Video: Terrestrial Energy Inc.’s Hugh MacDiarmid’s speech at the Economic Club of Canada

 In Company News

September 24, 2014

Video: Terrestrial Energy Inc.’s Hugh MacDiarmid’s speech at the Economic Club of Canada

Full Transcript of Hugh MacDiarmid’s speech at the Economic Club of Canada:

NUCLEAR: THE INNOVATION IMPERATIVE

“Today, I stand before you as a man on a mission:  to inform and to educate; to broaden awareness; to generate some excitement about something that just might lead the next generation of innovation in nuclear technology: the Integral Molten Salt Reactor.

I believe we at Terrestrial have something special, and I hope you will leave here shortly at least curious, if not convinced.  And, that you will have some appetite to learn more.

I’m the talking head today, but I am joined by a number of my Terrestrial colleagues, including David LeBlanc, who is truly the architect and visionary for our technology. 

I want to present three key messages in my remarks today.

First, it has never been more important for there to be true innovation in energy technology than is the case today.  The challenge is immense but is outweighed by the importance. 

We are facing ever higher growth in energy demand.  At the same time, we have significant issues with basically every option today for the supply of energy.  The global fleet gets older every year and we need to handle market growth as well as replace existing capacity as it reaches the end of life.  The size of the upcoming gap between energy supply and demand is staggering.  And, there aren’t enough good answers in the existing range of supply alternatives. 

Innovation will surely come and it will be disruptive.  Joseph Schumpeter once famously described capitalism as a “perennial gale of creative destruction”, and we will see the inexorable movement forward into the next generation.  The change may be swift, a large step-change in innovation as market need hits that critical level.

My second point:  The Integral Molten Salt Reactor, the IMSR, could be one of the answers to this supply gap – surely not the only answer; we’re not so ambitious as to say that we will take over the world – but we do think there are good and solid reasons that this laboratory-proven Gen IV technology will grab a significant foothold in the markets of the future. 

We also think that future may arrive sooner than you expect.  I want to explain why I think this is the case.

My third point: This is a tremendous opportunity for Canada’s nuclear community.  We want to be the home country of the Molten Salt Reactor wave.  We intend to design and license our technology right here in Canada.  We intend to build the first demonstration unit in Canada.  We expect to build industrial partnerships in Canada that will create new business opportunities for us all.  We can build a very robust export-oriented business model that will be a source of pride for all Canadians.

I have a lot to say and want to say it all in less than 25 minutes, so let me dive into the three key messages in turn. 

Low cost and accessible energy supply is linked to living standards and quality of life.  Higher standards of living make appliances and devices more affordable; emerging nations are craving all the gadgets and conveniences of the developed world. 

Per capita electricity consumption in the most developed nations, the countries of the Organization for Economic Cooperation and Development, the OECD, is 4 ½ times greater than in the rest of the world.  In Canada, our per capita electricity consumption is over double the OECD average and 9 ½ times the non-OECD world.  There are over 5.7 billion people who want to close that gap.  They want what we’ve got.

I’m sure I don’t need to make the case with this audience that demand for transportation fuels and for electricity will outpace the underlying growth rate in the global economy.  There will be conservation efforts to be sure, but the overwhelming demand growth is coming from outside the core OECD markets and will dwarf any efforts to moderate demand growth in the OECD. 

The environmental movement is another force to be reckoned with that will drive innovation.  I won’t dive into that debate here, other than to say that the competing philosophies will continue to drive the agenda forward and it seems logical that any new technology that can lessen the environmental impacts of energy production will have a ready market opportunity.

On the supply side, we have more issues and obstacles than we have solutions.  Coal is not acceptable to today’s social norms for environmental protection, and the coal industry’s response, carbon capture and sequestration, is both expensive and unproven.  Coal plants are being built in China and India for the simple reason that they can’t ramp up nuclear fast enough to meet demand growth.  

Natural gas is certainly the current favourite in North America, but cracks are starting to appear in the hydraulic fracturing story (forgive the play on words) in terms of depletion rates and environmental opposition, making a bet on natural gas today highly risky in terms of long-term fuel cost. 

In Canada, we are blessed with massive hydroelectric resources, but most observers feel we are approaching the limits of exploiting the available footprint.

The primary standard-bearers of renewable energy are wind and solar.  They continue to benefit from government policies to subsidize these energy sources as a kick-start to innovation and eventual commercial viability.  I’m not objecting to this current state of affairs but I think the jury is out on these energy supply alternatives.   

There is no evidence, that I can see, of competitive cost or scalability, which is the global market need; there simply isn’t enough land or enough sunny days or grid flexibility to accommodate supply intermittency.  There is no evidence that renewables can make the BIG difference to the BIG energy problem we have.

Conventional nuclear continues to operate in a parallel universe, with those of us who are insiders firmly believing in the rightness of our cause while the rest of the world sees only issues of safety, management of long-term wastes, and the costs and financial risks associated with construction of new capacity or life extension of existing capacity. 

We need to change that narrative.

