The unusually nimble nuclear startup Last Energy relies on proven technology to steer clear of the pitfalls that have stymied its competitors, incumbents and newcomers alike.
Read the original article by Julian Spector at Canary Media.
Podcasting is not a conventional stepping stone to building nuclear power plants. But after interviewing hundreds of experts for his Titans of Nuclear show, entrepreneur Bret Kugelmass concluded that the nuclear power industry had “ossified and stagnated.” So he hung up his microphone and launched another company. His previous venture, aerial data company Airphrame, was acquired by a Fortune 500 company in 2017.
Last Energy pitches itself as the smart, lean alternative to both the hulking behemoths of old nuclear and the overly ambitious science projects that dominate the new wave of nuclear startups.
Plenty of other startups are tinkering with their own small modular reactors (SMRs) as an antidote to the megaprojects that the U.S., at least, seems unable to build on time or on budget. Kugelmass differentiates Last Energy’s product from many of the competing SMRs by designing around well-established light-water reactor technology.
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“We came to the conclusion that using the existing, off-the-shelf technology was the way to scale,” Kugelmass said in a recent interview. “We don’t innovate at all when it comes to the nuclear process or components — we do systems integration and business-model innovation.”
That business-model innovation includes tapping a contract manufacturing partner to actually build the reactors, so the startup doesn’t need to capitalize its own nuclear-grade factory.
This lean approach means Last Energy has a shot at getting plants up and running ahead of the pack of new-wave nuclear contenders. Indeed, the company secured commitments to build two power plant units in Romania and 10 in Poland, and it says it will complete its first commercial project in 2025. Somehow, it’s doing all this with just $24 million in venture capital equity investment, nowhere near the hundreds of millions that competitors have raised and churned through.
Small, clean baseload power with a recognizable technology
After scouring the nuclear landscape for his podcast, Kugelmass opted to work with “virtually the same technology” that powers the massive conventional light-water reactor plants.
That choice distinguishes the startup from other nuclear innovators who chose to tackle what Kugelmass calls “the fun problem”: the more exotic breakthrough designs that involve lots of hard science. Those approaches get scientists and certain extremely wealthy investors excited because they would bring something new to the table. But they’re also very hard to execute.
“It’s very easy to dream up a technology, fall in love with it and try to sell it into the market,” Kugelmass said. The years of podcast research pointed Kugelmass to a simpler path: “It’s not what we love, but what the customer needs.”
Venture investors, Bill Gates included, certainly have poured considerable funding into advanced reactors with novel technologies, and not for nothing. The hope is that new reactors can deliver operational benefits, like longer core life or faster ramp rates to complement the ups and downs of renewable generation, said Adam Stein, director of nuclear energy innovation at the Breakthrough Institute, a think tank that advocates for advanced nuclear as a climate solution.
But Last Energy is not the only one adapting conventional light-water reactors for a nimbler, modular format. NuScale is working on U.S. regulatory approval for its 77-megawatt light-water module and hopes to get one running “by the end of this decade.” GE Hitachi developed legacy light-water tech into the 300-megawatt BWRX-300 small modular reactor, which could be installed in Canada as early as 2028. Holtec has a 160-megawatt SMR in the works.
Big nuclear plants generate upward of 1,000 megawatts from a single reactor. Even the nominally “small” reactors listed above produce hundreds of megawatts; NuScale plans to cluster six modules into 462-megawatt power plants. Last Energy plants will produce just 20 megawatts from 75 shipping-container-sized units, making them “actually small and actually modular,” Kugelmass quipped.
With the tighter footprint, they can in theory be built close to industrial facilities to supply them directly with round-the-clock carbon-free power, or plug into the grid wherever utilities need more baseload clean power. (Startup Oklo is aiming even smaller with its 1.5-megawatt “nuclear battery” for off-grid communities.)
Last Energy targeted Europe first due to its more favorable regulatory environment for getting new reactor designs built and the continent’s clear need for more clean energy that has only grown since Russia invaded Ukraine and threw fossil-fuel supply chains into turmoil. The company is working through regulatory signoff in the U.K., Poland and Romania. Poland may be the first to get a project up and running — Last Energy met with President Andrzej Duda in June and shortly after secured a contract to build 10 modular plants in the Legnica Special Economic Zone, an industrial area.
Surprisingly, Last Energy is tackling this ambitious task with just 40 or so employees, split roughly evenly between engineering and government affairs. That compact crew, backed by an early investment from Gigafund, works with governments abroad to get clearance for nuclear construction, designs the modular systems, and structures the deals. But the actual fabrication of the reactor modules will be outsourced to a contract manufacturer in Texas that assembles high-pressure modular equipment for the oil and gas industry.
