Beware The Dunkelflaute

Podcast Transcript

Ed Coyne: Hello and welcome to Sprott Radio. I'm your host, Ed Coyne, senior managing partner at Sprott Asset Management. I'm excited today to welcome a new and special guest, Jan Emblemsvåg, a professor at the Norwegian University of Science and Technology. Jan, thank you for joining us on Sprott Radio.

Jan Emblemsvåg: Thank you for having me.

Ed Coyne: Jan, when we were prepping for this, I was laughing because I talked to many different people on Sprott Radio, but I rarely have a professor of your caliber on here. I have to be honest with you: I'm a little intimidated. I appreciate you taking the time today to spend time with someone like me. Let's go right into it because you've got an interesting and cool background. Talk a bit about yourself, the research you're doing at the Norwegian University, and what brought you to focus on nuclear technology.

Jan Emblemsvåg: Let's start with education. I received my undergrad from the Norwegian Institute of Technology in Trondheim and my master's and PhD at Georgia Tech. I'm a mechanical engineering guy, not nuclear. Many people think that nuclear power is about nuclear and nuclear and nuclear, but there is a lot of mechanical engineering in nuclear.

When I returned from the U.S. in 1999, I started working as a consultant. Later, I became a manager and then a senior vice president. After that, I went to the marine industry. I headed a shipyard. I was the senior vice president of Rolls-Royce Marine, with global responsibility for ship design and system integration.

My last job in the private sector was as general manager for Midsund Bruk, who designed and manufactured pressure vessels for the oil and gas industry. Very advanced pressure vessels. In 2020, I decided that after doing enough downsizing and firing many people over the last five years, it was time to look at something more future-oriented.

In 2014, I think the whole zero-emission shipping idea came up when I was at Rolls-Royce Marine. Back then, I only knew about the pressurized water reactor, a very good workhorse, but it's too expensive for commercial marine. Then, when I started as a professor, I soon learned about the molten salt reactor and other generation IV. Then I realized that this is something that really could do it. That's what I've done research on for the last four years.

Ed Coyne: Speaking of research, you published an interesting report about different parts of the world trying to shift away from fossil fuels and nuclear towards renewables. You focused on Germany as an example of being aspirational, but maybe not quite getting it right. It was an interesting report, and you gave some cool stats. Talk about what inspired you to do that, and dive into that report and some of the findings you came about.

Jan Emblemsvåg: Yes. A Swedish guy called Anders Österlund and I did our first study on the best 50 states in the U.S. and Germany. It was more like a ranking study. It wasn't doing the cost calculations. That study showed that the best U.S. states, with Tennessee being one of them, outperformed Germany by a huge margin when it comes to both emission cuts and price levels in the grid. They have gone for the nuclear path. Germany has invested a lot in wind, solar, and biomass.

I took this study that you refer to upon myself to try to do the difficult calculation of figuring out what the ‘Die Energiewende’, as the Germans call it, is the energy transition—what does it cost? Of course, there is a lot of data, but there is a lot of missing data. It was a very approximate study. I had to use a method called triangulation, which is not the most accurate. That's why I basically did the analysis using nominal terms. I didn't inflation adjust or anything. I didn't want anyone to believe that this was an accurate study. It's just a ballpark. Then, when you start to look into this, you realize that they have spent an enormous amount of money on the energy transition. I came to around €700 billion.

Ed Coyne: Wow.

Jan Emblemsvåg: Yes. The way I did that was to estimate the cost of all the investments for all these power plants. Then I knew they had spent a huge amount of subsidies on making them competitive. Some of the subsidies also are purely financial in nature. There is some double-counting in there. In order to eliminate the double counting issue, I didn't include a lot of other costs.

For example, the cost of extending the transmission network, prematurely closing down the nuclear power plants, people, value-added tax, the fact that they have a higher mortality rate because of using coal instead of nuclear, et cetera. When everything is said and done, the €700 billion is most likely a conservative estimate.

Ed Coyne: What timeframe was this over when you were looking at this from when they started this initiative to where we are today? What was the timeframe of that?

