Nuclear energy is facing a marked uptick in private investment over the next five years, spurred by the escalating demand for clean energy and energy security. Both governments and the private sector’s net-zero ambitions are driving significant interest in high-growth energy areas like nuclear energy. Further, according to the International Energy Agency, existing nuclear plants make up a large part of global energy production today – representing nearly 10% of global energy production and nearly 20% in advanced countries. The further growth of nuclear power is becoming critical to the decarbonization of the electricity grid and the growing market for emissions-free energy.

In this episode, host Lincoln Payton brings together a panel from investment giant Brookfield Corporation to explore the transformative role that nuclear energy plays in the pursuit of a net-zero future, particularly in the private sector investment landscape. Joining Lincoln for this episode are Pramod Shukla, Managing Director in Brookfield’s Private Equity Group; Sam Meyers, Senior Vice President at Brookfield Asset Management; and Mike Daschle, SVP of Sustainability for Brookfield Properties. 

The discussion spans the intricate considerations around nuclear power investments, the ability of nuclear power to meet the world’s growing energy demands, and the role of companies like Westinghouse within the broader nuclear industry. A projected and insightful outlook on nuclear energy, Lincoln and the panel acknowledge its significance and the expected evolution of investments and deployments over the next five years.

Key Takeaways

1. Clean power is on the rise: the world is turning to nuclear energy as a critical tool for decarbonization, as this clean energy source offers a vital solution for achieving net-zero emissions goals.
2. Gigawatt-scale giants lead the way: while smaller modular reactors (SMRs) hold immense potential for future deployments, their development remains in its early stages, meaning that larger, gigawatt-scale plants will likely dominate the energy landscape for the next decade.
3. Public sentiment shifting in favor: public opinion toward nuclear power is undergoing a positive shift with growth in bipartisan support in the USA coupled with the urgency of climate action and the need for clean energy solutions, all of which paint a promising picture for the future of nuclear power.

Resources

• IAEA’s revisions up of projected nuclear buildout by 2050: https://www.iaea.org/newscenter/pressreleases/iaea-annual-projections-rise-again-as-countries-turn-to-nuclear-for-energy-security-and-climate-action
• Energy Monitor on SMRs: https://www.energymonitor.ai/sectors/power/small-modular-reactors-smrs-what-is-taking-so-long/?cf-view
• Bipartisan support in the U.S. is up significantly compared to polling in 2020: https://www.pewresearch.org/short-reads/2023/08/18/growing-share-of-americans-favor-more-nuclear-power/sr_23-08-18_nuclear-energy_1/

Transcript

Narrator: On this episode of the Decarbonization Race: 

Sam Meyers: There’s not really a credible Paris aligned scenario out there that does not include nuclear generation as a meaningful portion, really a stable if not growing percentage of the power generation mix, and we all know what’s going on with energy demand. So that means to remain a stable or growing portion, we’re going to need a lot of new nuclear around.

Narrator: Nuclear energy is experiencing a resurgence as a vital solution in the fight against climate change. The International Atomic Energy Agency, or IAEA, recently boosted its projections for global nuclear build out by 2050, reflecting growing recognition of its advantages as a source of carbon free energy.

Public support for nuclear power is also on the rise. Notably, bipartisan backing in the U. S. has witnessed a significant increase since 2020. This shift in public opinion, coupled with the urgency of climate action, suggests a bright future for nuclear energy. In this episode, host and Cleartrace CEO Lincoln Payton sits down with a trio of experts from across the powerhouse of sustainable investing, Brookfield Corporation. Sam Meyers, Senior Vice President at Brookfield Asset Management, has a wealth of knowledge and natural resources, and pivotal experience with Brookfield’s strategic play into nuclear power, through their investment in Westinghouse. Pramod Shukla, managing director in the Brookfield Private Equity Group, has an illustrious 30 year tenure across the industrial sector and joins to bolster our understanding of the role of nuclear in Brookfield’s ESG program management and Michael Daschle. Senior Vice President of Sustainability for Brookfield Properties oversees its U.S. portfolio of commercial office space. He returns to the podcast to offer his unique lens on how nuclear energy could accelerate progress towards decarbonization targets in the real estate sector. Come join us in this fascinating follow up panel on nuclear energy. 

Lincoln Payton: Hello again, this is Lincoln Payton, CEO of Cleartrace Technologies, and pleased to be bringing you another installment of the decarbonization race, and a special installment on a couple of angles actually.