The response of conventional nuclear has been the introduction of Small Modular Reactors.  It is clear, though, that something is missing from that formula when we see deferrals and cancellations of key programs.  I am not here to bash today’s nuclear technology.  Much more can be accomplished and surely many more Gen III+ reactors will be built, including Candus.  At the same time, it is clear that today’s nuclear industry has not cracked the code on social acceptability, due to safety and waste management concerns, and has not earned the confidence of the financial markets due to costs being both high and uncertain.

The current state of the art in energy production has an absence of supply choices without serious externality issues.  It is this absence that creates the compelling opportunity for true innovation.  Fundamentally, there are four core criteria:  cost, safety, practicality, and environmental stewardship.  Truly disruptive innovation will make a difference on all four dimensions. 

While the West talks of energy efficiency, the developing world talks of energy scalability and cost.   This is the crux of my message today:  that there is a global market imperative for energy innovation – innovation that can underpin the transformation of our world into one with greater economic opportunity and quality of life for all.   That is the aspiration of 5.7 billion people, over half of whom are in the BRIC nations.

My second key message is about molten salt technology.  At Terrestrial Energy, we believe we can change the way the world thinks about nuclear energy.  We believe that molten salt reactors in general, and our Integral Molten Salt Reactor in particular, offer answers to the most challenging questions surrounding nuclear energy today; and that, with those questions addressed, we can begin to realize the inherent potential of nuclear as carbon-free, highly reliable, low-lifetime-cost power.

So, what is a molten salt reactor and how is it different?

Generically, it is a reactor system that uses a liquid fuel. This is a fundamental difference.  All others use solid fuel.   The fuel of a molten salt reactor consists of a molten salt mix that includes a fuel salt – in our case, uranium.  This salt mix generates heat from the fission process under the right controlled conditions.  Salt has a much higher boiling point than even highly pressurized water, so the MSR can generate outlet temperatures approaching 700 degrees Celsius compared to just over 300 degrees for a conventional nuclear plant.  And it does that at atmospheric pressure.  This avoids many of the engineering challenges and added costs associated with large pressure vessels or pressurized fuel channels, as in a Candu.

We know that the MSR works in a lab; this was demonstrated very clearly at Oak Ridge National Laboratory for a number of years.  But it must work in the environment of private industry, where regulations, costs and commercial considerations drive decisions.   It needs to be manufactured with materials from existing supply chains.  It needs to be fueled with currently available nuclear fuels.  It needs to be built for market needs and not become a science project to showcase a concept.  In short, it needs to pass the test of commercial viability – and we believe our IMSR does pass that test.

It is here at the interface between the lab and market that we as a company have made our most important innovations. 

One key innovation is the integration of primary reactor components (the moderator, primary heat exchanger and pumps) into a sealed reactor vessel within a compact and replaceable module, the IMSR Core-unit.  The replaceable core-unit concept, unlike any other reactor design, leads to the properties that create high industrial value:  passive safety, operational simplicity, and lower cost.   

We have chosen graphite as the moderator. It is the only known unclad moderator for use in a MSR, and its use in molten salt reactor systems is well understood.    Graphite has a limited life in a reactor core, as I’m sure many in the audience know.   However, this is not principally a technology issue but an economic one.  The question is, “Can the capital value of a sealed and replaceable vessel, with primary components, including its graphite moderator, be recovered over its limited life at current energy prices?”  From our estimates, the answer is yes.  It is handsomely recovered over the seven-year operational life that we estimate for the IMSR Core-unit.   

The economics of our IMSR are very compelling:  low capital costs and low operating costs – overnight capital costs comparable to a fossil fuel power plant and operating costs that are a fraction of conventional nuclear.  Uranium consumption per kilowatt hour will be one-sixth of Conventional Nuclear.  Our estimates indicate that the IMSR will demonstrate the lowest Lifetime Cost of Energy of any known technology, and by some margin.

With cost advantages come scale advantages as well, and that is important in our grid-challenged world.   The IMSR meets the accepted definition of a small modular reactor.  Its components, most importantly the IMSR Core-unit, are modular and transportable.  They can be manufactured at a central production facility and can be transported to plant site on a flat-bed truck or by railcar.  As a result, replacing Core-units can be done with minimal operational disruption; this preserves high utilization factors.   IMSR technology is scalable, though, so our vision includes larger reactor designs that will be sized to meet the needs of both power generation and industrial process heat applications.  Think oil sands.  Think mining.  Think desalination.  Think petrochemicals, potash and ammonia production.

But we should not solve the market need solely through the prism of economics.   As I mentioned earlier, nuclear needs a new narrative with Main Street for site licenses, for energy planning, and for public policy support.  In this parallel arena, we have also innovated and have a new and fresh message, one based on passive safety and viable waste management.

As I mentioned earlier, the IMSR, and Molten Salt Reactors, in general, are entirely different reactor systems and, as such, have fundamentally different risk profiles.  It is risk profiles that drive engineering requirements and costs.   Molten Salt Reactors display excellent natural properties for decay-heat management and we have designed the IMSR to make the most of these properties.    As such, the IMSR offers the possibility of passive safety rather than engineered safety – the IMSR design offers a “walk away safe” level of assurance:  zero operator intervention, even with a total loss of site power.

