world's most experienced workforce and nuclear power plant construction and the safety and welding characteristics that are necessary. There's also an impression that the Chinese regulator well, it's it's you can't blame the Nuclear Regulatory Commission for what goes wrong.

00:16:45:18 - 00:17:16:12

James Krellenstein

And to build in China, they don't have an NRC. They do have a actually, I would argue, a pretty competent regulator themselves. But regardless, there's a perception how how real it is that the regulatory burden is much less. And we see this even play out a little bit with the AP1000 built. But just to go back and one of the things is also just to go to your initial point and that initial AP1000 build out that that Westinghouse gets in in China, they agreed a chance for the intellectual property really in a way to China.

00:17:16:14 - 00:17:53:16

James Krellenstein

And actually that's what we see now with the six reactors that are now coming in that are being built, that are AP1000 derivatives, quote unquote, how much their derivatives is a different question. They're called cap Chinese AP1000. See AP one thousands. And even kind of worse than this, if I was Westinghouse as IP counsel, what I would sort of shake my head or, you know, is was the decision that apparently and I've only gotten this sort of second hand information is is that you know, the Chinese have also upscaled the AP 1000 to a much bigger reactor that's over 1500 megawatts for the cap, 1400.

00:17:53:16 - 00:18:25:08

James Krellenstein

The AP 1400 is the scaled up version. My understanding is that Westinghouse does not have the back licensing rights essentially to that larger scaled up AP 1000, the AP 1400 or AP 1400. So we're in a situation where we kind of transferred the crown jewels over to China, maybe under sort of a different sort of time. That was maybe a little bit too starry eyed about the Chinese or, you know, push two days about China being a partner.

00:18:25:08 - 00:18:57:01

James Krellenstein

But I'm not so sure in hindsight, as you noted, it looks it looks good at all. And I want to I want to drill down on some because I think that and forgive me if I'm I try my Mandarin pronunciation is not good. It is not. But you know, the sun moon build was the first clue I had that the story that often the US nuclear advocates that I had initially and even some initial industry people that I had spoken to about what went wrong with the AP 1000 wasn't right, right.

00:18:57:02 - 00:19:07:23

James Krellenstein

That there was something far, far deeper to this story than what has been told. And I think that's a really instructive point to start.

00:19:08:01 - 00:19:38:07

Chris Keefer

Absolutely. Yeah. So the Chinese builds I understand basements are being poured, I think in in 2009. So they got a head start Summer and Vogel. I think it's like 2012 2013. So what kind of information is is coming in to the U.S. constructors from China as as they proceed what are some of the frustrations? We don't have time, I think, to go into it in-depth in terms of what went wrong in China when it came to AP 1000 deployment, but maybe just from a, you know, a 30,000 foot view.

00:19:38:09 - 00:19:39:06

Chris Keefer

Give me a sense of.

00:19:39:06 - 00:20:06:02

James Krellenstein

How that was maybe on a 30,000 foot view. We have to realize one of the things that happens right in this process in 2009, actually. Exactly. Is in the United States, the Nuclear Regulatory Commission finalizes a rule saying that new nuclear power plants must a new construct, a nuclear power plants must be able to withstand an aircraft impact and be able to protect the core in the event of that occurrence.

00:20:06:04 - 00:20:32:07

James Krellenstein

So the air, the aircraft impact assessment ten CFR 5150 And what and because none of the AP1000 sites had yet been actually licensed, every new AP1000 was required to now comply with that. Right. So this required Westinghouse, even though Westinghouse had been warned a couple of years before that this was coming down, Westinghouse was apparently quite unprepared and really has to start redesigning everything.

00:20:32:07 - 00:20:58:07

James Krellenstein

And we use in a standardized construction process like what the AP 1000 is using, using this one step process, simple design control document, which, as its name implies, controls the design and has parameters. And so we jump from revision 15 of the CD, actually revision 16 of the nuclear to revision 18 and 19. We redesigned the entire shield building that surrounds the containment building of the 1000.

00:20:58:09 - 00:21:32:06

James Krellenstein

The Chinese did not have this rule change, so they start building on revision 15 right where they really start building a classical reinforced concrete shield building. So we started initial divergence right there. Now, a lot of U.S. nuclear advocates often say it was all the NRC. Rod Adams, I believe, published a piece in 2014 or something saying that the root cause of the delays at Vogel were and summer were due to this air rule.

00:21:32:08 - 00:21:56:05

James Krellenstein

And I don't think there's really much empirical support for that. The rule, of course, was a challenge. But let me just let us start at this point. Sandman unit number one, which is being built in China, right. Which is not subject to the US NRC, not subject to the aircraft impact assessment rule and has a workforce that is extremely experienced, you know, accessible across labor workforce in nuclear construction.

00:21:56:07 - 00:22:39:14

James Krellenstein

It is the single to to this day. It took the longest of any nuclear power plant ever constructed in China. It takes more than double the median length of construction duration that happened that that was happening in China in the modern LWR buildout that we see over nine years from base map to operation. Right. We see today a median build exceptional 4.5 years around that in China and globally we actually see a median of around six years with China really bringing a down that media so so you can't so my initial what I sort of started hearing this and I sort of read this and did the math the time math and China I said

00:22:39:14 - 00:22:59:08

James Krellenstein

this doesn't make sense. It can't be the aircraft impact assessment rule because the aircraft impact assessment doesn't apply to China. It can't be the NRC because the Chinese don't have the NRC. And it can't just be that they don't have an experienced workforce. So the Chinese have an experienced workforce. We had this a great case control experiment like we had one we're building in the United States, one building in China.

00:22:59:13 - 00:23:28:02

James Krellenstein

And like the Chinese were slightly faster, but actually not that much faster, believe it or not. Then then the American built and it really points to actually in my mind and what I think there's much more empirical support for what was going on in this bill and the which was that we just mismanage Westinghouse and their initial EPC partners, which was Shaw, which had bought the old Stone and Webster.

00:23:28:04 - 00:23:55:00

James Krellenstein

Right. I just completely I'm going to say absolutely, frankly, mismanaged this to a degree that is painful to analyze in hindsight. And I know this is all very funny because I'm the one who's saying we should build another AP one. So the first thing we should do, but it's because I believe that actually by telling the real story, not the sort of nuclear bro nuke probes sort of fairy tale that we often tell ourselves.

00:23:55:01 - 00:24:13:18

James Krellenstein

Actually, the argument for building another AP1000 is much stronger than with a new pro fairy tale. It's about how everyone was persecuting us and it just was we can't catch a break. So. So I think that's a really good place to start. And a really interesting sort of note to begin.