First of all, following on the dialogue around a very interesting Nuclear expose that we started with Dr. Rita Baranwal, and we’ve had a lot of interest and that’s one of the reasons as well as our own interest in following that topic from a slightly different angle. Second interesting diversion here is we have not just one, but a panel of three distinguished guests, which I’m delighted to have an each to introduce.

We’re going to be tackling the world of nuclear. But from slightly different to the technical inroads we made with Dr. Rita, with Pramod Shukla, who is an MD in the Brookfield private equity group, looking at the whole world of ESG across those portfolio companies. Where and how does renewable energy and nuclear fit into that?

Sam Meyers, who is an SVP at Brookfield Asset Management has been responsible for actual equity investments and now conducting diligence on new investment opportunities and overseeing portfolio companies investments made by Brookfield.

And then Mike Daschle, who I would go as far as to say is a repeat offender appearing on The Decarbonization Race, who is SVP and a distinguished player in the New York real estate market SVP of U.S. office space for Brookfield properties, looking respectively here at the ESG considerations of nuclear, the financial investment diligence elements of nuclear and then how does one actually use nuclear energy in a decarbonization effort and how does it work for you and how do you manage the various pros and cons that we’ll talk about so that for me is very much.

Pramod, Sam, Mike, in talking that way. Let’s start off with Sam, if we may. And Sam, I didn’t do justice to your background in your intro there. Tell us quickly, how do you get to be sitting where you are? What’s your background? I know it’s a sophisticated financial background. And once we’ve got this, I’m going to drill in on what are the factors?

What are the evaluations in looking at energy investments, but also nuclear energy investments? 

Sam Meyers: Thank you, Lincoln, as a start for having me on the podcast, really excited to be here. My background, as you said, is in the finance world, started with a degree at Columbia University in financial economics.

The first two stops on my career were at Lazard and then Morgan Stanley working in investment banking across industries, but with a focus on natural resources. And then I’ve now been at Brookfield since 2016, starting working in the private equity group where promote an eye. We’re colleagues. And then just a couple of months ago, moving over to Brookfield, renewable and transition.

And my background and tie into the topic on this podcast is in Brookfield, private equity. We had made an investment in Westinghouse to the company that Dr. Baranwal works for back in 2018. So we’re very closely with that investment. And then we very recently closed on a transaction, selling it from Brookfield Private Equity to a consortium that includes Brookfield Renewable and Cameco, the Canadian uranium mining company.

So very excited to be here and talk about my experience in nuclear and energy investing. 

Lincoln Payton: Fantastic, because let’s be honest, there’s less experience in the commercial financial world around nuclear transactions than many other types of energy transactions, because there’s been less nuclear, there’s been less nuclear companies.

It’s been more in the domain of the national interest rather than private companies. So Westinghouse and all of the movement around that name, which is such an icon in the nuclear world is significant. I’m going to come back to you in a second on what were those key factors in financial. Decision making because there isn’t that great depth of precedent transactions and values that one might have if you were looking at say solar or wind or some of the other renewable spaces. But Pramod, let’s go to you tell us a little bit about yourself and how you get to be sitting where you are. I know, very interestingly, there’s some

serious background in the industrial world and some of the major industrial companies on the technical side of things, major industrial companies in the world. How do you get to be sitting where you’re sitting and how are the major focus points for you? 

Pramod Shukla: Thank you, Lincoln. As you mentioned, my major background has been in industrial sectors. 30 plus years I worked in industry in engineering, operations, maintenance, project management background, and for last five years, I am with Brookfield. Before joining Brookfield, I was running an integrated steel plant for 12 years, accountable for everything that happens in that steel plant. After joining Brookfield, I am part of the business operations group along with Sam.

So we look after a bunch of portfolio company. And I also run a few program for our private equity group. So one is digital, second one is ESG. So as an ESG program management, I am accountable along with my team member to make sure that our portfolio companies are aligned with our Brookfield frameworks commitments.

So we work very closely with them. Make sure that they have a decarbonization program. They are looking at all type of levers that are possible. And the focus is mainly on value creation and value preservation. Lincoln, we truly believe that ESG can be a value creation and value preservation lever. And decarbonization can play a major role there.

That’s where our focus is and being in the center, we are able to really get the portfolio company together for collaboration on this initiative. 

