MacroPass: Doomberg On The Future Of Nuclear Energy
A potential renaissance lies ahead, but so do some pretty big challenges
This week’s installment (the 12th!) of our new MacroPass service for premium members of this Substack comes from energy analyst Doomberg.
It’s a recent report on the outlook for increased expansion of America’s nuclear energy industry. Vilified for decades and under constant threat of decommission, the US nuclear industry suddenly finds itself a highly desirable part of the plan to power the electrical grid of the future.
There have been seismic policy shift over the past year that are extremely favorable to nuclear power. But a number of big obstacles — legislative, logistical and perceptual — still remain to be resolved. So now the hard part begins…
If you somehow missed our previous announcements, MacroPass is a weekly rotating selection of premium analysis from many of the big thinkers interviewed on Thoughtful Money.
To-date that list of contributors includes experts like Stephanie Pomboy (Macro Mavens), Danielle DiMartino Booth (QI Research), Tom McClellan, Michael Howell (Capital Wars), Darius Dale (42 Macro), Doomberg, Kevin Muir (The Macro Tourist), Alf Peccatiello (The Macro Compass), Lance Lambert (ResiClub), Ed Yardini (Yardini Research), David Hay (Haymaker), Melody Wright (M3_Melody), David Stockman (Contra Corner), David Brady (FIPEST Report), John Rubino, Adam Kobeissi (The Kobeissi Letter), Sven Henrich (Northman Trader) and Jeff Clark (The Gold Advisor).
The reports issued so far in this MacroPass series include
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Be Like Ike
Now the hard part begins.
JUN 08, 2024
“The shortest answer is doing the thing.” – Ernest Hemingway
Serving as the Supreme Commander of the Allied Expeditionary Force during World War II, General Dwight D. Eisenhower became intimately familiar with German infrastructure and logistics. He was impressed by the effectiveness of the Autobahn highway system in facilitating the rapid movement of civilians and military personnel alike. As the Allies captured more German territory, they leveraged that system to enhance their mobility, and the general’s experience there would forever alter the course of US economic development.
Eisenhower believed that members of the professional military class should refrain from direct participation in politics and initially resisted calls to consider running for US President. Eventually succumbing to persistent encouragement, he won both the 1952 and 1956 elections by landslide margins. Eisenhower’s many outstanding contributions to the country include the passage of the National Interstate and Defense Highways Act of 1956. The Act became the foundation upon which more than 48,000 miles of highways were constructed, forming economic arteries that facilitate modern commerce in what is still the world’s largest economy. Amazon, FedEx, Walmart, and the family road trip owe debts of gratitude to the 34th president.
The build-out of the Interstate Highway System was not without its controversies, including the substantial disruptions imparted upon urban centers across the country. The project also irreversibly cemented the automobile’s role in the cultural and economic development of the US.
While Eisenhower literally paved the way for broad automobile adoption and mobility, today’s shift towards electric vehicles (EVs) requires robustness in yet another public good: the electrical grid. Efforts to mandate this transition have unveiled the grid’s convoluted history and its grossly inadequate current state of operation. As outlined in Emmet Penney’s expansive essay, “The Rise and Fall of the American Electrical Grid,” the US grid’s journey is deficient in the type of discipline a project spearheaded by a talented general would bring. Decades of policy flip-flopping, disastrous market reforms driven by the likes of Enron with the full backing of Wall Street, and the expansion of intermittent renewable sources of electricity like wind and solar have left this all-important national asset on the brink of crisis. Here’s Penney’s gloomy assessment:
“It is not clear how the grid can be fixed. The rules governing it grow more arcane by the day. Various universities, utilities, NGOs, major financial institutions, politicians, and industry interests have too much at stake to turn back now. FERC [Federal Energy Regulatory Commission] wants to create more and bigger electricity markets. And those who deal in quick fixes, like delusional transmission buildouts, hypothetical black-box modeling, or various other wonkish tabletop role-playing games, ceased being honest brokers long ago. The political force that could meet the challenge of fixing the American grid would have to be both powerful enough and competent enough to achieve its aims.”
Into this foray enters US Secretary of Energy Jennifer Granholm, who inspired little confidence early in her tenure when she appeared before Congress to push for electrifying much of the US military vehicle fleet. (One can imagine how the late general would have responded to that proposal!) To her credit, she has partially redeemed herself of late by spearheading a campaign to return nuclear power to a central role in providing baseload electricity. While doing so would not fix every problem ailing the US grid, it would go a long way toward stabilizing a situation that teeters on the brink. Last week, she raised eyebrows while celebrating the startup of Vogtle Unit 4 in Waynesboro, Georgia, the second of two nuclear reactors recently brought online at the facility and the first new units to be constructed in the US in over 30 years (emphasis added):
“Plants like this one, obviously, are economic magnets, because clean, 24/7 power is now irresistible to companies that are looking to build big manufacturing facilities, big data centers. Those facilities mean even more jobs and even greater opportunities…
Southern Company and Waynesboro, they have led the way here. But it is now time for others to follow their lead. To reach our goal of net zero by 2050, we have to at least triple our current nuclear capacity in this country. That means we’ve got to add 200 more gigawatts by 2050. Okay, two down, 198 to go!”
As much as pro-nuclear advocates welcome this about-face from the Biden administration—this publicaton included—tripling the national nuclear operating capacity over the next 25 years poses a gargantuan challenge for an industry that “quivers like a litter of beaten puppies under the routine flogging carried out by radical environmentalists.” Well, the dog finally has the opportunity to catch the car. Now what?
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