00:24:13:20 - 00:24:31:06

Chris Keefer

Absolutely. And, you know, I always before I recorded an episode like this, we did do an episode of Mark Nelson probably two years ago titled What Went Wrong at Nuclear. So we'll have a different title for this one. But, you know, to me, you know, obviously being far less educated on these topics, you know, there's a couple of variables in that case control study.

00:24:31:08 - 00:24:46:13

Chris Keefer

And I think we're going to get into some of those details for me. And kind of the impression I got from that interview is there's just something wrong with this design. It's too cramped, it's too difficult to work around it. And certainly that's one potential variable. But I think, you know, we're going to have a different perspective here today, and I'm really looking forward to that.

00:24:46:13 - 00:25:16:22

Chris Keefer

But before these kind of interviews, I always go back and I watch 81,000 promotional videos from the nineties, and this is a historical record and a document. And you know, what's promised is, you know, rapid construction times, eliminating construction risk. And I think that was the genesis of the AP 1000 in the AP 600, when I guess in the eighties and nineties there was the thought of and it seems like we kind of have these ideas of let's go really big, let's come down a little bit, let's go big again, let's go really small modular that's kind of been the thing and that now we're coming back to maybe gigawatt scale but the promise of

00:25:16:22 - 00:25:39:20

Chris Keefer

the AP 600 and later the AP 1000 was it was going to be so constructive and we talk about this. We've reference that I might study nuclear steam supply system is like 20% of overnight capital costs. It's all about build ability. We need innovation in construction, construction, construction. That's what the promise was, why it was the promise not delivered in China and VOGEL And whenever you're ready, if you want to keep talking a bit about China, jump over to Vogel in summer.

00:25:40:01 - 00:25:40:21

Chris Keefer

I'll leave it up to you.

00:25:40:22 - 00:26:05:10

James Krellenstein

Well, so I think I think we should, first of all, dispute this, views this idea as too cramped. Right. The AP 1000. It is true as a smaller containment vessel than a comparable pressurized water reactor, maybe on the order actually of maybe a little bit smaller than the ice condenser p.w others like it was bar and Sequoia and McGuire and Catawba Lake, which have a space pressure suppression system.

00:26:05:10 - 00:26:26:15

James Krellenstein

But you know, look what I think small containments the if you want thousands you know downright luxurious in in its containment size compared to what a boiling water reactor containment looks like maybe with the exception of the mark three BWR containment. But if you look at what a mach one boiling water reactor containment like at Browns Ferry or Vermont Yankee Air, Fukushima Daiichi, right.

00:26:26:16 - 00:26:53:06

James Krellenstein

Those containments. Right. Are really, really cramped and you can't even go inside them when during operation. Same thing with the Mach two, because they're nitrogen they're nitrogen inert It so it is not that that it's too cramped. The design is bad. It's actually I would argue the AP 1000 is still a fantastically constructed reactor and really was designed at the top level with construct ability in mind.

00:26:53:06 - 00:27:26:09

James Krellenstein

The first thing to really recognize is the AP1000 is the first modular, while the AP 600 really was the first fully modularized nuclear island that we've ever seen. And as you may recall right, the AP1000 consist of 342 modules. That's 122 structural modules, 154 piping modules, 55 mechanical equipment modules and 11 electrical equipment modules. And the idea of this was something that you hear, I don't know.

00:27:26:11 - 00:28:04:05

James Krellenstein

I could go next week to a nuclear conference and hear this exact shtick, which is if we can bring in so much of that nuclear island and nuclear grade fabrication tasks out of the field into a centralized factory, we can reduce the cost, increase quality, increase repeatability and increase economies of scale. And the the guys in Pittsburgh really took this ethos and took it to its, you know, kind of uber maximum sort of state and actually tried to build a reactor based on that ideology, on that, on that methodology.

00:28:04:06 - 00:28:24:17

James Krellenstein

That's, I think, still a very good idea. But as we we saw in Simon Hyang Vogue on Summer, it's not the only story, it's not the only thing you need. And the first thing that you're going to need to know and it's kind of the logical next step. Okay, so we have all these modules. Fantastic, right? That's how we're going to build the plant.

00:28:24:19 - 00:28:52:10

James Krellenstein

And we should just be be clear, like what this modules mean, right? So I'm going to look at three different modules. Let's talk about three different modules or as you talk about two different modules right now. Right? So like the famous one probably that everyone well, I don't know everyone. That's probably No one. But actually people who follow the story, though, is to see a20 module or to see a 20, which is basically in the auxiliary building as the spent fuel pool itself.

00:28:52:10 - 00:29:20:05

James Krellenstein

And it's it's literally it is so massive. It's 905 metric tons, right? It is 67 feet by 47 feet by 69 feet. So that's like 21 meters by 14 meters by 21 meters. Right. As I said, it weighs close to 1000 metric tons, 905 metric tons. So obviously, you can't actually transport for that entire module. So what do you do?

00:29:20:05 - 00:29:41:08

James Krellenstein

You break it up into sub modules. In the case of 2072 sub modules that you bring to the site and then you assemble all at the site outside of the construction site and watch the module assembly building have that entire sort of 820 building, you know, sort of module sort of assembled on site and then moved over into the nuclear island.

00:29:41:10 - 00:30:05:09

James Krellenstein

Okay, great. That's still a great approach, right? We're still breaking down like, you know, it's like the Legos that you see on the, you know, these these smaller videos, Right? We just snap it together and it will be all glorious. The the problem right away that we see is two things that ultimately do this well, do it. Obviously, we finished it, but really caused a major problem.

00:30:05:11 - 00:30:33:20

James Krellenstein

The first is, is who's going to build those modules, right. So we have Shaw, which was, you know, a famous Newton, Louisiana company is famous. The oil and gas industry really for pipe you know, for piping and piping manufacturing And Shaw buys an old veritable nuclear EPC stone in Webster out of Boston they integrated in and they create a module factory down in Lake Charles, Louisiana.

00:30:33:22 - 00:30:59:21

James Krellenstein

And we initially start seeing some initial warning signs. Right. And the first thing is that the first warning sign that I always like to talk about was back in 2011. So about a year before we really start nuclear island construction at Vogel in summer. Right. The NRC goes down to this Lake Charles Pfaff module factory in January of 2011.

00:30:59:21 - 00:31:20:20

James Krellenstein

So, you know, it's less than a year away from construction start where we we assume module fabrication is beginning. We want to inspect to make sure that the safety culture is right at the edge. You see processes, etc., everything is going well. So the message is a surprise inspection on January 10th of 2011. And what is the NRC?

