Inside The Audacious Plan To Use 10,000 Nuclear Microreactors To Wean The World Off Coal

Bret Kugelmass of Last Energy aims to build his first 10 inexpensive, off-the-shelf fission reactors in eastern Europe.

Anhour west of Houston, where suburban sprawl surrenders to cow pasture, sits a cavernous industrial workshop in which welders and pipefitters assemble equipment bound for oil refineries and drilling platforms in the Gulf of Mexico. “These guys have been working for decades to modularize components for high pressures and temperatures,” says Bret Kugelmass, 36, the founder and CEO of Washington, D.C.–based Last Energy. That’s why he came here, to VGas LLC, when he wanted a prototype of the small, modular nuclear fission reactors he’s betting could play a big role in cutting down on fossil fuels.

Based on Kugelmass’ open-sourced design and using mostly off-the-shelf components, VGas fabricated almost all the parts for a basic small light-water reactor and crammed them into nine shipping container–sized modules. It took only two days to bolt them together.

To be clear, this wasn’t a working prototype—in fact, its 75-ton reactor pressure vessel is cut away to show how standardized fuel assemblies of zirconium rods filled with pellets of enriched uranium fuel could nestle inside. “We’re not doing any new chemistry or reactor physics,” Kugelmass emphasizes. “Our core innovation is the delivery model of a nuclear power plant. We’re just packaging it in a different way.”

We’re talking old-fashioned fission technology here—the kind that for decades has been used to generate energy by splitting uranium atoms apart. It’s the opposite of nuclear fusion, which is how the sun generates energy: by fusing hydrogen atoms. For decades fusion research has stalled because scientists could not coax more energy out of fusion reactions than it took to trigger them. Recent breakthroughs show promise, but even in the most optimistic scenarios commercial fusion is many years away.

Leaning into science is one way to make things easier; avoiding U.S. regulators is another. Kugelmass isn’t even asking for American approval of his plants. Instead, he hopes to have his first 20-megawatt reactor (enough to power 20,000 homes) up and running by 2025 in Poland, which has been getting 70% of its power from burning coal since Russian natural gas supplies were cut off. Poland has agreed to buy the electricity from 10 of the units, which Kugelmass hopes to make for $100 million each, under a long-term contract that requires Last Energy to operate the reactors and take on the risk of cost overruns.

Kugelmass aims to build 10,000 of these mini-reactors worldwide, which sounds fantastical for a nuclear industry newbie who has so far raised just $24 million in venture capital. It’s smart money, though: $21 million came in a round led by Austin, Texas–based Gigafund, whose mana­ging partner, Luke Nosek, was the first VC investor to back Elon Musk’s SpaceX.

You can still hear in Kugelmass’ voice the Long Island kid who loved building robots and who studied math at SUNY Stony Brook before earning a master’s in mechanical engineering at Stanford. In 2012, when he was just 25, he launched a business that used a fleet of fixed-wing drones to assess storm risk by conducting photographic surveys of millions of rooftops for insurance companies. He raised $5.8 million for his venture, known as Airphrame, and sold it in 2017. At that point, he decided to devote himself to fighting climate change.

Kugelmass quickly homed in on nuclear power as a big part of the solution. According to Columbia University’s International Research Institute for Climate and Society, nuclear is the only fix for the “energy trilemma”—a source that is reliable, affordable and sustainable. Wind? Solar? They require more than 10 times as much material per unit of electricity generation as nuclear, notes Marc Bianchi, an energy analyst at Cowen & Co. Moreover, land access and NIMBY-ism make it hard to scale up—wind and solar farms worldwide already cover an area twice the size of Texas and deliver just 5% of the planet’s electricity needs. Generating the same 20 megawatts as one of Kugelmass’ proposed mini-reactors would take, on average, 600 acres of solar panels or 4,000 acres of wind turbines.

Kugelmass was still a nuclear novice in 2018, so he began interviewing experts via a podcast, Titans of Nuclear, that has now grown to nearly 400 episodes. He studied the obstacles to building more nuclear capacity and concluded that too much complexity, along with excessive regulation, were major problems.