Lincoln Payton: Again, congratulations, ’cause Brookfield as a very large fragmented in some respects, entity really does. Take a leadership role in the space of ESG. And congratulations to all of you on that.

Let’s move to Michael out the last of our three guests here, Michael, we are delighted to have you back. You have been on before your operating area in the commercial real estate world, a slightly different bucket within the big Brookfield organization. How does your approach compare and fit with Pramod?

And Sam, and I’ll come back to you in more detail later, but big picture nuclear, does it mean anything for you in the properties decarbonization world or not? 

Mike Daschle: Great to be back. Thank you for having me again. So we’re all part of the larger Brookfield asset management ecosystem, as we call it. And so we’re all participants in sister companies where we can benefit from each other’s knowledge in the respective markets, but also leverage the relative expertise.

Beyond something I’ve had discussions with Sam, for example, about nuclear when we were exploring it as a potential energy source for some of our properties in the U. S. And I oversee sustainability for our U. S. Office properties and our energy procurement efforts. And so we really viewed nuclear as a great opportunity from energy procurement perspective to help meet our decarbonization targets.

And it’s unique in the U.S. What it offers and that it is strong base load power, that’s 24/7 carbon free energy. And so for us, that’s a very attractive element to pursue for properties that are operating in these large areas. So it’s a great solution to help us with our decarbonization targets. And we’re happy that within the Brooklyn ecosystem, we have so much expertise here.

Lincoln Payton: You certainly do. Brookfield is moving impressively in this respect, both technically and across the ESG and the financial side of things. So, Sam, right back to you with the heart of the issue here. Let’s talk money. Nuclear. It’s a contentious Topic in some respects, because it’s got that emotional risk element to it.

You’re coming out of the world of financial risk management. How does one, and then how did Brookfield, you look at this Westinghouse, perhaps the blue chip name in this space? How did you look at this from an investment perspective? 

Sam Meyers: Happy to get into that, Lincoln. And I think it’s, you know, like you said, right, everything in investing is about risk reward and you seek a target return.

And there’s a certain level of risk you’re willing on to try and generate that return. And so a little bit of a evolving story with Westinghouse because Brookfield has now invested in it twice out of two different pockets of the firm. So when we bought it in 2018, at that time, Westinghouse was coming out of bankruptcy.

And that was our private equity strategy, which is a little bit more high return focused than some of the other strategies we have here at Brookfield. And so in looking at that business, and really, I’d say this is a theme across Brookfield, but we have a very strong mindset when we’re making investments in terms of downside protection and capital preservation.

And then having controllable factors to drive your target returns with then an upside case that may be more or less tied to exogenous factors. But you really want to make sure when we think about our investments that you have downside protection and that there are levers within your control that can help drive you to that target return.

And so in thinking about Westinghouse, when we bought it in 2018, coming out of bankruptcy, it was really this stability. Of the nuclear industry that drove us to it as an attractive target, which maybe is a surprising thing for people to hear for us to talk about the stability. But the reality is that nuclear power plants, once they are constructed and operational.

Are one of the lowest cost sources of energy available and the nuclear power plant footprint that may be getting a little bit into Westinghouse itself, right? Westinghouse is a service provider to the nuclear industry. They are not an operator of power generation assets. So Westinghouse has exposure across all facets of the nuclear cycle from the deployment of new reactors, and they’re kind of a technology OEM. They provide services and fuel to the operating reactor fleet. And then they have a business that’s involved in the decommissioning of reactors at the end of their life. So Westinghouse is exposed to the full spectrum of that nuclear life cycle and Westinghouse as the inventor of the PWR technology and the entity that connected the first nuclear reactor to the grid, about 50% of the nuclear reactors around the globe are based on the original Westinghouse derivative technology in some form or fashion as it’s evolved and Westinghouse counts about two thirds of the global reactor fleet as its customers and these nuclear reactors, obviously, it’s one of the most heavily regulated industries in the world.

There are very strict requirements about maintenance, inspection and refueling. And so what really got us comfortable investing in Westinghouse from that downside and capital preservation perspective was. These reactors are going to keep running unless they have some severe unforeseen operational issue.

But like we said, they’re one of the cheapest forms of power generation once they’re on the grid. So they’re going to keep running. They are going to need fuel and services, and it’s a very sticky business when you’re that technology OEM and Westinghouse has demonstrated 99 percent customer retention in its coal fuel and services businesses since 2012 to give you a sense for how stable it is. So capital preservation, we got very comfortable that even if there was not a lot of growth in the nuclear industry, these reactors would continue to remain online through the end of their licensed lives and perhaps even longer pending relicensing extension considerations.