00:31:20:20 - 00:31:53:17

James Krellenstein

Fine. Well, the NRC leaves the next day. Why do they leave the next day? Because they note that there isn't enough activity going on at the site. They haven't actually started building enough modules to even inspect anything. Literally, the NRC says like, Hey, guys, call me when you're ready to act when you're actually doing something. And that way I'll surprise inspect you then, because we have nothing to inspect here right?

00:31:53:18 - 00:32:36:10

James Krellenstein

And that's the initial one of the initial warning signs that this module assembly building down in Lake Charles ain't going so well. Right. And it is really with nuclear construction, you know, you know, no matter how early you start, you're already late. It's the old joke that I always hear. And this really will turn out to become one of the Achilles heel of the if you want that that Achilles heel is if you don't have a good supply chain, The advantage of modular construction becomes a dramatic disadvantage and we'll start seeing this cascade throughout the entire AP 1000 builds now in Seabee and ISE Defense.

00:32:36:10 - 00:33:08:03

James Krellenstein

We'll get back to Lake Charles one again, one of the reasons why construction was so wide module assembly and fabrication was so behind was because Westinghouse had not completed many of the design of a design finality on many of the modules. Architecture. Right. And it was not ready. It was not certified for procurement or construction. And we will see this continuous problem as we walk through the project, sort of begin dooming it.

00:33:08:05 - 00:33:34:11

James Krellenstein

And that really is a major, major lesson that everyone here has, to my mind should take from this is that whatever level of design completion you're at, unless you have a reference operating plan, you're probably not design complete enough and we will start seeing that by 2015, 2016. There is still major engineering changes going on in the module, sort of architecture.

00:33:34:11 - 00:33:57:15

James Krellenstein

In one case, even about four or five years after module, fabric after the plant had been nuclear island construction, we start seeing that there is in some cases a thousand design changes per month being communicated from Westinghouse in Pittsburgh all the way down to the suppliers. Right. Which we can blame the suppliers and the suppliers. We're not prepared.

00:33:57:19 - 00:34:18:05

James Krellenstein

We'll talk a little bit more about that. But ultimately, the suppliers, we're put into a very hard position because Westinghouse itself wasn't actually prepared and actually I think has had misled consortium members, including the utilities that were ordering them about what the level of design and completion was at the beginning of the project. And that's a really major error.

00:34:18:09 - 00:34:29:19

James Krellenstein

And this is going to cause in addition to the supply chain errors, this will cause the major regulatory problem that we see as well in this construction. But I want to pause and and stop ranting.

00:34:29:21 - 00:34:57:04

Chris Keefer

I love it. I love it. So one little kind of thematic a bit for me. And then another question. But they're all they're all related. So first off, I mean, again, having been in this space for five years, small modular reactors, modularity, I is often framed and and received by policymakers, politicians, those coming to nuclear as this like brand new concept that is specific to smas.

00:34:57:09 - 00:35:14:05

Chris Keefer

And again, I hear it over and over again from people who are very well meaning this concept. You know, a journalist friend of mine in Alberta who was talking about Eskimos recently, and this idea, you build it in a factory and you just bring it over and plug it into the grid. And, you know, I think maybe it's because we're thinking so much about wind and solar.

00:35:14:06 - 00:35:30:21

Chris Keefer

What? Yeah, you can essentially build, you know, several components or, you know, the panels themselves and just put them down and plug them in. I still disagree with Jigger Shaw, who said I had my head screwed on the wrong way. I'm taking a bit of a low blow here that a nuclear construction projects a little more difficult than a wind and solar construction project.

00:35:30:23 - 00:35:56:12

Chris Keefer

But all that to be said. I mean, this modularity thing is fascinating. We're talking about this this case control trial we have of the Chinese project happening slightly in advance, but somewhat in parallel to those in the U.S. I imagine they're a little bit better at making modules. So can we eliminate that as as a potential cause in terms of some of some of the differences or design specific flaws?

00:35:56:13 - 00:36:16:20

James Krellenstein

Well, so I think that once again, the problem was, is that anyone can be you can be the best modular fabricator in the world. But if the the sort of if the design controllers, if the designers of those modules aren't done with the design, it doesn't matter how good you are at module fabrication, you're not going to be able to do this.

00:36:16:22 - 00:36:48:03

James Krellenstein

Right. And that's really what we saw a lot in the Chinese situation is, is that they were ready to build these modules, right. Even though dedicated factories are still running, they'll be building the Cat 1000. But one of the major contributors to this delay was the fact that the engineering debt was so significant at at at on the 81,000 that it forestalled effective module fabrication or efficient module fabrication and just to give you an idea, I'm not I'm not joking here about what this what this looked like.

00:36:48:03 - 00:37:18:04

James Krellenstein

So if you go back into the timeline, even before nuclear construction started, right. Westinghouse reported back in March 17, 2011, that 90.49% of all of the issued for construction blueprints were issued. Right. That they were essentially ready to be built. Right. And then just a couple of months later in May, Westinghouse reports to the Department of Energy that is that that they are 95% done with issued for completion.

00:37:18:07 - 00:37:50:21

James Krellenstein

I'm not going to go through everything. Let's fast forward two years to March 31st, 2014. All of a sudden, Westinghouse is reporting actually, I know we said 95% back in 2011 were issued for construction. Actually. Now it turns out only 88% of the drawings are are certified issued for construction, which gives you an idea of the total lack of process control that was beginning down at Westinghouse, that they had either been they either did not know.

00:37:50:21 - 00:38:20:14

James Krellenstein

That's obviously not the right number. Right as time on if you're saying 90% are done in 2011, then 95% are done in 2011. And then all of a sudden, years later, you're reporting to your customers. Well, actually, 88% are done. Something is wrong here. And that is a major theme that we'll see throughout this bill, that not only was the design actually not done and really didn't finish in the case of Vogel, it's like 2016, 2017.

00:38:20:16 - 00:38:50:09

James Krellenstein

But Westinghouse and CB and I and the FTC are kind of themselves not sure about how much engineering debt they have on this project, which shows, I think, a complete lack of project management to use a euphemism here. And that's a very kind euphemism in some cases. I would say this is not the way you should should talk about your church, should talk to your customers in an integrated project delivery framework.

00:38:50:11 - 00:39:20:03

James Krellenstein

There's one more thing I want to flag here. One of the strengths that we saw the NRC evolve in was a major problem even before the Nuclear Regulatory Commission existed, even before Three Mile Island happened. Right. One of the major problems that we had in U.S. nuclear licensing was this two step licensing process where you get a construction permit to start building, you start building, and then you would apply mid bill for an operating license.

00:39:20:09 - 00:39:37:14

James Krellenstein

And the problem, of course, is, is that it's the or the first time that you're really putting your final design in front of the regulator. And the regulator can say, I'm sorry that you constructed that emergency, that high pressure cooling injection in this way, sorry, that's not actually compliant. You're going to rebuild, ratchet down, retrofit, destroy everything you had built.