Another issue: the historically runaway costs of large nuclear projects, which he attributes in part to skewed incentives in the way they have been financed and built. In the U.S., utilities that dare try to build new nuclear plants bear little risk from outrageous cost overruns, since they know they can always cover bills by charging more for their electricity. After all, their monopolistic rates are set by regulators. Kugelmass’ solution is to adopt the financing model from wind and solar projects: Last Energy will build and own the plants, using long-term contracts as the basis for borrowing the large amounts of money needed—around $1 billion in the case of the Polish project.

HOW TO PLAY IT

By Jon Markman

Basic micro-reactors are the future of nuclear power generation. The best way to play this trend is Cameco, the Saskatchewan-based uranium producer that holds some of the world’s largest deposits. Nuclear power is impossible without uranium U-235, the fissionable material used in all current nuclear facilities. Momentum is building in the West to expand the life of existing nuclear plants, and numerous companies and countries are pursuing the development of small modular reactors and advanced reactors, according to the International Atomic Energy Agency. This interest will ultimately increase demand for uranium. Cameco could trade to $34.50 within 12 months, a gain of 28% from the current price of $27.

Jon Markman is president of Markman Capital Insight and editor of Fast Forward Investing.

Last Energy is hardly the only startup aiming to build a new generation of smaller reactors. Deep-pocketed competitors include Terra­Power, a joint venture between Bill Gates and Warren Buffett’s Berkshire Hathaway, which is seeking to build a novel molten chloride, liquid sodium–cooled 345-megawatt reactor in Wyoming. Despite $2 billion in federal subsidies, Terra­Power’s costs have ballooned to more than $4 billion amid years of delays. X-energy, soon to be a public company via SPAC sponsored by Ares Management, is also using a newfangled meltdown-proof uranium oxycarbide fuel for its 320-megawatt reactor, which will result in greater regulatory scrutiny. NuScale Power, the first publicly traded mini-nuke developer, got its 50-megawatt design approved in January after spending a decade and $1 billion to navigate the U.S. Nuclear Regulatory Commission but doesn’t expect to finish a first plant until the early 2030s.

So how does Last Energy, using old technology, answer the safety fears (justified and not) that have held up nuclear projects for decades? Kugelmass says that even if its multiple redundant cooling mechanisms failed, the underground vault encasing the reactor in 550 tons of steel would efficiently dissipate excess heat and contain fuel in the unlikely event of a meltdown.

As for radioactive waste, most nuclear plants remove the bundles of spent fuel rods from the reactor and store them outside in concrete and steel casks. Last Energy’s plan, by contrast, calls for bringing in a new reactor module, preloaded with fuel, once every six years. The old cores stay behind, secured underground, cooling off until the eventual decommissioning of the plant. It might seem a waste to replace an entire reactor module rather than just the fuel, but it does make life simpler. “We’ve deliberately accepted certain plant inefficiencies to achieve economic efficiencies,” Kugelmass says. “Any other approach and you’d be right back where we started.”

The Vault

METAL DETECTORS

At the dawn of the Cold War, the U.S. government was desperate for American uranium—and willing to pay. In 1948, Uncle Sam made an offer: a minimum of $1.50 per pound of uranium discovered (about $19 today), setting off a midcentury radiation rush as average Joes rushed West hoping to strike it big.

Besides some 200 government and industry geologists hunting uranium on Colorado’s Plateau, hundreds of amateurs packing pick, shovel and Geiger counter are trampling American soil. For them and the thousands of arm-chair ’49ers with vacation get-rich ideas, [the United States Atomic Energy Commission] makes no secret of exploratory methods in a neat, pocket-sized, 128-paged manual: “Prospecting for Uranium.” Packed with plain poop on where and how to find it, the copper-colored books adequately describe all the U-ores from chemistry to value, explain the use of “radiation detection instruments,” brim with tables and appendices.

—Forbes, August 1, 1953