Jan Emblemsvåg: It was 2002 through 2022, so it was 20 years. After 20 years, figuring out how it has worked is interesting. Then I took the €700 billion, and then, first, I tried to estimate what it would have cost Germany to keep the nuclear power they had in 2002 operational. That was roughly €100 billion. The interesting part is that if they had just done that, they would've produced as much power as of today. The old nuke produced as much power as all the renewables in Germany today, but they would've saved €600 billion.

Of course, some of these older nuclear power plants would have to be invested in later on, and so on. That comes after 2022. Then I asked myself, what if Germany had pursued a strategy of building new nuclear power plants? Of course, if you look at the stats around the world among OECD (Organization for Economic Cooperation and Development) countries, for example, there's a huge variation in cost and construction time.

Again, using triangulation as the approach, I triangulated myself to what I would call an average nuclear power plant. This means that our nuclear power plant is average in terms of cost, average construction time, and so on. I used that, and then I concluded that with the timeframe of 20 years, Germany could have built—I think it was 11 of these—and saved €300-some billion and reached its climate goals.

Ed Coyne: You hear about how France is the leader as far as nuclear. Can you talk about other countries that have maybe had more success relative to Germany? Then maybe expand on that. What is Germany doing about this going forward?

Jan Emblemsvåg: I think it was Vaclav Smil who wrote that the U.S. had achieved the same result as Germany, using natural gas at a fraction of the cost. That's one version. The French did a very rapid scaling of nuclear in the '80s and early '90s. Because of that, they are one of the world's big countries with the cleanest grid.

If you compare the emissions in Germany and France, you will see that France typically emits around 50 grams per megawatt hour or something similar. Whereas Germany is sometimes 8, 9, or 10 times worse. That is because the challenge with solar and wind power is that they are non-synchronous, meaning they cannot sustain frequency and voltage. That's the fundamental issue.

The other fundamental issue is the lack of storage. From a technical point of view, the lack of synchronization means that in order not to have a blackout in the grid, you need to have enough synchronous energy sources to stabilize the grid. There are only two clean synchronous energy sources. It's nuclear, and it's hydropower. Germany doesn't have enough hydropower for them to stabilize the grid. Since they had closed down the nuclear, they were forced to run gas and coal.

Ed Coyne: They went backward, effectively.

Jan Emblemsvåg: Yes, I think so. They should have kept the nuke and closed down the coal.

Ed Coyne: I think the big takeaways so far in all the podcasts and research papers we've done–I'm curious to get your thoughts on this—is that the mistake is one versus another. Are areas like Germany starting to loosen the grip on one versus the other and starting to think, "Okay. What are our options out there?" What are you seeing in the research you're doing right now? What I just said, does that make sense? Are you still seeing this one versus the other mentality?

Jan Emblemsvåg: I wrote the paper on Ireland, actually. Ireland is a very interesting case because it has the highest amount of non-synchronous power on the asynchronous grid and wind power. Ireland has to curtail the wind when it reaches about 70% of the grid. The problem with Germany is that they have so much wind and so much solar capacity that when there is wind and sun, it's massive overproduction. Still, they need to maintain the synchronicity so the coal, gas, or hydro, or if they had nuclear, would still need to run.

That means that there is probably an upper limit on what's sensible to put into the grid of non-synchronous power. For example, Sweden follows our strategy of one-third each of nuclear, hydro, and renewables. That sounds like a good one because it means that the renewables will not be able to overproduce and, therefore, drive the grid into a negative pricing area. After all, the synchronicity must be maintained. Otherwise, we have a huge blackout.

Ed Coyne: That brings up the next question, which I guess is storage. We don't have the technology or capacity yet to store that overproduction and use it later.

Jan Emblemsvåg: No.

Ed Coyne: We have to consume it as we produce it, effectively.

Jan Emblemsvåg: Yes, that's true. That's because of the sheer volume of power on the grid. Germany had a so-called dunkelflaute in December 2022. Dunkelflaute is a German word for dark, cold, and windless.

