Emerging Nuclear Innovations Picking global winners in a race to reinvent nuclear energy

Japan’s close call notwithstanding, nuclear will remain an important baseload power source worldwide. And after decades of relative inactivity, companies in Asia, Europe, Canada and elsewhere are poised to reinvigorate the industry with innovations aimed at overcoming the historical objections to big, fission-based nuclear power. Which companies are best positioned to open a new nuclear chapter, and why?

Mark Halper November 2011 www.kachan.com

Emerging Nuclear Innovations

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© 2011 Kachan & Co. | www.kachan.com

Contents Executive Summary ............................................................................................................. 5   © 2011 Kachan & Co. Use of this report is limited solely to specific licensees including the individual watermarked below. Only reports specifically purchased under the terms of a site license may be distributed within an organization. Reproduction or distribution is prohibited. Under no circumstances may this report be shared outside an organization. This report is based on information available to research staff and is believed to be reliable but no independent verification has been made. Perspectives expressed represent our judgment at the time of writing and may change in the future as circumstances evolve.

Fission: Splitting from the present ...................................................................................... 7   Thorium .......................................................................................................................... 9   Molten Salt Reactors ..................................................................................................... 11   Fast Neutron Reactors .................................................................................................. 11   Pebble Bed Reactors ...................................................................................................... 13   Modular reactors ........................................................................................................... 13   Other Fuel Innovations ................................................................................................. 13   China.............................................................................................................................. 14   Fast Neutron Reactors .............................................................................................. 14   Thorium .................................................................................................................... 15   Pebble Bed Reactors ................................................................................................. 15   Latest regulatory dynamics ........................................................................................... 15   Thorium ............................................................................................................................. 16   Molten Salt .................................................................................................................... 16  

Nothing herein is intended to be or should be construed as investment advice. This document does not recommend any financial product be bought, sold or held, and nothing in this document should be construed as an offer, or the solicitation of an offer, to buy or sell securities. This report is not to be relied on by investors, disseminated to the public or summarized, quoted from or incorporated by reference in any document which is to be disseminated to the public. Investors should not make any investment decision without consulting a fully qualified financial adviser.

Molten Salt Reactors.......................................................................................................... 22  

Kachan & Co. does or seeks to do business with companies mentioned in this report.

Modular Reactors ..............................................................................................................30  

Flibe Energy .............................................................................................................. 16   Solid Fuel ....................................................................................................................... 18   Thor Energy .............................................................................................................. 18   Thorium One International ...................................................................................... 19   Rare Earth Extraction Co. ....................................................................................... 20   Ottawa Valley Research................................................................................................ 22   Fast Neutron Reactors ....................................................................................................... 23   General Atomics ........................................................................................................... 23   Terra Power .................................................................................................................. 26   Pebble Bed Reactors .......................................................................................................... 28   QPower Corp. ............................................................................................................... 28   NuScale Power.............................................................................................................. 30   Hyperion Power Generation ........................................................................................ 33   Radix Power and Energy Corp. .................................................................................... 34  

Cover: India's fast breeder nuclear reactor core being lowered into safety vessel. Source: Defence Forum of India.

Fuel innovations and other technologies .......................................................................... 36   Lightbridge Corp. ......................................................................................................... 36   Fusion: Hurtling toward big gains .................................................................................... 37   International Thermonuclear Experimental Reactor (ITER) ..................................... 42   U.S. National Ignition Facility (NIF) ........................................................................... 43  

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© 2011 Kachan & Co. | www.kachan.com

General Fusion ............................................................................................................. 46   Helion Energy............................................................................................................... 49   Tri Alpha Energy ........................................................................................................... 51   Other Fusion ..................................................................................................................53   Final Thoughts and Recommendations ............................................................................ 54   Modular .........................................................................................................................54   Thorium ......................................................................................................................... 55   Fast Neutron Reactors .................................................................................................. 55   Conventional Reactor Fuel ............................................................................................ 55   Fusion ............................................................................................................................ 55   Conclusion ......................................................................................................................... 56   Appendix ............................................................................................................................ 56   Nuclear reactors under construction, planned and proposed in China .......................56   Further nuclear power units proposed in China ......................................................... 58   Nuclear companies, utilities and state agencies in China ........................................... 60   Methodology & bibliography ............................................................................................. 64  