00:39:37:14 - 00:40:01:18

James Krellenstein

And this was a major problem. Even with the AEC, we saw on the Sequoyah nuclear project back in 73, 74, 30 major subsystems have to be redesigned mid construction after they had already been built because of this two step licensing procedure. So the NRC introduces this new procedure called Part 52, which is basically says, no, no, no, we're going to license the entire plant before you start construction.

00:40:01:20 - 00:40:21:06

James Krellenstein

The whole idea is and then you'll have tests that you will define that shows that you built it in compliance with the licensing basis and that way you can't ratchet mid builds, you know, from the very beginning, before you pour a drop of concrete or place an ounce of rebar, what exactly you need to do to get the regulator happy.

00:40:21:08 - 00:40:46:23

James Krellenstein

Here's the problem. The NRC held its end of the bargain. They did not change after the issuance of that license a single rule or a single regulation. The problem was, let's go back to this lack of design maturity that we have. The bargain that you're making with the Nuclear Regulatory Commission is that, you know, you're design backwards and forwards and you know how to construct it ultimately.

00:40:47:01 - 00:41:17:13

James Krellenstein

But because so much of the Westinghouse AP1000 design actually not been actually finished, it meant that in reality they had to issue many, many amendments to this license because simply put, they couldn't actually build what their own license that they had submitted to the NRC said because the design wasn't done right. So this will lead to on Vogel three, a 188.

00:41:17:15 - 00:41:44:02

James Krellenstein

Now, it's actually a little bit more than that license, amendments that have to go through the NRC made construction not because the NSA is changing anything, but because the license that actually, you know, the licensee in Westinghouse and CB nine, as she put together, wasn't buildable and wasn't going to conform to the actual design that was going to be built because that design wasn't done when the licensing was finished.

00:41:44:04 - 00:42:19:23

James Krellenstein

So we see this part for the advantage of the part 52 process. Once again, like the modular modularity become a disadvantage, right? Because it turned out the design wasn't done and in the in Georgia power and then now defunct scanner's defense Westinghouse itself seemed to be not so either not able or not willing to tell their customers the level of design maturity that they actually had on that design, which I think ultimately influenced the licensing pathway that was taken.

00:42:20:00 - 00:42:48:05

Chris Keefer

So in terms of summarizing so far, I understand more factors will come up. We haven't talked about some of the kind of litigation issues. We certainly inferred some of the atrophy of of supply chain and project management. We haven't talked about things like covert or kind of worker retention. Sure. But but for now, and can you just summarize like the two or three key things in terms of your thesis, just so we give our listeners a place to sort of toggle their thoughts?

00:42:48:05 - 00:43:20:21

James Krellenstein

So the first thing is modular. You know, if you thousand highly modular plants, 342 modules, right? But that is dependent a modular supply chain that is working, that is ready to go. That module supply chain was not ready to go. And the then primary supplier of many of these modules, which was Shaw's Shaw's. So the factory had no nuclear culture and never built a nuclear project before was all for the oil and gas industry, which is a very different safety and regulatory forum.

00:43:20:21 - 00:43:46:20

James Krellenstein

So that's number one. A corollary to the modular supply chain not being ready was is that and this would be a systemic issue is that the design wasn't ready. The design was not finalized for the 81,000, what we call issued for construction. Ready. Right. Like that, that actually we have blueprints, drawings and work packages that are ready to go down to a work team and go to a work face and begin building that.

00:43:46:22 - 00:44:18:23

James Krellenstein

That was not ready. And that impacted both the actual on site construction of both local and summer, but it also impacted the ability of the modular modular suppliers to actually build the modules because it turned out that modular architecture was not ready, it was not issued for construction or procurement either. Right. So we have literally cases of modules being built and they have to be rebuilt at the factory because of the design instability that the and this also causes a major regulatory headache.

00:44:18:23 - 00:44:44:00

James Krellenstein

Right. That because the NRC, the license that Westinghouse and and the utilities submitted to the NRC. Right. Was based on a design that turned out not to be complete as they finished the design up and actually tried to build it, it turned out they had a huge amount of change and go back before the to the regulator to actually change the design and get a regulatory approval for that.

00:44:44:02 - 00:45:06:14

Chris Keefer

So just a question here again, in terms of it sounds like there was an effort certain to localize supply chain to this Lake Charles facility and not necessarily leverage the Chinese supply chain. And we've talked about the different contexts of globalization that we were in then and now. Were there any efforts to like maybe after Charles Lake or Lake Charles facility was proving to be inept to try and harness?

00:45:06:16 - 00:45:32:05

Chris Keefer

You mentioned that the Chinese had built up specific factors to build these modules, like was it a happier, friendlier globalization period in which that was an option? Was it the need to sort of show local economic development statistics that kept them working in the U.S. sector and even looking into the future? I mean, is there are there plans to leverage that Chinese now cap supply chain to make AP1000 more viable, you know, in future builds in the U.S. and Poland?

00:45:32:05 - 00:45:36:00

Chris Keefer

It's way too big of a question. I just can't help myself asking it.

00:45:36:02 - 00:45:56:06

James Krellenstein

Yeah. So I'm actually not sure about during the mid build if there were any, you know, decisions to use the AP1000 design, the sort of Chinese supply chain. I think there might be regulatory issues about how they were certified, you know, whether they have any stamps or not had. And since all I believe they were actually and stamped.

00:45:56:08 - 00:46:29:06

James Krellenstein

But you know, I think I don't think that ended up happening at all. And you can actually see what happens in the middle of the the middle of the build begins happening is we start moving away from, you know, Lake Charles to other factory fabricators around the country to basically begin fabricating these modules, sub modules. Right. And know that we should be clear, it's not just the United States, Right?

00:46:29:06 - 00:47:01:17

James Krellenstein

We are there's major fabrication activities going on in Italy at the time. For example, South Korea was fabricating the steam steam generators, the the reactor pressure vessels at Doosan. Right. So this was not this was a globalized supply chain. I'm not so sure we had very much Chinese involvement, which is curious. But I my understanding is now it is viewed that the ability to use that Chinese supply chain, I'm fortunately for geostrategic reasons, is not a viable option.

00:47:01:20 - 00:47:27:15

James Krellenstein

So we do have this challenge ahead of us of building a viable AP1000 supply chain here in the United States or among our allies. Right. You know, and also Toshiba began actually themselves fabricating, which was a a a the then owner of Westinghouse was also beginning purchasing the 001 module, was doing a lot of the sub module fabrication.