Ed Coyne: That sounds awful.

Jan Emblemsvåg: Yes, but it's very common in winter in Northern Europe, probably Northern Canada and the U.S. What happened then is that you have no sun or very little and no wind, but you have a very high demand because of the cold weather. In December 2022, they had 16 days of this, consecutive days. If you took the biggest grid battery in the world, Moss Landing energy storage facility in California, you would need 3,800 such batteries to handle that dunkelflaute at the whopping cost of $1,200 billion. It's not a good idea. To keep nuclear power, it's dirt cheap in comparison.

Ed Coyne: What did they do in those 16 days? What actually happened?

Jan Emblemsvåg: Then they spiked up all the fossil fuel stuff they had and imported from France.

Ed Coyne: They did. They were buying energy from France. Were they using coal?

Jan Emblemsvåg: Yes. Germany is using 10,000 tons of coal per hour.

Ed Coyne: Wow. It sounds like they're going in the opposite direction of what their initiative is. I hate to pick on Germany.

Jan Emblemsvåg: No, it is a good case because it's a big country. In very small countries like Norway and Iceland, we can always find a way because we don't need so much on the big scale of things, but a big country like Germany needs a much more industrial approach toward energy.

Ed Coyne: What are they doing about that going forward? Are you seeing them rethink this policy? Are they readdressing their thoughts on nuclear going forward?

Jan Emblemsvåg: Yes. The former government party, CDU (Christian Democratic Union), is not in government now, but it has stated that it would like to reintroduce nuclear power to Germany. They see that Angela Merkel's process of downsizing and closing nuclear power plants was a big mistake.

Ed Coyne: Interesting.

Jan Emblemsvåg: Yes, I hope they will do that because the challenge with Germany is that it used to be a power surplus, but now it's a deficit. Germany is now importing a lot from the countries around, driving the prices up. For example, in Norway, we are exporting a lot of energy to Germany, but because the German grid is very large, they have brought up the prices in Norway and all the countries around.

Ed Coyne: A lot of this energy transition tends to focus on the 1 billion of the 8 billion people. The other 7 billion people say, "I don't really care if my power comes from coal, wind, solar, or nuclear. I want my electricity to light my light bulbs because it's the first time I have electricity in a house." It'll be interesting to see how that progresses over time. Are you seeing anything in other parts of the world getting access to the grid for the first time? Do they care where their electricity comes from, and if they do, what are they focused on?

Jan Emblemsvåg: The main issue for the part of the world that is electrifying is reliability. If you take the villagers in the poor world, they are happy with just having some electricity now and then.

Ed Coyne: Wow.

Jan Emblemsvåg: For them, you've had the off-grid solar panels has been a major positive effect because even though they have then have power half the day, it's a huge step forward compared to having no power at all, but then if you look at this country who have now done these kinds of things and are starting to move towards industrialization, they realize that you cannot run industry on wind and solar. For example, a number of African countries, I think 15 of them, are now discussing nuclear.

We saw the Emirates invest in a nuclear power plant built on record time with very low-cost and South-Korean made. We see a bigger and bigger quest for power, but reliability is an important determinant of which kind of power they choose, at least early on. In the mature economies that have been around, like, say, the U.S. or Germany, there are already a lot of different kinds of power sources. Their TSOs (Technical and Scientific Support Organizations) there have to be more like a portfolio decision.

Ed Coyne: This report has probably spurred a lot of other activity.

Jan Emblemsvåg: Yes, and also some criticism.

Ed Coyne: What pushback are you getting?

Jan Emblemsvåg: The Fraunhofer Institute in Germany, which has been part of the Energiever, the energy transition, commented that I did a lot of double counting, but I have also done, and that's why I eliminated a lot of the other costs to avoid double counting. Apart from that, I've received a lot of very positive comments also from Germany where they say, "This is a ballpark study, but this is something we need on the table to start discussing the options that are here," because right now, they're burning coal when they need synchronous power or gas if they have it. Putin made access to gas difficult. One thing that's very good about nuclear power is that you detach yourself from the whim of the security policies often associated with fossil power.