So that would provide us a stable base of cashflow. For our downside protection and then the controllable factors that we’re going to get us to our target return were really operational improvements, obviously, Westinghouse having had a couple of different owners over the last few decades before we bought it, you know, at different times in that period, being more focused on growth or not, we felt that by refocusing the business.

On its core fuel and services and kind of optimizing operational efficiency, manufacturing efficiency, supply chain, best practices, organizational structure, redesign that we could rejigger the business to really. Increase its profit margins. To hit our target return, and then if there was growth in the industry, then we would hit our upside cases.

So that’s kind of really what ended up happening here is as Brookfield Private Equity signed the transaction to sell to Brookfield Renewable and Cameco in 2022 that we just closed a couple of weeks ago. We had completed our operational improvement thesis. We had borne out the stability of the business through that customer retention, and now driven in part by geopolitical considerations of energy security, driven in part by the push towards net zero.

The tailwinds for nuclear are the best they’ve been in quite some time. The prospects for growth are extremely strong. And I think that’s for Brookfield Renewable and Cameco. When they looked at the investment, they got the same degree of comfort with the downside protection that we felt when we first bought it in Brookfield Private Equity.

And now there are so many exciting growth opportunities on the horizon. You know, Westinghouse has a variety of different reactor technology offerings. For different use cases that the demand for has never been higher. So really exciting time to try and capitalize on some of that growth. 

Lincoln Payton: It’s very apparent the balance that you were able to get there in terms of defensible moat to the whole business, if you like.

I mean, nobody’s going to replace a Westinghouse that’s been taking care of your reactor with a new player without some considerable reason to do so. And at the same time, the world looks very poised to include nuclear. In the mix in a much more ready and cosmopolitan way than before. So congratulations on the investment.

I’m going to come back to you again in a second on the genre of nuclear and maybe some of the other facets, because I think you did a great job in taking one angle in the nuclear industry that did have that big defensible protection downside, but we’ll talk about some of the others, but Pramod, shifting to you, that point that Sam made, which is nuclear is increasingly becoming factored in to the decarbonization world and in your seat

in a major financial corporation, and you are talking and looking and listening to a lot of portfolio companies who are thinking about decarbonization. How is the topic of nuclear fuel supply to these companies being looked at today? Is it being embraced? Is there still some of the uncertainty that there may have been in the past?

What are you feeling across the board? 

Pramod Shukla: If I just look at our set of portfolio company, the carbon footprint varies significantly from one company to another, and so the decarbonization focus or our strategies are different. But one of the common theme that we see is transitioning to renewable energy, and it could be hydro, could be solar,

could be wind, could be nuclear, but nuclear and solar definitely comes as one of the most potent sources for most of our portfolio company. So I would say transitioning to renewable is one of the lever, but we also look at the operational efficiencies, reducing the energy intensity through energy hunt programs.

We are also looking at substitution, for example. That how we can reduce the conventional fuel, say natural gas with a low or no carbon kind of fuel. So there are multiple strategies which we adopt for decarbonization. So this is just one of them. 

Lincoln Payton: Right. So I think that’s an important takeaway. Nuclear for you is one component in an overall decarbonization effort, but it’s a relevant component, and it’s a component that you’re quite welcome to see in the mix of a sensible decarbonization strategy.

Is that fair? 

Pramod Shukla: Absolutely. It’s yeah. 

Lincoln Payton: And there’s no stigma, no worries for you about people looking to nuclear as a supply where, you know, again, in the past, we talked to Dr Rita about this in terms of people being worried about safety. I think a lot of that is past now, but for you, it’s something you’re comfortable with.

Pramod Shukla: No, not at all. It all depends on the availability that if that is available in the region for that portfolio company and there is a possibility of getting it in a better terms compared to what we have today. As you know that we are always looking at that there has to be a value in every decision that we make.

Lincoln Payton: Very good point. I’m going to ask you one last question, then I’m going to take that over to Michael. So keep that thought, please, but geographically, because you’re looking across a number of geographies, differences in this perception around the nuclear space or not, is it pretty much a universal point?

Certain countries have always been a little more forward on the nuclear side. Does that show in the way things work today, or is it pretty much generally accepted? 