Figures & tables Figure 1: Worldwide nuclear generation capacity could grow significantly from current levels by 2030. Source: World Nuclear Association. .......................................................... 5   Figure 2: World Nuclear Association figures show that 97% of the world’s commercial nuclear reactors (i.e. including demonstration reactors, but not test ones) are watercooled, either light water PWRs, BWRs, LWGRs or heavy water PHWRs. Two percent are gas-cooled and 1 percent are fast breeder reactors. ..................................................... 9   Figure 3: Thorium molten salt reactor under construction at Oak Ridge National Laboratory, circa 1960s. Photo source: U.S. government, via Wikimedia. ...................... 10   Figure 4: Monazite ore is mined for rare earths but is also rich in thorium. Photo source: RARECO............................................................................................................................. 11   Table 1: Fast neutron reactors throughout history. None are currently commercially active. Russia is schedule to start one in 2014. Source: WNA. ......................................... 12   Figure 6: Flibe’s liquid fluoride thorium design. Source: the Energy From Thorium website run by Flibe CEO Kirk Sorensen. ......................................................................... 17   Figure 7: RARECO chairman Trevor Blench at the Steenkampskraal monazite mine. Source: RARECO. .............................................................................................................. 21   Figure 9: General Atomics’ modular Energy Multiplier Module—an FNR—is to fit on a tractor trailer, as in this mockup. Source: General Atomics............................................ 24   Figure 10: The gas-cooled GA EM2—a fast neutron reactor—sits underground, is intended to turn “waste” into fuel, and is designed to be about 50% more efficient than conventional light water reactors. Source: General Atomics............................................25   Figure 8: Design schematic for Terra’s travelling wave fast neutron reactor. Source: Terra Power........................................................................................................................ 27  

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© 2011 Kachan & Co. | www.kachan.com

Figure 11: The QP-100 QPower PBR would have a 100 megawatt thermal capacity and about 30 megawatt electricity. Each ball—pebble—contains fissile fuel that heats up a helium coolant in the modular design. Source: QPower. ................................................ 28   Figure 12: NuScale’s passively cooled modular PWR is designed to sit underground. Source: NuScale. ............................................................................................................... 32   Table 2: Lightbridge says its fuel will add between $20 million and $90 million per gigawatt of annual value to a nuclear plant because reactors will have more uptime. Utilities will not have to shut down them down as often for refueling. Source: Lightbridge. ........................................................................................................................ 37   Figure 14: A typical fusion reaction combines deuterium and tritium—both are isotopes of hydrogen—to give off heat, neutrons and helium. The neutrons react with lithium to create more tritium that feeds more fusion. Source: Helion Energy. ............................. 38   Figure 15: Cutaway view of the ITER tokamak. Source: ITER. ....................................... 43   Figure 16: In the NIF’s fusion approach, a tiny compressed plasma ball inside a canister above heats to 100 million° C in 20 billionths of a second after 192 lasers travel nearly a mile to focus on it. Source: NIF. ....................................................................................... 44   Figure 17: After next year, don’t expect milestone achievements from NIF for some time. Source: NIF claims. ..................................................................................................45   Figure 18: General Fusion’s magnetized target fusion reactor is being designed to heat up a plasma of deuterium and tritium, inject it into a vortex and compress it with finely controlled pistons. Source: General Fusion. ..................................................................... 47   Figure 19: Meeting in the middle: Helion’s Fusion Engine is designed to send deuterium/tritium plasma slamming into each other at a million miles per hour in a burn chamber. Source: Helion Energy. ............................................................................ 50   Figure 20: The promise of aneutronic fusion: No turbines, no radioactivity. Fusing standard hydrogen with boron yields three charged “alpha” particles of helium (thus, “Tri Alpha”). Those become electricity directly. The challenge: It requires temperatures of a billion° C. Source: the Focus Fusion Society. .............................................................52   Figure 21: The left image is said to show the relative size of Tri Alpha’s reactor next to a person, which appears in the right of the illustration. It’s said to be the size of a bus. The bottom image illustrates Tri Alpha’s magnetic and plasma fields. Source: Next Big Future. ................................................................................................................................53   Table 3: Nuclear reactors under construction, planned and proposed in China. Where construction has started, dates are marked in bold. Those here not under construction are marked as 'planned' in the WNA reactor table. At mid-September 2011, 27 were under construction: 28,920 MWe; 51 planned: 59,780 MWe (gross). Note Fangjiashan is sometimes shown as a development of Qinshan Phase I. Source: WNA & Kachan analysis. ............................................................................................................................. 58   Table 4: Further nuclear power units proposed in China. All PWR except Shidaowan HTR-PM and Sanming BN-800. Some entries based on heresay. Bailong is presumed to be same as Fangchenggang/ Hongsha phase 2, so not totaled above. Source: WNA & Kachan analysis. ............................................................................................................... 60  