Ed Coyne: Do you see yourself potentially returning to the private sector as a consultant to areas like Germany to help them solve this problem going forward? Would you be open to something like that?

Jan Emblemsvåg: Yes, I do a little consulting now, and I have some board positions, but most of my focus these days is on nuclear propulsion.

Ed Coyne: Talk about that a bit.

Jan Emblemsvåg: Yes. Where I come from in Norway, we have a very vibrant maritime industry with ship owners, shipyards, suppliers of equipment, and the whole thing. Of course, these big ships are consuming a lot of energy. A big container ship will consume close to 3,000 megawatt hours per day. That means it will take most landing energy storage facility, the biggest grid battery on the planet, and suck it dry in just one day.

That illustrates the problem with these big ships: they consume so much energy that batteries and hydrogen are out. We have two major options: continue as we do today or go nuclear. I analyzed all the fuel consumption in the marine industry, and if this were to be replaced by green ammonia or any other hydrogen-based fuel, we would need all the power in all the OSD countries to make the few. This will never work.

Ed Coyne: I've got a fun stat for you. Years ago, my son and I slept on the Battleship New Jersey. He was part of the Boy Scouts, and it was the last ship in operation that was using diesel fuel. You probably know that most people don't want to use it all the time, but can you guess how far they got on 1 gallon of diesel fuel when cruising?

Jan Emblemsvåg: 1 gallon, that's nothing. I don't know.

Ed Coyne: 3 feet per gallon. Three decades ago, it was over $1 million a day to cruise. Nuclear has been part of moving big ships around for quite a while in the military application. Still, I did notice on your LinkedIn the article about cargo ships, and I'm surprised that cargo ships aren't currently powered by nuclear. Talk about that and some of the work you're doing on that.

Jan Emblemsvåg: Because of the enormous energy required by the shipping industry, we had to find our way of doing it. As I said, the pressurized water reactors that the military uses are too expensive for commercial marine, but with the new generation IV reactors, we realized that this could be our solution.

We have a project running right now called NuProShip I that will evolve into NuProShip II over the new year. Basically, we have investigated all the known reactor technologies in the world and have narrowed it down to three that will do the job. One is a helium gas-cooled reactor. The other is a molten salt reactor, both of which use TRISO fuel. The third is a lead-cooled reactor.

All these reactors are small enough and provide enough power to make them relevant to our purpose. They are also easy to place. Costs are still a little bit too early to talk about, but preliminary studies I did on a molten salt reactor four years ago indicate we could do it cheaper than heavy fuel oil.

Ed Coyne: Interesting.

Jan Emblemsvåg: We can save money on this. Then we are talking because that means that once this is legal with all the licensing work and everything we have to do, it will outcompete the heavy fuel oil.

Ed Coyne: You mentioned South Korea. They come up a lot from a technology standpoint and from a construction standpoint on reactors. Are they really the leaders as it relates to patents, designs and construction? Why do they keep coming up in so many conversations?

Jan Emblemsvåg: I think in terms of patents, they are not, then probably the U.S. has the biggest number of patents on all these different reactor technologies. The South Koreans are very good at building. We see that in the maritime industry, too. They typically develop a design, then build the same ship over and over and over again. This is what they've done with the reactor.

Let’s take Hinkley Point C, for example, in the UK, which is a spectacular example of how not to do it. They buy a reactor technology from France, and the laws of physics in France and the UK are the same. Yet when the same technologies move to the UK, they impose 7,000 changes on the design and the facility.

Of course, this is a massive amount of extra work for the project guys who built it in Hinkley Point C. It makes everything so much more difficult than using the same thing that has been built before. This, we do in the West. Also, we have, for example, in the US, in some states, you could cancel a project up to 95% completion. Imagine that kind of financial risk. You have different consortiums and different agreements. Every nuclear power plant is a prototype in one way or the other.

Ed Coyne: We keep reinventing the wheel. We're the Koreans. That's interesting. How do we get everybody on the same page then?

