On Wednesday Nuclear Innovation Alliance (NIA) hosted a meeting on the Hill about how to enhance the development of nuclear energy by finding its “SpaceX” moment. The meeting relates to NIA’s new publication, In Seach of a SpaceX for Nuclear Energy. The talk was led by three experts: Dr. Matt Bowen, formerly Associate Deputy Assistant Secretary in the Office of Nuclear Energy at the U.S. Department of Energy (DOE) and currently with the Clean Air Task Force; Dr. Daniel Rasky, from the U.S. National Aeronautics and Space Administration’s (NASA’s) Commercial Orbital Transportation Services (COTS) program; and Dr. Per Peterson of Karios Power, representing the nuclear innovation community. The panel was moderated by Dr. Ashley Finan from NIA.
What struck us the most about the talk was the number of ways the speakers were able to draw parallels between the aerospace sector and nuclear power, and from those parallels draw insights about ways to apply recent spaceflight innovation successes to advanced reactor development. And the importance of disrupters—both within and outside of government—to make that happen.
With one of our blog authors being a past aerospace engineer, we appreciate that although the parallels may not always be perfect, the public-private partnership that was NASA’s COTS program does have strong lessons to teach the nuclear industry. Some key insights from the presentation include:
- COTS was driven by a clear national mission—resupplying the International Space Station following the wind-down of the space shuttle program. Nuclear power, too, has a key national mission both in the context of national security and climate change.
- COTS was actually a backup to the primary NASA program (using Ares rockets). Likewise, any DOE program to support nuclear power based on a COTS-type program need not be the only play in the playbook. A nuclear power COTS-like program, according to Dr. Bowen, would cost anywhere between $100 to $150 million a year, a sizable amount but well within the current DOE Office of Nuclear Energy budget.
- A key aspect of the COTS program was its ability to do “pay for performance” or milestone-based funding, which offered clarity to companies and investors as to goals to meet. That is, NASA provided a milestone and left it up to the private sector to determine how it was going to achieve it. This was based on input from venture capitalists (VCs)—and frequently mirror how the blog authors see payments ramp up from the VC community in private sector investments. These are not completely new concepts to DOE. The Advanced Research Projects Agency – Energy (ARPA-E), an independent group within DOE, already exercises “pay for performance” milestone based funding, and created its programs with strong influence from the venture capital community. So it can be done, and more can be done to develop a COTS-like program specific for nuclear power.
- NASA also offered non-financial assistance that was critical to private space entrepreneurs, such as launch capabilities, flexibility in contracting, and teams of experts to come around and help as needed. DOE is moving in this direction with its GAIN program, which opens up DOE labs to help provide non-financial assistance to companies. ARPA-E also provides technical assistance to innovators. DOE has unique contracting authorities in the federal government that allows it to develop customized contractual solutions.
A key differentiating point between the COTS program and nuclear power is the level of regulation of the nuclear power industry, which inhibits rapid testing. However, over time non-financial solutions can be found to address and potentially mitigate this important difference.
- The COTS program took advantage of “Other Transaction Authority” (aka “Other Transaction Agreements,” or “OTAs”) to facilitate strong and productive coordination between the private sector and government. The blog authors would add that OTAs are highly flexible government contracts that can mirror more closely commercial contracts, including on providing sought-after IP protections to the private sector. These types of contracts are particularly appropriate for developing prototypes. While other agencies, such as the Department of Defense readily use OTAs to support defense projects, including the development of prototype projects, DOE has largely stayed away from using them for nuclear projects.
- The COTS program facilitated a significant opportunity for cost savings that already existed. Elon Musk, a key player in the COTS story, saw an opportunity because while for other modes of transportation total costs are only 2-5 times fuel costs, in rocketry that was not the case (total launch costs far far exceeded fuel costs)—this represented an opportunity for huge savings. Similarly, we heard that while with other power plants, and even cars, overall construction costs are about 10 times the cost of materials, in nuclear power overall construction costs far far exceed the costs of materials (greater than 100x). This represents an area for savings that a COTS-type program can help achieve.
It was an excellent presentation, and thank you to NIA for putting it together!