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Executive Summary Nuclear power today provides 14% of the world’s electricity.1

Nuclear power will continue to play an important baseload power role, but it needs to change

It will continue to play an important and probably growing role in furnishing power and reducing the world’s roughly 70% reliance on price volatile and CO2-emitting fossil fuels. “Green” energy sources like wind and solar will also expand their share but they will not be able to supply the baseload power provided by nuclear. But for nuclear to gain significant share, it must change. There has never been a better time for mavericks to come forward with safer, better and less costly ways to split atoms or, in the case of the elusive but reachable notion of fusion, to meld them together. Despite last March’s Fukushima nuclear meltdown in Japan, the World Nuclear Association thinks it's possible that in the 33 countries that currently operate nuclear reactors, capacity could increase 52-200%, to between 559 and 1,087 gigawatts in 2030 (up from 367 gigawatts today).2 Among countries that don’t already use nuclear power, those with plans to do so could add another 30-123 gigawatts, and new potential entrants could increase that by yet another 13-140 gigawatts.3

Figure 1: Worldwide nuclear generation capacity could grow significantly from current levels by 2030. Source: World Nuclear Association. Most of that growth would come from already planned construction of conventional nuclear reactors. The wide range of WNA scenarios assumes different possible levels of government policy support and varying economic factors such as the price of fossil fuel. The higher side of the outlooks assumes a strong level of government support and assumes that fossil fuels will become less competitive. But in the context of the anti-nuclear backlash following the events at Fukushima, even the low end of the WNA’s outlook is surprisingly robust. Citing Fukushima, two other energy bodies, the International Atomic Energy Agency (IAEA) and the International Energy Agency (IEA) recently tempered their nuclear 1

World Nuclear Association (WNA) http://world-nuclear.org/info/inf01.html

2

WNA, http://www.world-nuclear.org/outlook/nuclear_century_outlook.html

3

Ibid

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© 2011 Kachan & Co. | www.kachan.com

outlooks. The IAEA cut its low growth projection by 8%, to 501 gigawatts in 2030, and lowered its high growth projection by 7% to 746 gigawatts.4 In its 2011 Energy Outlook, the IEA pointed out that Fukushima has “increased uncertainty” in the industry. Although it sees a likely scenario in which nuclear’s share of the world’s energy supply will grow, it also issued a cautionary projection in which the nuclear capacity could shrink by 15% by 2035.5 For the industry to continue to grow significantly beyond 2030, it will have to move away from conventional reactor designs of the type that blew up in Japan. As Fukushima demonstrated, nuclear power needs safety improvements. In a back-to-thefuture play, the industry will adopt technologies first championed decades ago, we predict. The fission design on which the industry settled 50 years ago was a VHS victory over superior Betamax alternatives

While most of the world’s 432 nuclear reactors split atoms without a hitch, Fukushima illustrated that things can go wrong—and when they go wrong, they go very wrong. It reminded us that the fission design on which the industry settled 50-some years ago— the large water-cooled reactor that burns uranium—was by today’s standards a poor choice. It was a VHS victory over several superior Betamax alternatives. Compared to other reactor schemes that are now poised for a revival, today’s production fission design has serious disadvantages. •

It produces a weapons-grade waste (plutonium) that requires careful and expensive storage and safeguarding.



When improperly maintained and sited (as at Fukushima), a conventional reactor can melt down and release dangerous radioactive material. The cores of three reactors melted down at Fukushima after a tsunami knocked out the power supply that drove their cooling systems.6 The combination of externally driven cooling in a zone exposed to tsunamis was devastating.



The waste and radioactivity make the conventional reactor a potential terrorist target.



Conventional reactors are inefficient at converting fuel to energy, adding significant cost.