Kugelmass likens this division of labor to a real estate developer putting together a new building: The development team isn’t out there pouring concrete, but it’s responsible for outsourcing all the jobs to capable contractors and making sure the project comes together.
Nuclear plants typically demand sky-high upfront investment — a tough sell in a market now ruled by cheaper renewables and gas plants. Rather than frighten customers with sticker shock, Last Energy took a page from the wind and solar playbook: It won’t sell power plants; instead, it will sell power-purchase agreements.
The plan is to build, own and operate the plants, and sell the electricity to customers under long-term contracts (Kugelmass said a 24-year contract was representative of this model).
Customers will only pay for power they actually receive — a privilege not afforded by the scandal-plagued nuclear plants developed by monopoly utilities in the American Southeast. To execute this strategy, Kugelmass and his team need to successfully woo infrastructure investors to provide project capital in exchange for the promise of above-market returns. If that happens, Last Energy won’t have to dilute ownership of the company to raise funds to build power plants.
Does “off-the-shelf” work for nuclear power?
“Off-the-shelf” rings with totemic meaning in the climatetech world, where development and sales cycles stretch far beyond the comfort zone of the typical Silicon Valley startup. The phrase connotes pragmatism, discipline, thriftiness. Why spend 10 years in a laboratory when you could adapt industrial equipment previously vetted and brought to scale by other companies?
It’s a popular path to market in the long-duration energy storage space, where companies such as Malta, Hydrostor, Energy Dome, and Highview Power all take existing technologies like compressors and turbomachinery and reorient them for storing many hours of clean electricity. (Ace fundraiser Energy Vault once touted its partnership with the existing crane industry as a way to efficiently erect gravity-based storage plants — before it dropped the concept in favor of designing and building massive steel lattice buildings instead.)
The trick, of course, is that components that can be plucked off the proverbial shelf were vetted for different end uses. This strategy dodges the risks and prolonged timeline associated with chasing scientific breakthroughs but still requires engineering to hook up disparate pieces of equipment for a new purpose and prove they will work under pressure for years. This real-world integration has a sneaky tendency to become more complicated than one might expect from hearing the “plug-and-play” pronouncements of startup founders.
For its nuclear modules, Last Energy can tap into the oil and gas industry’s mature supply chain for high-pressure piping. But how do you find an off-the-shelf nuclear reactor at a miniature scale that’s never been built before?
“Nobody’s currently making a 20-megawatt nuclear-certified pressure vessel,” Stein cautioned. “You can’t just go to Walmart and buy one of those.”
Kugelmass clarified that point in an email: “Many of our components, including our reactor vessel, do in fact require minor customizations, but the device type, frame, materials, and mechanical features are fully standardized and have been produced to these basic specifications on the order of thousands of times around the world across a wide range of industries (oil & gas, chemical, pharmaceutical, etc.).”
Qualifying for nuclear safety standards requires additional work, he added. But that involves examining and documenting the quality of the materials, rather than novel R&D.
Then there’s the issue of outsourcing manufacturing for nuclear reactors specifically.
Generally speaking, contract manufacturing is an efficient way to get a new energy product to market and avoid repeating the mistakes that occurred during the late 2000s investment bubble now known as Cleantech 1.0. Back then, numerous companies sank hundreds of millions of dollars into building their own factories prior to establishing whether there was a market for their wares (Solyndra being the most famous failure of this cohort).
But nuclear reactors demand a higher level of trust and verification than the average battery or solar panel. It’s not yet clear if Last Energy’s unnamed manufacturing partner will meet this bar in the eyes of potential customers.
Regulatory roadblocks also remain an ever-present risk, one that nuclear innovators can only hope to reduce rather than eliminate. Mini-reactor company Oklo got a taste of this when the U.S. Nuclear Regulatory Commission denied its application early this year, citing a “failure to provide information on several key topics.”
“Even if you’re using existing technology, you’re not using an existing design,” Stein said of nuclear innovators. “The licensing case for a new pressurized water reactor could be easier than for completely novel tech. But easier doesn’t mean trivial.”
The Nuclear Regulatory Commission itself has a lot of work to do to make its processes more streamlined and efficient, Stein added. Still, nuclear entrepreneurs have to work with the regulations that exist currently — or, as in Last Energy’s case, pick the country with national regulations they think are most workable.
Nothing is guaranteed with nuclear startups, marked as they have been by grandiose promises and negligible market penetration so far. A virtue of Last Energy’s accelerated timeline is that the company will have to back up its promises sooner than most of its peers.