00:47:27:15 - 00:48:00:18

James Krellenstein

Same thing was in Japan. So it was a international fabrication, you know, supply chain. But it was not it was a little bit haphazard. Right. So if you look back at back to see a 24 example, right, that big module that I was talking about, that's nearly a thousand metric tons for summary unit number three, what we saw is that 13 of the 72 sub modules were not going to be fabricated actually by this point in at Lake Charles, but instead at Oregon Ironworks.

00:48:00:18 - 00:48:51:22

James Krellenstein

Right. Obviously in the Pacific Northwest. And and 59 of the 72 sub modules are still going to be made at at Lake Charles. But you know, what we do see is that even Oregon Ironworks takes over C.a 20 fabricate all the way back in 2014. Right. So this is years after construction has started. We see that the that Westinghouse issues a thousand engineering and design change requests to Oregon Ironworks just on those 13 sub modules of the 72 sub modules at that that see a 20 consist of right and this is once again in 2014 and we see that, you know, we have of the 13 of 72 sub modules, every one of them is

00:48:51:22 - 00:49:16:10

James Krellenstein

late as a result of this. Right. And even by 2014 and these are all in the critical path, right? You can't build the plant, right, without these modules. So essentially what's going on here is the construction teams in some cases are kind of waiting around for these modules to arrive and we start seeing the entire critical path of the project sort of just completely collapse in front of everyone.

00:49:16:12 - 00:49:40:12

James Krellenstein

Right. And you know, of the, you know, Lake Charles, right, of the 59 of the 72 sub modules. Right. When we just start looking at know amid construction back in 2014. Right. We were supposed to already have a 20 on hook right by this point, but they had only received 25 of the 69 sub modules they needed to assemble a 20 right.

00:49:40:12 - 00:50:11:00

James Krellenstein

And 24 of those were late or way behind where the construction was. So we're starting to see this module supply chain caused in many ways by the lack of design maturity. Start rippling through the project and just destroying the critical path of the project. There's one more thing that I think we we really need to talk about here before we move on to some of the other challenges, which was Lake Charles.

00:50:11:00 - 00:50:52:23

James Krellenstein

You know, I hear this actually a lot even in the nuclear industry today, that, you know, oil and industry, they fabricate stuff all the time. Right. And they do right at very, very high pressures. Right. Very, very complex piping and mechanical and electrical. And see and in some ways, you know, the oil and gas industry, regardless of what you think about it from a climate perspective, it's an amazing collection of suppliers, of engineers, technicians, of craft laborers, all working together to optimize and sort of build a oil and hydrocarbon supply chain that is continuously producing more and more.

00:50:53:01 - 00:51:12:17

James Krellenstein

And we there's often this talk about, well, if only you could translate that ethos to nuclear. And I keep on saying, well, we actually tried doing this at Lake Charles Shaw's entire Lake Charles, Louisiana, of course, is one of the one of the centers of the U.S. hydrocarbon industry. It's on the Gulf. Right. We have a huge amount of natural gas and petroleum going on.

00:51:12:17 - 00:51:34:10

James Krellenstein

There's a whole industrial ecosystem down there that is amazing at doing these things. But it turned out that actually the the issues with nuclear safety culture really became a major challenge at that facility in many ways doomed it. And I want to be clear, this is not just the Nuclear Regulatory Commission sort of coming in and saying your safety culture isn't right.

00:51:34:12 - 00:52:05:04

James Krellenstein

This was inside the actual contractors, right? So even though Shaw is the main APC, we also see that it's like Shaw's brother or Shaw Modular Solutions, that's fabricating it and it's like Sean Nuclear that is handling the procurement. So it's not an arm's length stuff. But in a famous incident, one of the quality insurer assurance people from the APC shop at Shaw goes down to Lake Charles, starts inspecting it and says, Your quality assurance is shit, right?

00:52:05:04 - 00:52:28:12

James Krellenstein

That you you're literally are not follow you know people are fabricating the welding logs right that that the wells are not at nuclear grade at all. We have to redo all them. And to give you an idea of what the safety culture was, it wasn't just, you know, a pedantic NRC inspector, the the person who works at Shaw who then says, I'm going to have to order a work stoppage.

00:52:28:14 - 00:53:00:09

James Krellenstein

Right. Until you can get basically the safety culture up to where it needs to be. He gets a letter opener thrown at him. Right. And the the informant of the plan literally start thrashing chairs around and, you know, throwing papers and folders around in the of this. And this is not the NRC once again, this is literally the actual sister division of this company that is making these modules.

00:53:00:11 - 00:53:21:17

James Krellenstein

So, you know, that's a pretty violent and kind of almost, Tony, no one got hurt, thankfully, But but kind of funny story. But that really does show, I think, a very big difference in a nuclear sort of safety culture and engineering culture. You know, you know, sort of stopping, you know, having dissenting views is not always supposed to be tolerated.

00:53:21:23 - 00:53:55:19

James Krellenstein

It's supposed to be encouraged. Yeah. Yeah. Right. And what we just saw is that there was a very large break in the ability of the oil and gas industry to be able to just seamlessly translate into the sort of nuclear supply chain. I think that's a really important lesson that we should all be taking. That is that nuclear construction is very different and that it's not just going to be the NRC, it's going to be your customers and your ultimate, you know, that are going to basically demand that your you're meeting up to the standards that you need.

00:53:55:21 - 00:54:23:09

Chris Keefer

Okay. I want to get into like IPC structure and how that changed Westinghouse bankruptcy. I think moving finally over to getting Bechtel to sort of take over, I need you to explain to me and also my listeners what ABC models actually are, who is the EPC, etc.. But but just just to take a moment to just, you know, process what you've just said, like I can only imagine how demoralizing it must have been for those people throwing the papers up in the air and screaming like I could I could see myself doing that.

00:54:23:09 - 00:54:41:08

Chris Keefer

It'd be so incredibly frustrating. You've done all this work. Maybe it's jackhammering up concrete because the rebar wasn't laid properly. It's at these modular factories where they're supposed to click together, but they're four inches off in terms of their specs or something like that. Having to go back and do things from scratch like that would drive me bonkers.

00:54:41:10 - 00:54:52:06

Chris Keefer

Anyway. I'd just just had to bookmark that for a second because you hear, you know, and again, for a number of these stories, it just must have been incredibly frustrating.

00:54:52:08 - 00:55:13:17

James Krellenstein

Well, I think what's going on there is that you're trying to build something. When you build something where the fabrication, as we just noted, it's not just regular fabrication, right? For better or for worse, you know, we have very strict quality assurance quality in the nuclear industry. Now. I would argue that's part of the reason why we're so reliable or so safe.

