Nuclear energy expert: ‘Regulators are in a bind’

Brett Rampal, Veriten Nuclear and Power Strategy Director, and Daniel Kammen, Professor of Energy at the University of California, Berkeley, join Yahoo Finance Live to discuss the resurgence of nuclear energy, regulatory hurdles, the risk of an accident, and the energy transition to combat climate change and as Europe's energy supply is squeezed.

Video Transcript

AKIKO FUJITA: Well, over 10 years on from the tragedy at Fukushima in Japan, the debate over the merits of nuclear power are continuing to heat up. In the aftermath of the war in Ukraine, governments around the world are rethinking the role nuclear energy could play. In Europe, France's plan to roll out new reactors, while Germany debates whether to keep some open.

Here in the US, California is considering extending the life of its last remaining plant, while Japan's been flirting with the idea of opening new facilities. Regardless of the stigma, nuclear has not disappeared. Let's bring in Brett Rampal. He's a Veriten Nuclear and Power Strategy Director.

We've also got Daniel Kammen, Professor of Energy at UC-Berkeley. And good to have both of you on. Daniel, let's start with you. We've talked about this before-- that the concerns around nuclear have always been cost overruns and safety. What specifically has changed about the risk benefit calculation, where governments are now saying, maybe it's not such a bad option?

DANIEL KAMMEN: Well, I think what's changed is the recognition that we also have to deal with the climate crisis. And what that's going to mean is mean is that we need to ramp down the amount of fossil fuel use, we need to ramp up the amount of low or zero carbon energy generation. And nuclear has a potential role in that.

And so closing, for example, California's last remaining nuclear plant would make the pressure on not only more renewable generation, but also the pressure to get more storage into the grid as early as possible. So that's really why there's this debate and there's, in California, there's competing bills-- one bill to keep the plant open, to provide a subsidy to the operator, and the other to take that same amount of subsidy and provide it to the renewables generation and not subsidize this nuclear plant that was scheduled to close fairly soon.

BRIAN CHEUNG: Hey, it's Brian, I want to turn this question over to Brett. And I kind of want to broaden out to show the international scale. Obviously, a lot of focus on what's been happening in the Russian invasion of Ukraine, as Akiko was outlining there-- still a lot of headlines coming out of the nuclear implications there.

But at the end of the day, Russian gas still very much in focus. How has, essentially, the off-lining of Russian natural gas changed the international conversation over the viability and the investment into nuclear?

BRETT RAMPAL: Well, yeah, thanks so much. I think that the off-lining of Russian natural gas and the changing calculus around the desire to have natural gas from Russia, even, in your energy supply system has made a lot of nations turn back to nuclear, consider nuclear, that we're very, very firmly in a position of getting out of the nuclear game-- specifically Germany. Also, you're seeing the other side of it-- not just gas pressures and the changing gas supply dynamics, but also other additional cheap energy supply options from Russia.

Many nations rely on Russian uranium supplies. And so those nations are also looking at these opportunities to now get away from Russian supplies, get away from Russian gas, get away from reliance on those cheap energy supplies from Russia, and look towards a more broad and better sort of energy dynamic that they can rely on.

AKIKO FUJITA: Daniel, obviously, it's important to put this in context. We're not talking about a rapid build-up of brand new nuclear reactors, although new technology is coming online. This is about using the existing reactors and extending them. Here in the US, you've got more than 90 reactors-- more than half of those expected to be decommissioned by 2030. How much of them are safe enough to continue operation?

DANIEL KAMMEN: Well, so that's why the regular inspections happen. And actually, part of the calculus that the nuclear operators, the companies that run them, and the utilities have to look at is, what will that additional cost be? When we closed our second to last reactor in Southern California, it was largely an economic decision.

The company that operated it-- it was called the Songs Plant-- went in and thought there would be well over $1 billion of unanticipated upgrades that would be needed. And so they chose to close it in that context. The price of renewables has come down dramatically. The price of storage has come down. The ramping those in is a challenge.

And so I think that's really where this plays out in terms of looking at each plant individually. It probably doesn't change the risk on the waste management side very much-- you could keep the plant open somewhat longer. But again, an accident for an existing plant totally changes that calculus. And so that's really why I think that regulators are in a bind to figure out how do they balance those forces, because the risk of an accident trumps everything else. But keeping them open does provide some more firm low carbon supply as we try to ramp up amount of renewables, as we're seeing in California and many other places.

BRIAN CHEUNG: Brett, just to respond to Daniel there, I mean, he was kind of talking about the risk, but then also just the economics of all of this. Do you think that the Inflation Reduction Act, knowing that it has such a heavy hand in terms of infrastructure investment on types of alternative power in the United States, does it move the needle on the economics of how viable it is to operate a plant in the United States?

BRETT RAMPAL: Yeah, absolutely. I think the Inflation Reduction Act is a huge win for both existing and future nuclear in the United States. There's a production tax credit in the IRA for existing nuclear power plants to support their financial operation. There is also the inclusion of advanced and future nuclear technologies in future clean energy credits that are supposed to be technology inclusive and open in 2025 to projects that are producing power after that point.

And in addition to that, we see infrastructure and funding from the IRA almost to $1 billion in direct funding for nuclear issues like uranium enrichment capabilities in the United States and funding for the Office of Nuclear Energy and the Department of Energy, as well as additional funding and authority for the loan program office at DOE, which will be instrumental in supporting deployment of additional nuclear projects in this country. So yeah, I think the IRA is a great opportunity for supporting the existing fleet, as well as supporting future nuclear technology.

AKIKO FUJITA: Final question to you, Daniel-- the reality is over in Europe, there's got to be some kind of solution right away when you're thinking about potential of more natural gas coming offline from Russia, obviously an oil crunch as well. In the absence of bringing back coal-powered plants, any form of hydrocarbons, how much of that void do you think nuclear can fill considering the infrastructure that's already in place?

DANIEL KAMMEN: Well, certainly, keeping the existing plants operating, those that are operating well, it makes a lot of sense in the context you're talking about here. The issue of new plants, though, is kind of a challenge in that the timing is much further off. So the highest profile small modular reactor companies, certainly in the United States, that are planning on putting their first plants in the ground at the end of this decade, a number of those are looking at sales into both Western and Eastern Europe.

But these are going to be plants that come online 2028, '29, '30-- and, of course, the Russian gas crisis. And the commitment by countries like Germany to get off of Russian gas need to be completed well before that. And so I think that existing nuclear play a role, but the future plants are going to have to have, really, the ramp-up of new renewables, offshore wind-- we're talking about very large ramp-ups-- hydrogen for both industrial use and storage. Those are likely to be able to fill the gap more quickly as part of the Russia-Ukraine response plan.

BRIAN CHEUNG: All right, thanks to Brett Rampal, Veriten Nuclear and Power Strategy Director, as well as Daniel Kammen, Professor of Energy at UC-Berkeley. Really appreciate the time.