Pramod Shukla: No, generally accepted. Pretty much it’s an availability issue. Where are the resources available? But as a view about whether nuclear, there is a stigma, no, nothing like that.

If it is available, of course, we would go for it.

Narrator: This scale of nuclear reactor is still at the early stages of deployment. This means deployment of large gigawatt scale plants to add nuclear generating capacity will likely dominate in the near future, at least for the next 5 to 10 years. So why the push to develop and get SMRs in the field? For one, SMRs offer several advantages.

Their simpler design, passive safety systems, and lower fuel consumption make them potentially safer and more economical than traditional reactors. Additionally, their diverse applications extend beyond electricity generation, encompassing hybrid energy systems, heating, desalination, and industrial steam.

Despite these benefits, some key challenges are slowing commercialization, safety testing, economic competitiveness, and complex country specific regulations. All come into play before widespread adoption. Despite the delay in SMR deployments, global support for nuclear energy overall is growing as a long term decarbonization solution.

This is evident in rising public support in the U. S. and increasing reliance on existing nuclear plants worldwide as a source of carbon free energy and as a foundational layer of a cleaner energy resource stack. Smaller applications like SMRs and even mobile reactors for remote, terrestrial, or even space based use cases are still under development.

Still, studies suggest that a mix of nuclear and renewables provides the most cost effective pathway to reducing power sector emission overall, due to reduced need for energy storage. Addressing the challenges surrounding SMRs, along with continued investment and research, will be crucial in unlocking their potential and securing a clean energy future.

This breakout is brought to you by Cleartrace. For more information on how our platform can help you at your stage of the decarbonization journey, visit cleartrace.io. 

Lincoln Payton: Michael, taking that bridge across to you now, North America particularly, but also economics of nuclear fuel and Pramod said, when it’s available, so your major players in the North American commercial real estate space, what is the availability of nuclear power?

And how does it look and work economically? I know that you have some successes there already, but for people who may not, how does one do that? And does it work economically? And does it work supply wise? 

Mike Daschle: There’s two major points here that I think are worth mentioning. One is that the U. S. is I think the world’s largest user of nuclear energy on an aggregate basis. And so it already, I think, contributes 20 percent or so to the current electric grid mix. So it’s already everywhere on the grid and that really helps with the overall decarbonization and the overall, what we call like the emissions coefficient of using electricity.

So I think that’s a really important point because it’s already serving as a very foundational carbon free energy source for the U. S. grid. The other piece about the availability though, and this is what Pramod brought up is not everywhere in each grid. Do you have the opportunity to transact directly for nuclear power?

Like you might in other grids for renewable energy, for example. And so when we looked at our U. S. Office strategy for procurement from a decarbonization perspective, we really targeted in on the grids where our properties were located, where we could also do direct power purchase agreements from nuclear power producers.

So in our case, that turned out to be the PJM grid, which is around our DC metro portfolio. And we have 40 some office properties there that are going to source 100 percent of electricity from nuclear power plants within the same grid. And what we love about that is that there’s real power in the narrative and the environmental claim that you can make saying that you have 24/7 carbon free energy contributing to the grid at the exact same time that your properties are pulling electricity from that same grid. And then especially in PJM, because they also just recently adopted hourly tracking, you can prove on an hourly basis. And this is also obviously part of the value out of the clear trace technology that on an hour for hour basis, every hour that you consume is matched with an hour of carbon free energy generation.

So we love that aspect. And it actually turns out that about 20 percent of our national load will be met with nuclear generation. And that’s roughly also about the same percentage that the U. S. already has. And so everywhere where we have the option, we would definitely look into doing that. And it is very economically competitive relative to even renewable energy sources.

So that’ll always be one of the first places we look. 

Lincoln Payton: Congratulations. That’s really significant progress. And to have that matching of percentage of national availability and direct utilization for you. It’s a very nice. Metric to achieve. So well done. You guys play as a team so well, another nice pass thrown to Sam there.

So economics, Sam and slightly broader now. So not just Brookfield and Westinghouse, but how does the economics of building? Getting up and running and then operating and then decommissioning nuclear reactors in today’s world. Look, why will that work and why will it lead to proliferation of nuclear energy supply so that people like Pramod can factor it into cross usage and Michael can really show those specific applications of a very nice, I would say, base load component amongst the carbon free solutions. It’s a very nice, solid base load component. 