00:55:13:19 - 00:55:31:06

James Krellenstein

Maybe there's a discussion that we should be having about how we're going to change AP and MQ one. But regardless, that is what we need for this build. They didn't if they wanted to have that argument, you don't do that mid-course construction, right? This was what they needed to do. And so this is very challenging. Manufacturing and fabrication.

00:55:31:06 - 00:55:57:17

James Krellenstein

This is not, you know, simple stuff by any stretch of the imagination. I want to give the respect to the workers and to see the challenges. But in addition to all of that, here they have Westinghouse and their designers coming down and giving hundreds of design changes as they're trying to build this thing. And so the frustration of this guy, of these the plant is understandable in some ways.

00:55:57:19 - 00:56:31:06

James Krellenstein

However, it really does show, I think and this leads directly to your point, that we didn't have the sort of integrated project delivery framework that we needed a sort of one team, one mission, right between the C, the sub suppliers and and Westinghouse and the utilities. Right. And we see I think the most initial thing that we see is the obvious first thing that the customer, you know, the utility in this case is being left out of the conversation a lot of ways that Westinghouse is not being very frank with them and neither is CB.

00:56:31:06 - 00:56:53:23

James Krellenstein

And I, I think part of the reason is, is that these were initially set up as somewhat of fixed price contracts, believe it or not. And a lot of people talk about fixed price contracting as the way forward in nuclear. I think that anyone who thinks that that's what a fixed price contract is, is that the APC and the nuclear island nuclear steam supply system vendor Right.

00:56:54:00 - 00:57:13:22

James Krellenstein

They're going to basically build the plant come hell or high water for a fixed price and there's times of hell or high water happened here. But, but you know, and the idea is that, you know, from the customer side, you know, the APC and the nuclear vendor are taking on all of the risks. Now, what is you asked your question, what isn't EPC?

00:57:14:00 - 00:57:24:15

James Krellenstein

So it's engineering, procurement and construction. Right? So these are firms like Bechtel for Shaw. Was the EPC here Stoneleigh Webster was the old ones.

00:57:24:17 - 00:57:42:09

Chris Keefer

And is that the EPC for the overall project or each sub project has an epic I'm just trying understand like you've got the utility, who's the buyer I guess, and owner and operator, they are. They're going to Westinghouse, which is the vendor. We like your design, but if yeah, if you can just explain that ecosystem a bit better because it's still clear.

00:57:42:11 - 00:58:00:02

James Krellenstein

Projects are weird, right? You know, you're going to Westinghouse and Westinghouse will say, I will provide a nuclear island for you and there's going to be some specification, but I'm not going to touch the turbine building. Right. And you know, a nuclear either, you know, the turbine building is is sort of just the turbine building. You know, it makes a lot of steam.

00:58:00:02 - 00:58:24:05

James Krellenstein

But I don't know what you're going to really do with with that steam flow. So what you do is you bring in an EPC firm. This was historically called in the US nuclear industry before the nineties architects and engineering firms and is right in the eighties would do would do some level of the end triple integration right they would actually design the plant maybe even design some aspects of the containment building and some of the safety features.

00:58:24:05 - 00:58:44:14

James Krellenstein

Right. You actually see variation in the US sort of nuclear fleet as a result of this. They would build like the emergency diesel generator system, some of the classical E power systems and they would be responsible. There must be a construction firm that would be responsible for constructing all of this, for providing the laborers, providing skilled labor, manual labor, etc..

00:58:44:14 - 00:59:20:17

James Krellenstein

Right. Because obviously Westinghouse does not have an army of construction workers ready to be deployed. In addition to that, as I noted earlier, they the nuclear vendor, G.E., Westinghouse, Combustion Babcock's, they won't build the turbine building. They won't build the condenser system. Right. They won't build the purified water system. They won't build the circulating water infrastructure. So you have the architect and engineer or the APC that builds what we call the balance plant, which, as its name implies, is sort of you got the nuclear island and then you have the BOP.

00:59:20:19 - 00:59:51:11

James Krellenstein

The architecture can vary very significantly even if you're the same exact nuclear island. So we see huge heterogeneity, as we've talked about. And I think the first episode I was ever on, not only do you have the nuclear island itself varying for these different manufacturers, but then you have actually the secondary side of the plant, that sort of power conversion, circulating water, etc., being designed by, you know, half a dozen in the case of the US nuclear fleet, different architecture and engineering firms.

00:59:51:12 - 01:00:14:19

James Krellenstein

And then in the old way that you would do it, you may have a different construction firm then is constructing the architecture engineering of a of this third party. So you have many different players here or that are coming together in a consortium to sort of deliver the project. And this is the problem, I would argue, in the nuclear sector right now is that we have projects, not products.

01:00:14:21 - 01:00:43:04

James Krellenstein

Right? You can't just go to Westinghouse and say, Westinghouse, I want to buy an 81,000 Westinghouse. So I, I will provide this and I'll provide procurement relationships from my scope. But you're going to need an epic firm to do your scope, and then you're going to have to manage all of these guys together to make sure everyone's playing nicely and everything is working together, which is a major managerial task now, I should note that not always did we use an external EBC.

01:00:43:04 - 01:01:06:19

James Krellenstein

There are cases Tennessee Valley Authority was famous for this, but PSEG in New Jersey, right? Niagara Mohawk Institute. Sometimes the utilities themselves, especially early on in this in the nuclear build up, would actually do the EPC. So if they had enough of an architecture and engineering staff themselves and they would like to build their turbine island the way TVA builds turbine island.

01:01:06:19 - 01:01:25:04

James Krellenstein

So you see in TVA right about PGE or Westinghouse as the last vendor, but it's the Tennessee Valley Authority that is designing their own balance of plant design. And so there's nuclear safety features that are not in the scope of of the nuclear steam supply system vendor or ancillary systems on the nuclear island. And and also building the construction and managing that.

01:01:25:08 - 01:01:30:02

James Krellenstein

That's not the arrangement was done on the AP1000 instead sorry.

01:01:30:06 - 01:01:52:12

Chris Keefer

I mean that is probably too general of a question. But you know these large utilities like the Tennessee Valley Authority or Ontario Hydro, which people joked it was a construction company, not so much a utility because of, you know, these big four eight unit candu plants that we built all over the place. But one would think that that might have a bias, I guess, towards vertical integration and some some degree of planning.

01:01:52:14 - 01:02:02:19

Chris Keefer

Is there any sort of tendency for that to work out better, be more economical or there's just too many variables to throw in there to isolate that as as something which is favorable or desirable?