Jan Emblemsvåg: The most important thing we can do is take politics out of nuclear. When we have a project, let the guys who run it do it, and keep the politicians away and all the other guys who have their wishes about this and that. That would be one huge step going forward.

What's interesting about the maritime industry is the vast number of reactors. We are talking about 2,000 ships per year. The U.S. Navy has about 600 ships, but we talk about 2,000 yearly here. This will mean that, in the marine industry, you can industrialize nuclear to a level not seen in any other domain. That will, of course, have a huge spillover effect on the land.

Land-based nuclear power plants should then become much cheaper than they are today. We do have to remove politics from this. We cannot have every regulator, politician, company, and everyone do it their way because then everything becomes a prototype.

Ed Coyne: That might take a miracle then, it sounds like. You're talking to an American. We love our politics over here. Getting the politicians to step aside will be a challenge in itself. You figure that out, and there might be a Nobel Prize there for you. It could be your greatest achievement.

Jan Emblemsvåg: Yes. Absolutely. If they realize that by doing that, they will serve themselves and everybody else.

Ed Coyne: What do you say to those still concerned about nuclear power's safety going forward? What has changed in technology, and what would you say to someone who would bring that up?

Jan Emblemsvåg: They probably have in mind Chernobyl and some of these early accidents, which were very old-fashioned. We call them Generation II nuclear power plants. Something built today is not even remotely close to that in terms of safety levels. That's one thing. Perhaps the most important thing about the Chernobyl accident was the historical context and lack of safety culture.

In the Soviet Union, they had a decree that stated that nuclear power plants cannot fail. Because of that, there was no training for what to do. There was not even equipment or anything. Of course, then, when they do have an accident, this accident becomes much worse than it would have been in any Western facility if it could have happened at all. The reactors we built in the West since the '90s and upgraded the older ones are safe.

Ed Coyne: Can you talk about the existing plants now? We hear about this a lot now that existing plants are having their operating license extended, so older plants are operating. Still, those have also been retrofitted or upgraded from a safety standard.

Jan Emblemsvåg: Yes, they have. Then, of course, if we move on to what I work on, which is generation IV, those reactors have an even higher level of safety. For example, a molten salt reactor has no pressure, and with no pressure, there cannot be an explosion. Simply, physically impossible. With no explosion, that means that if you do have an accident, the radioactive material would be confined to the concrete sarcophagus around the reactor. That means even if everything failed, it cannot be an accident.

Ed Coyne: Because there's no pressure in the Gen IV type of reactor.

Jan Emblemsvåg: Exactly. That kind of Gen IV. Other Gen IV reactors have pressure, but that has advanced safety systems. When we sorted for the ships, we looked at the worst case. We want to have a reactor that can withstand just about anything.

For that reason, we also have the TRISO (TRIstructural ISOtropic) fuel. The TRISO fuel is a game changer in terms of safety because all the radioactive material is contained in a ceramic graphite pallet. Because of that, it cannot spread. It's impossible to spread it around like what happened with Chernobyl when an explosion threw the radioactive isotopes around the facility. That could never happen.

Ed Coyne: I want to discuss how we can follow you and your work, including the research you're posting online.

Jan Emblemsvåg: Yes. I suppose the easiest way is LinkedIn. When I write an article, I normally share it there if it's scientific.

Ed Coyne: Is there anything else that I should have asked that you think is really interesting and would be worth mentioning today?

Jan Emblemsvåg: No, I really spend all my research time, not all, but most on the nuclear propulsion part, simply because of the enormous potential. We are talking about a market that will be bigger than land-based nuclear today.

Ed Coyne: This was cool. I might be mildly more confused than before the call because you introduced so many new things to me. I think our listeners are really engaged in the future of what nuclear means for them personally, for the economy, and from an investment standpoint. We really appreciate you taking the time today. Thank you so much for joining us on Sprott Radio.

Jan Emblemsvåg: Thank you. It was very interesting.

Ed Coyne: Once again, my name's Ed Coyne, and you're listening to Sprott Radio.