Sam Meyers: Absolutely. I mean, you alluded to this Lincoln, but there’s not really a credible Paris aligned scenario out there that does not include a nuclear generation as a meaningful portion.

Really a stable, if not growing, percentage of the power generation mix. And we all know what’s going on with energy demand, so that means to remain a stable or growing portion, we’re going to need a lot of new nuclear around the globe. It’s a really interesting time for nuclear because Like I said, Westinghouse connected the first commercial nuclear power plant to the grid in 1957.

Then we had a bit of a nuclear boom for a couple of decades where across the globe, the U. S., then France, you know, who’s obviously very reliant on nuclear energy across Europe and even in Asia, you’d see China and Russia have built a lot of nuclear. It really gained a lot of popularity and there were a lot of nuclear reactors being built in the 60s, 70s, 80s.

But then there was a bit of a lull as political opinions on a change, social opinions on nuclear changed, and really now we’re starting to kind of see that the tide’s turning back towards nuclear again with this recognition that one, it’s clean. And to its baseload, and there’s not a lot of generation sources out there that can say that, but the critical thing for an investor thinking about investing in new nuclear generation in particular is, do we still have the skills from an intellectual property perspective from a labor perspective to actually build these reactors?

Because with all due respect to wind and solar, which are very important mix for part of the power generation mix, they’re not nuclear physics. Right. And nuclear physics is. Very specialized technical field. And because we really slowed the momentum over the last couple decades of how many reactors were being built and deployed, there’s a question of, can we still do these projects quickly, efficiently, cost effectively? And really, in order to get comfort in that, it’s what’s referred to in the nuclear industry is kind of the first of a kind versus the end of a kind. There’s a lot of technology developers out there. You know, Westinghouse has been around for a long time. There are a few others that have been around for a long time as well.

But there’s also a lot of startups in the space and innovation in a lot of We’re not only looking at these one gigawatt sized grid scale reactors anymore. There’s SMRs that can go from a couple hundred megawatts a piece. There’s micro reactors. Westinghouse has one design called the eventually it’s a five megawatt reactor.

So really all different shapes and sizes now for different use cases, many of which have never been deployed before. A lot of them are still under development, not even ready to be deployed yet. So when you think about investing in a new nuclear project today, you really have to look at it. On its own merits in terms of what are the power market dynamics, like in the geography where you’re looking to deploy, what are the labor market dynamics in terms of where you’re looking to deploy?

And that’s both labor availability, labor, technical capability, and labor cost, because the construction cost itself is 1 gigawatt reactor that you’re looking at. You’re looking at the better part of a decade from deciding you want to build that reactor to it actually coming online. These jobs require a lot of people with a specialized skill set, take a long time.

And you want to make sure that of course the technology is actually going to work once you build it, those things aside. So I know we’re not talking specifically about Westinghouse, but one of the things that I think makes Westinghouse so attractive is that They’ve been around the block. They’ve been doing this for a long time.

And their AP 1000 technology does have operating reactors on the grid now that have been built. And people might look and say, oh, well, we’ve heard about some of the challenges that happened with those first couple of reactors that were built. Well, yes, of course, there are challenges. There’s going to be challenges.

Anytime you do a first of a kind anything, but you have to kind of learn your lessons from the experience and the challenges you’ve faced and realizing the solutions to overcome them for your next deployments and for your future developments. That’s really critical as well.

So I think a big thing that people have a hard time wrapping their heads around today when thinking about investing in new nuclear is, well, I haven’t seen this be done before. So what’s my reference point for. How long it’s actually going to take and how much it’s going to cost. And that is something that is going to be a challenge for any investor kind of wrapping their heads around it.

So again, you got to look at the project specific dynamics, the geography, the technology, but it’s only going to get easier over time. Right? So it’s really. We got to find a way to enable the first movers to be able to make attractive risk adjusted investments in funding these projects. And once we get a few more under our belt, the more we have, the easier it will be to continue to deploy them.

Lincoln Payton: I definitely think that’s true because there is in the finance world, my background too, as you know, there’s an element of herd instinct that the more precedent successes there are, the easier the path it is to follow. Are we seeing, and again, question, is it easier? And are we seeing roads open up for retail investors to somehow invest in the future of nuclear, clearly the private equity space that doesn’t trickle down to the average man in the street, maybe your significant wealth house.

