Fission Impossible? Financing New Nuclear w/ Michael Seely

But in general, that can then, I mean, that literally would turn a project that is not feasible into a project that is feasible just by having the government come in and say, yeah, we're going to support X portion or Y portion of this project.

and make it much more feasible for either private capital or for government capital to come in.

And then the project is suddenly looking a lot more attractive.

Historically, obviously, nuclear plants have been built under different conditions.

But let's say kind of up until the 80s and 90s, you had big sort of state-backed utilities, EDF, Ontario Hydro, Korea Hydro Nuclear Power.

And they were either government or government-like or backed by governments.

In the U.S., you have a lot of regulated monopoly utilities.

And I almost see them as like a sovereign or a government entity.

Obviously, the ratepayer base is different than a tax base, but suffice it to say, the thinking was, and they were proved wrong in, I believe, the Washington, the whoops incident.

And I think with Scanda, there's been utilities, regulated mob utilities that have been bankrupted by nuclear projects.

But in general, that was thought to be very unlikely because you had this huge rate base that you could spread a cost overrun over.

And so- Um, they were able to, um, access capital at a fairly low cost.

I imagine sovereign government debt, slightly lower than regulated monopoly debt, um, but still fairly, fairly low.

Um, and I think there's probably a greater willingness for government to take, um, this risk and, and, um, to take this debt onto their balance sheet in an era in which nuclear projects, say in France or Ontario, were being built more or less on budget and on schedule.

Because, you know, simplistically I go, well, if cost of capital is what it's all about, you know, why are nuclear power plants just not funded in the most efficient way possible, you know, essentially by government or government-associated entities like state-owned utilities? Um, where possible, like, why is there this desire to get private finance in when the cost is just going to be higher? And I guess, you know, I can just imagine the news stories if, you know, government finances a whole project and there's a huge cost blowout, you know, politicians are going to be hung from a lamppost.

Metaphorically speaking, the reputations will be ruined.

when they could have shared the blame, I guess, with some private financiers.

In the end, my understanding is with a lot of these big mega projects, once you've sunk enough capital in, it's partially built.

There's a huge incentive for the government to bail out a private source of capital or finance there.

So in the end, government ultimately ends up backstopping private risk.

But I just wanted, again, not to get too deep into what we're about to do in terms of our little tour to Europe, into this basic timeline of up until the 80s or 90s, largely things were being financed through government debt, government-associated utilities or regulated monopoly utilities, and the cost of capital was pretty low.

Is that a pretty good starting point?

I think that's a fair starting point of where things stood for the most part.

In a lot of these projects, I mean, you would have private companies are doing the construction in the building, and that's always generally seen as kind of an attractive model.

The government typically hasn't been seen as, you know, the... driving force for actually managing an enormous construction project, at least in the U.S. That usually gets outsourced.