01:02:02:21 - 01:02:32:22

James Krellenstein

So it turns out that I have heard really mixed reviews of this. I was talking to a guy at at Hope Creeped I Hope Creek in Salem. Right. Was talking about, you know, the challenge is, for example, that we had with the condenser design that was utilized for the balance of plant, and it was a condenser design that had been used on every single other piece fossil plant, but was just completely incompatible with sort of nuclear construction.

01:02:33:00 - 01:03:01:13

James Krellenstein

I'm not so sure that it's clear that using an internal versus an external and architect and engineer has a clear signal in the data. What it does have a clear signal in the data. However, is the ability of an informed customer. It's just the utility to have the internal management staff and engineering staff to be able to walk, watch like a hawk, right, the EPCs and the vendors.

01:03:01:13 - 01:03:28:00

James Krellenstein

Right. And to make sure that actually when they say, well, 88% or 95% of the designs are issued for the of the work packages are issued for construction, that there's someone who's able to go in and say, okay, well, show me them and let me let me walk you to a sample of it and actually have the competency to be able to evaluate what the IPC and or any and and the vendor is giving you.

01:03:28:02 - 01:03:49:02

James Krellenstein

I think this was a me is a major challenge in the US model of nuclear deployment. Now in other countries like in France, for example, EDF, which is the utility and the ultimate sort of operator of the plant, they just manage the construction completely. And in fact, EDF was so that before the nineties, France didn't have a nuclear regulator.

01:03:49:04 - 01:04:09:13

James Krellenstein

EDF itself would just regulate the construction because in the state anyway, they do the architectural engineering and the and they would work with Frampton we would do the reactor in Charles but they would do everything else right and that sort of approach and that led to this like 20 to you know I make it in the exact number wrong of the CPI CPI one CB 012.

01:04:09:15 - 01:04:46:19

James Krellenstein

So deployment of this 900 megawatt electrical, you know, they just kind of, you know, printed them out and identically. So I would argue that we have made a mistake here in some ways with this sort of constellation of architects and engineers. Right. You know, there were six and seven panies that were building a large number of nuclear plants in the heyday of our fleet deployment, You know, Stony Webster, Basco backed off Burns and Ro Sergeant and Lundy, I'm probably missing one or two here somewhere, but you know that that sort of led to this non standardized approach.

01:04:46:21 - 01:05:00:18

James Krellenstein

And it's a very hard thing from a management perspective to manage. And that becomes a critical factor as we'll start seeing. So we have those quite in detail here I really think is just, yeah.

01:05:00:20 - 01:05:07:17

Chris Keefer

This is get let's get we have 8 minutes in a hard stop. It's a hard stop and I have a feeling there's kind of a part to happening here that.

01:05:07:17 - 01:05:11:16

James Krellenstein

Has to be overcome soon. We haven't even got word 2014 right now.

01:05:11:18 - 01:05:12:02

Chris Keefer

Yeah.

01:05:12:02 - 01:05:14:21

James Krellenstein

So where you more do we.

01:05:14:23 - 01:05:21:18

Chris Keefer

Do we wrap? Do we wrap up now? Do you have a floury finish. Do you want to introduce what we're going to talk about in our in our follow the facility to 21 to you.

01:05:21:18 - 01:05:51:05

James Krellenstein

So as I'm I'm I want to start saying you know I I'm sort of I'm sort of foreshadowing this project is not going very, very well. Yes, sir. Neither one of these projects are going well. And the project participants start suing each other. And we started to see even before this initial lawsuits or initial threats of litigation happening from the suppliers going back to Westinghouse saying we can't meet our contracted scheduled delivery date and that's not our fault.

01:05:51:05 - 01:06:27:07

James Krellenstein

It's your fault. Right. And we shouldn't be held liable for that. And the West are saying, well, you weren't even ready. You know, you had all of these quality assurance, quality control issues so that both were probably true. But basically this entire project starts breaking down. What we're going to start seeing is at the end, the FCC firms really start exiting out and ABC saying, hey, I want out, quit One of the things that happens first is that Forshaw gets bought by Chicago Bridge and Iron ore, which is a very, very big procurer and engineering firm and Chicago Bridge and Iron is looking at this thing and saying, this is a trash heap and I'm

01:06:27:13 - 01:06:58:04

James Krellenstein

I'm liable for a huge amount of what needs to go right. And this project is not going right. So Chicago version Iron basically tries to get out and does get out and transfers back responsibility actually to Westinghouse itself. And then Westinghouse itself tries for a couple of months to manage the DC role. They transfer the child, the Stone Webster Division out of Shaw, out of CB and I and into into Westinghouse, which still lives, by the way.

01:06:58:06 - 01:07:14:21

James Krellenstein

And Westinghouse tries to manage the project at all. And that doesn't go so well either. And Start we start seeing a rapid change over EP C's until we stabilize on on one other once, but we're going to see that one of these projects anyway, I'm getting too much, but suffice to say the drama is only going to increase.

01:07:15:00 - 01:07:31:11

James Krellenstein

The problem though, that I think that probably the listeners are realizing is there's a lot that went wrong in this project and almost one or two podcast episodes are not sufficient, I think, to explain the full depth of this of the failures here.

01:07:31:11 - 01:07:47:17

Chris Keefer

And yet at this is so vitally worth understanding to inform us. yes, of course you're on the verge. As I was kind of introducing the episode of A New People Won't Say Renaissance because they were stung so badly, but of a new revival in which I would argue we're in a much worse place than they were in the noughties.

01:07:47:17 - 01:08:07:13

Chris Keefer

The price of natural gas is still quite low. There's talk of some of the impulse to do nuclear is climate driven, which is wonderful, but I think not pragmatic enough of a driver to force us into doing something as difficult as nuclear with such a high value proposition, but was such a hard bar to entry and so many challenges to getting it right.

01:08:07:15 - 01:08:15:12

Chris Keefer

So just I think that's a good place to leave it. But, you know, we went into a lot of depth, a lot of detail. We might have lost some people in acronyms. We'll try and make up for that with the show notes.

01:08:15:16 - 01:08:16:12

James Krellenstein

sorry about that.

01:08:16:12 - 01:08:37:18

Chris Keefer

But it's it's I this is, I think, very much worth doing. Just just as a couple of teasers, maybe a little trivia with you, quickly, James, is the Vogel two reactors of Vogel. Will that be the most expensive power plant or the most expensive building ever built? I've heard if you were to build a pyramid today, it would cost you about eight or $9 billion for reference.

01:08:37:18 - 01:08:47:19

Chris Keefer

Vogel I think we're at 35 billion. And then there got Toshiba had to pay like 3.7 billion to get out of some kind of commitment of getting them done on.