As undesirable as plutonium waste is today, it was in demand during the atomic weapons buildup of the Cold War, helping the water-cooled uranium reactor win the day in the 1960s. The Cold War ended some time ago, but not before an entire industry and supply chain grew up around hundreds of such reactors. The entrenched interests of this industry have helped suppress better alternatives. That will change. The meltdown of the Fukushima nuclear reactor in Japan last March demonstrated the need for safer nuclear power. In fairness, the nuclear industry has a remarkably good safety record and has caused far fewer deaths than the fossil fuel industry.7 But the potential for disaster is significant. The Fukushima accident polarized the public’s nuclear sentiment. Some countries— most notably Germany—have since abandoned nuclear power. That’s the side of the story that makes headlines. Quietly though, other countries, especially China, are marching steadily along a nuclear path paved by radically different, safer, and less expensive reactor technologies than 4

International Atomic Energy Agency. http://www.iaea.org/newscenter/news/2011/nuclgrowth.html

5

International Energy Agency. http://www.worldenergyoutlook.org/docs/weo2011/key_graphs.pdf

6

WNA. http://www.world-nuclear.org/info/fukushima_accident_inf129.html

7

International Energy Agency. http://www.ieahydro.org/reports/ST3-020613b.pdf

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those operating today. In the United States, President Obama’s Blue Ribbon Commission on America’s Nuclear Future draft report in late July welcomed near-term improvements to conventional reactors, but pointed out that the longer-term hope lies in “‘game changing’ innovations that offer potentially large advantages over current technologies and systems.” 8 This report looks at the technologies that will alter nuclear power for the better. Almost all of these ideas date back to the 1950s and ‘60s, when for reasons including military stockpiling, the water-cooled uranium-fuel reactor prevailed. The incoming technologies include a uranium replacement called thorium, as well as a new idea for cladding and housing uranium that boosts its efficiency. We look at reactor designs including molten salt, pebble bed, fast neutron, gas-cooled and, yes, fusion. We also note that small “modular” reactors will secure a place, especially as users like the U.S. military look for off-grid power sources, and as industrial users look for new sources of process heat.

Disruptive nuclear innovators will unseat Old Nuclear. This report aims to illuminate who is poised to win, and when.

The back-to-the-future nuclear movement faces a tough fight against the status quo of large nuclear companies like Areva, Westinghouse, and GE Hitachi Nuclear Energy (GEH). But the industry is at an inflection point. Just as Skype and Google upended the traditional telecom, media and technology giants, so, too, will the nuclear innovators unseat Old Nuclear. Disruptive forces eventually win the day, if they have merit. Our report shines a light on some of those with the most potential.

Methodology & bibliography Interviews conducted by Kachan & Co. Flibe Energy, General Atomics, General Fusion, Helion Energy, Hyperion Power, ITER, Lightbridge, NuScale Power, Ottawa Valley Research, QPower, Radix Power and Energy, RARECO, Terra Power, Thor Energy, Thorium One International and others Secondary research sources AsiaOne | www.asiaone.com China National Nuclear Corp. | www.cnnc.com.cn China Quangdong National Nuclear Corp. | www.cgnpc.com.cn/n1093/n463576/n463598/index.html EMC2 Fusion | www.emc2fusion.org/ Energy FromThorium | www.energyfromthorium Focus Fusion Society | www.focusfusion.org Generation IV International Forum | www.gen-4.org Great Western Minerals Group | www.gwmg.ca/index.cfm International Atomic Energy Agency | www.iaea.org International Data Group | www.idg.com International Energy Agency | www.iea.org Lawrence Livermore National Laboratory | www.llnl.gov 8

U.S. President’s Blue Ribbon Commission on America’s Nuclear Future http://brc.gov/sites/default/files/documents/brc_draft_report_29jul2011_0.pdf, pages xi and xii.

Emerging Nuclear Innovations © 2011 Kachan & Co. | www.kachan.com

Lawrenceville Plasma Physics | www.lawrencevilleplasmaphysics.com Lynas Corp. | www.lynascorp.com NASA | www.nasa.gov Next Big Future | www.nextbigfuture.com Nuclear Threat Initiative | www.nti.org President’s Blue Ribbon Commission on America’s Nuclear Future | www.brc.gov Red Cross | www.redcross.org Renewable Energy World | www.renewableenergyworld.com Reuters | www.reuters.com Socaltech | www.socaltech.com Thorium Energy Alliance | www.thoriumenergyalliance.com Wikipedia | en.wikipedia.org World Nuclear Association | www.world-nuclear.org

This is an eight page excerpt of a 64-page Kachan report on Emerging Nuclear Innovations. The complete version is available for purchase via credit card for immediate download at www.kachan.com, or by calling 415-390-2080. Purchase orders accepted for invoicing and payment by check/cheque or wire transfer.

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Emerging Nuclear Innovations - Kachan & Co.

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