But I heard the other day about ETFs with a nuclear flavor to them. Are we seeing this type of move that you’re optimistic will bring more people into the game?

Sam Meyers: I think there’s some of that, but of course the challenge with that is that. You can get exposure to nuclear through investing in certain utilities or investing in some technology

developers are public, some are not. Some of the ones that are are a smaller part of a larger conglomerate as well. So I’d say retail investor access to investing in nuclear and in particular in new nuclear is not, I would say, particularly wide today, but I do expect that to continue to broaden as the momentum builds around the space.

Lincoln Payton: I hope so, because I think with it comes an understanding and a comprehension of exactly what we’re talking about here, which is the risks and the opportunities. So, Pramod, new things for next year, we’re in the later stages of 23. You could argue that we had a great deal of excitement. In the ESG space in 2021, 22, 23, there was a little bit of a cooling in terms of, Hey, let’s think about this.

Some of it very, very healthy thinking about it and reflecting what’s new in 24. For you and the way you look at some of Brookfield’s portfolio companies and helping them on this decarbonization journey. 

Pramod Shukla: Yeah, Lincoln, I would say that when we started, we started with the low hanging fruit first and they were mostly low CapEx, improving operational efficiency, those kinds of things.

As we move forward 2024 and beyond, there will be more bigger projects required for decarbonization, require more CapEx, money execution. They could be two to three year kind of programs there. So the kind of projects which our portfolio company will be doing will be different. The requirement of capital will be much higher as we go forward.

I think what I would say is the type of project mix is going to be very, very different. 

Lincoln Payton: Very interesting and you coming from some of the biggest and the best industrial players in the world crazy question for you can you see heavy industrial players around the world doing the thing that nuclear.

Naval ships do today which is a very specific purpose generation that has a very nice base load, continuous supply linked to really the heavy industrial players around the world. Can you see that in the next few years? 

Pramod Shukla: I can definitely see, so there are two issues here. One is energy security and another is energy transition.

So to make sure that we have both the things addressed, this is a very important topic for most of our portfolio companies. What I would say, maybe we’ll not directly invest, but we are definitely looking at long term PPA. kind of arrangements with those who are ready to invest. And so if there is a good PPA long term, anybody investing in be it solar, be it nuclear, we are very, very open to those kinds of arrangements.

Sam Meyers: There’s been a lot of increased interest from power end users in nuclear recently. I mean, nuclear used to be a business where If you’re a technology developer and OEM, you’re selling to utility and it’s pretty cut and dry, you know exactly who your customer base is. Now you see some of the technology giants, I mean, data centers, right?

They require a very intensive amount of energy and they needed 24/7 round the clock baseload. As many of the comments you and Mike made alluded to before, nuclear is an ideal generation source for that. So we’re seeing a lot of increased interest from. Industry, not just industrial companies, but technology companies.

Maritime is another area where a lot of shipping companies are looking into, can we power our vessels with small nuclear reactors on board? So there’s been a lot of interest. I’d say there’s been to date, not a ton of movement, but there is a lot of interest. And I think 1 of the questions that will have to be answered as we continue down that path is.

A lot of these customers, they want nuclear power. They don’t want to operate a nuclear power plant. They don’t necessarily want to own it. They don’t want to operate it. So figuring out that right mix of entities and partners to kind of develop the technology, design it, deploy it, then somebody else to perhaps own and or operate it.

And then get the end user, their power. So when you think about a five megawatt reactor that maybe you want to use to serve a remote community in northern Canada so that they don’t have to rely on diesel generation for power. Well, that’s great, but you can’t just drop off a nuclear reactor there and say, “Hey, there you go. Enjoy.” There’s new commercial models in the space that will need to be developed to meet this kind of growing new segment of demand. 

Mike Daschle: If I could add something there too, like I think one of the things that’s super interesting to me about these times is when we entered into the clean energy procurement strategy development effort.

One of the big things that Was a major consideration. We want to look at additionality. We love 24/7 carbon free, but we also love the fact that through your commitment, you can initiate the construction of new build solar, new build wind to displace fossil fuels on the grid. And I think within the next five years, we’re going to be in a space in the market where we’re going to start contracting for new build nuclear on the grid, where in the past we may have gone to like a 200 megawatt solar plant and said, “Yeah, we want a slice of that.” Instead, we’re going to go to a 300 megawatt SMR and say, “We want a slice of that.” And through the collective commitments of the offtakers of that particular deal, we’ll be able to finance the construction of new build nuclear, which I think is incredibly exciting because that’s something that was not available for retail consumers and certainly not for commercial real estate operators in the past.