01:08:47:21 - 01:09:13:16

James Krellenstein

A 55 includes the couple billion bucks that Toshiba put in. But it's a lot of money. It probably is the most expensive power plant that has ever been built. I don't know what the most expensive building is, so I'm not going to comment on that. Yeah, we should not underestimate it, not anti-nuclear propaganda to look at what happened to Vogel and say, you know, do we really want to do this again?

01:09:13:17 - 01:09:35:14

James Krellenstein

Yeah. What I will say about this is the ratepayers of Georgia. We should be eternally grateful thankful to them and the rate payers of South Carolina who get the worst deal in some ways they paid for all these lessons. We shouldn't have made them pay for these lessons. It's something that the industry in some ways my mind owes an apology to these people.

01:09:35:16 - 01:10:00:03

James Krellenstein

But the flipside of the greatest sin that we could do right now, those were paid for with not only their their money, but also with just incredible perseverance by a lot of these workers who ended up finishing this plant. And a lot of the engineers, a lot of the corporate officials within Westinghouse, within the EPC firms who could have thrown in the towel, but they didn't say with this and we're going to finish what we started.

01:10:00:05 - 01:10:27:21

James Krellenstein

And the greatest shame that could happen now is that those incredibly expensive, incredibly valuable lessons that we generated, if it doesn't do anything and we just leave it on the floor, the whole point is, is that we started down the learning curve and we set the bar pretty low for the next one can do, but we have immense, immense lessons learned that we got from this.

01:10:27:21 - 01:11:02:23

James Krellenstein

And my whole point is right now the we have those lessons and we have those unlike any other power plant that nuclear steam spaces and technology in the West, I mean, besides the EPR. But no one should ever want to build one of those. But sorry about that shade. But like, you know, the basic point is, is we need to figure out where the where the innovation and where the technology, where the entrepreneurial spirit needs to go is figuring out to deploy and capitalize and and deploy those lessons.

01:11:03:01 - 01:11:27:08

James Krellenstein

And I don't like this thing of us saying where, you know, that was hard let's start something completely new, that industrial ADHD, we got to end we've got to take some industrial Adderall and focus on the, you know, the sort of lessons that we learned here. And that's the bright side of the story. That's the good side of the story we got through.

01:11:27:08 - 01:11:53:17

James Krellenstein

We have those lessons. It's the most exciting and that's why I'm bullish on nuclear now in some ways than I would have been in 2005 from a deployment deployment standpoint, because we've gone through this process once and we've gone through most of these challenges can't happen again or you can't not have a complete design because we have a complete design and you can literally walk into the building and it's visioning atoms and making power.

01:11:53:18 - 01:12:14:20

Chris Keefer

Okay? I mean, just just just in closing and I want to ask for a long commentary from this, but it is interesting, said we have to lean in this. The people of Georgia are owed an apology. I think there's a lot of defensiveness in the advocacy community. I found myself I think I would be one of the most incredible anti-nuclear because I really understand a lot after this five year journey, have no intention to become mad.

01:12:14:22 - 01:12:43:05

Chris Keefer

But that being said, it's not something an anti-nuclear activist to actually acknowledge the problems and the challenges and to acknowledge some of the good arguments of your opponents. It actually makes you more effective. You come across as less of a zealot. So that's just one little commentary. The other would be I mean, we're starting to hear like, well, you know, the Lazard with firming costs that were updated recently, like if you're adding solar to the most insane duck curve in California, you're starting to have power prices that are similar to what Vogel produces.

01:12:43:06 - 01:13:06:14

Chris Keefer

The wind farms that are kind of going under off the shore, I believe New Jersey, the people that are being thrown there are cost competitive. So we say with the world's most expensive power plant. This is not to say that we shouldn't do better or we can't do better, but it's not to make excuses. But but it is interesting in terms of taking this this project and this debacle into into the broader consequences of where we're at right now.

01:13:06:16 - 01:13:25:11

James Krellenstein

You stole my my, my ending in line for the second episode, but you hit it right on the nail. The first thing just to go from the from the end to start, you know, as expensive as we ended up getting which, you know, power is going to be a hundred 7000, $75 a megawatt hour. We were signing in New York State as well.

01:13:25:11 - 01:13:50:16

James Krellenstein

As people know we are signing power procurement right now on the order of 140, $150 a megawatt hour for offshore wind, which has a lot less value as power simply because it is intermittent. Ultimately It does need some sort of firming resource on it. And those are, as you know, a lot of the offshore wind providers are walking away right now from from those power purchase agreements.

01:13:50:17 - 01:14:10:04

James Krellenstein

They can't build it at a price. So I don't think that even at this price, it it unfortunately it looks that insane compared to where we are today. However. Right. We should not be aiming to be deploying power at 170 or $85 a megawatt hour and certainly if we are, we should be upfront about that. It's going to be in that scale.

01:14:10:04 - 01:14:39:02

James Krellenstein

The price. Moving back to the first point that I brought up, right, the apology, I know that I don't know one of the things that, you know, forget about the nuclear safety discussion. One of the things that the financing of a large capital project like this requires, whether it's the taxpayers, whether it's rate payers, it does require a certain sort of social contract, is that ultimately we're putting people's pocketbooks on the line, right, to build our project and we need to be able to do that.

01:14:39:02 - 01:15:02:19

James Krellenstein

By the way, that that just is the way that these large capital projects work in a civilization. But the so the other side of that social contract is, is the responsibility to use that money responsibly and to be ready to build the project that you're building. And I don't think it is a bad thing for us to say, you know, we screwed up here and we won't do it again.

01:15:02:21 - 01:15:28:18

James Krellenstein

And we're here to explain to you what we did wrong and why it won't happen again. And the corollary to that is not only is that I think good PR, good optics, I think it's also essential for us to really learn the lessons that happened there so that we actually don't repeat them and so that we can actually improve on them.

01:15:28:19 - 01:15:34:00

James Krellenstein

That's not just apologies, that's actually good engineering and that's good science.

01:15:34:02 - 01:15:54:13

Chris Keefer

Okay, well, this episode, we've spent a lot of time in the naughties, I think painting the context, giving some great context again from the Chinese builds, doing our case controlled study. I'm sure we'll we'll reference that a little bit more. But I think this was very useful. I guess some move into the teens from an audience, into our teens and talk a lot more specifically.

01:15:54:18 - 01:16:11:03

Chris Keefer

Vogel We didn't talk much about Summer, but I think this is a fascinating kind of origin story for the AP 1000 for Lessons Learned. James, thank you for coming back and we will have you back shortly while the iron is hot to finish this conversation.

01:16:11:05 - 01:16:14:01

James Krellenstein

Great. Thank you, Chris.

01:16:14:03 - 01:16:14:16

Chris Keefer

Beautiful.