And so we’re getting to that point and I think that we will definitely see it. 

Lincoln Payton: I think it’s a really brilliant point. And actually, it was kind of where I was going for our wrap up here, which is if each of you in your particular facets of this decarbonization equation, you look forward five years and you kind of touched on it, Mike, but I’m going to ask you a bit more specifically in a second.

But Pramod, what do you see five years hence in the role and the way you’re doing things and how nuclear will figure in that more? 

Pramod Shukla: Like five years, hence, I would definitely see that a lot of our portfolio company will be into these off tech agreements or power purchase agreements long term. And it may not be just five years.

It could be more than five years. Five years is too small for these kind of agreements. It could be 15, 20 years kind of agreements and a major portion of their consumption. Is definitely going to be a transition into some form of renewable energy. Similarly, a major consumption of the fuel will also move into some form of low carbon fuel alternatives or some type of substitutions.

Lincoln Payton: Exciting times and a big five years in that respect, Sam, so big picture business wise deployment of new nuclear generation and with that goes the servicing and the development of Westinghouse, but more than just Westinghouse, the deployment, you look five years from now, where are we in the nuclear shape of the world?

Sam Meyers: I think you’re going to see, I mean, again, as promote said, right, nuclear moves slow in some respects. This goes back to kind of, it takes a long time to execute on a project. I think five years from now, you will see much more of an increase over the next five years in private sector demand. To get involved in investing in new nuclear, whatever that may mean, whether it’s a project, whether it’s an entity that develops, whether it’s a utility that has a grand plan to deploy a lot of nuclear, you’re going to see a lot of private sector investment behind that, because that is going to be one of the, I think, fastest growing areas.

When you look at countries around the globe, in particular in Europe, it’s very prevalent where you see a lot of nations saying. We need to deploy new nuclear for both because it serves both of our goals of energy security and clean energy. And so I think you’re going to see a lot more momentum at wanting to deploy new nuclear.

And I think government sector support is going to continue to be a really big part of that, especially for some of these first of a kind projects that we’re going to see go forward. But I think private sector investment is going to increase greatly, both because the investment in nuclear is going to increase and because a lot of these private sector investors, especially as the folks that see those investors, be those pension funds or retail, they want to see that you’re making strides towards a net zero future.

And they’re going to want to deploy capital in high growth areas. And I think nuclear is going to be right at the forefront. 

Lincoln Payton: Yeah. Very cool, Sam. Thank you, Mike. Last comments for you then. So you already talked about the way the markets are moving in the way Brookfield properties are moving, but Let’s really put it on the line here.

Five years. Now you look forward. What does Brookfield properties look like from an energy supply point of view? And where does nuclear figure into that? 

Mike Daschle: I definitely think in the next five years, one, that we will all benefit from an electric grid perspective on the continued extension of the service lives of the existing nuclear fleet.

I think there have been many states who have realized the value of that. So I think that’s going to play a huge part, which means that the underlying basal energy of the grid will be decarbonized, which I think is fantastic. I think we will definitely be in. The full term of our nuclear power participant for our DC Metro. I think we’ll also be working in the different markets where we’re in, and this is New York, Houston, Denver, California, where, whether it’s the local utility or local developers and owners of the nuclear power plants that they’re going to be entering into more direct transactions. I think there’s going to be a very strong demand for the ability to track via an emissions free energy credit, for example, like what they do in PJM, an Energy Attribute Certificate, to be able to really own the environmental benefits of nuclear power.

So I think that’s going to start making its way through the market and be a much more acceptable and prolific way to account for the user. 

Lincoln Payton: Pramod, Sam, Mike, thank you very much. Really enjoyable and interesting conversation. You also definitely Brookfield is a very diverse, very big, very different entities organization, but you do all fit together very well.

So congratulations on that. And I look forward to continuing this conversation. Nuclear is a very important part of the future, definitely needs some education and PR out there. So I think it’s good that we talk about it and we keep updating. So I’m sure we will come back to you all again. But. Pramod, Sam, Michael, thank you very much indeed.

Narrator: Thank you for joining us on the Decarbonization Race. For more resources to help you lead the pack in the most important race of our lifetimes, visit cleartrace.io/podcast.