The IMSR has a much smaller and relatively short-lived waste footprint.   It burns its nuclear fuel far more completely and generates power with higher thermodynamic efficiency than solid fuel reactors.  Together this leads to creation of only one-sixth of the long-lived Transuranic fuel waste (essentially, plutonium) per kilowatt hour compared to the nuclear plants we have today.  As those in the industry know very well, it is the long-term management of Transuranic fuel waste that is the most vexing waste management problem today – and we believe we address it convincingly.  We can also make the statement that the IMSR will generate 30% less fission products per kilowatt hour, another challenging waste stream to manage but with a shorter time horizon.

IMSR spent fuel recycling, which we believe will be commercially viable and achievable before 2030, offers the prospect of virtually no long-term Transuranic fuel waste from IMSR power generation.   This future prospect simply does not exist for today’s reactor systems that use solid fuels.

Although we have chosen to use low-enriched uranium as a fuel, we also have the possibility of using existing spent nuclear fuel as an IMSR fuel source – this is a branch of the waste disposal business with extraordinary “tipping–fees” and could be an interesting business by itself.  For us, spent nuclear fuel is an attractive fuel source.

No comparison is ever perfect, but the relative scale of our transportable core-unit compared to two well-known SMRs is indicative of the size advantage of the IMSR. The nuclear island is clearly smaller, as the energy conversion efficiency and the ability to operate at atmospheric pressure bring many engineering advantages.  The IMSR will be a much less expensive machine to build and operate – period.

The ability to access new industrial markets is a key to our commercialization strategy.  The higher outlet temperature opens up many new industrial applications that are not viable for conventional nuclear.  We believe that the industrial heat market could become even larger for the IMSR than power generation.  That’s quite a claim, but we believe it.

So, when we examine our reactor design against the four key criteria I mentioned earlier – cost, safety, practicality and environmental stewardship – we believe we truly have the potential to change the way the world thinks about nuclear: 

  • lowest lifetime cost;
  • high passive safety;
  • scalability;
  • use in industrial process heat markets, not just power;
  • small plant footprints;
  • grid and water independence, and;
  • a dramatic reduction in the magnitude, toxicity and longevity of the waste stream.  

This is clearly a new message for nuclear and a new message for civilian energy provision

My third key message is about the opportunity for Canada.

We will launch the IMSR right here in Canada.  We will enter the pre-licensing Vendor Design Review with the Canadian Nuclear Safety Commission at the earliest opportunity.  We have completed our Pre-Conceptual Design Report – the essential first step – and are gearing up our team to engage with CNSC staff.

We want to build our first demonstration unit, an 80 megawatt thermal reactor, in Canada.  A key activity in our next phase of operations is to identify the best site and to establish a working partnership to launch the site license application process.

Very importantly, we want to build a Canadian supply chain.  We fully expect that our manufacturing facility will be in this country.  We believe that the Canadian nuclear supply community has all the capabilities we need to be world class.

We will locate our headquarters for the design team in Canada in a location that affords us access to the best engineering talent we can find .

Last, but not least, we will raise our investment capital as a Canadian-based company and hope that we will find strong investor interest in this country to make it truly a “made in Canada” success story.

Let me express a few important “thank you’s” before I close.  I would like, first of all, to thank Phil Henderson, Glenn Zacher and Jim Harbell of Stikeman Elliott for agreeing to be our title sponsor for today’s event.  They are supporting our efforts in many ways and this is one more.

The Economic Club of Canada has established a brand that has become the podium of choice for speakers who have an important message to give, and I thank them for this opportunity.

I am delighted to see so many familiar faces, so many old friends from the nuclear industry.  It’s a small club with a strong network.

I want to recognize Ron Oberth and OCI, and John Barrett and the Canadian Nuclear Association, for the roles they play in promoting the nuclear industry in Canada.  We need every ounce of their energy to sustain the mission to promote clean, safe and reliable power generation.

Lastly, I also want to acknowledge the role of Henry Vehovec of Mindfirst and his Future of Nuclear initiative in connecting me to Terrestrial Energy.  At one of Henry’s events late last year, I ran into Rob Bodner, a former AECL colleague, and he pointed me toward Terrestrial.  Rob has now put his money where his mouth is by joining our team.  The network does work…

I want to close by restating our corporate vision and mission statements.  They tell our story very succinctly.

Our vision is: to change the way the world thinks about nuclear energy.  We want to shift the narrative to an aspirational level.  We believe that nuclear energy can realize its potential for safe, sustainable, reliable and emission-free energy. 

Our mission is simple:  be first to market with a machine that meets the commercial demands of the marketplace by virtue of innovation in design that produces a simple and low-cost solution to the energy needs of our world.

The world is changing.  Voters – as we saw earlier this week in New Brunswick – are turning their backs on technologies that they believe pose a risk to their environment.  This is not lost on the world leaders who gathered at the UN yesterday.  Public policy has been moving, and will continue to move, in only one direction – rewarding carbon-free alternatives and making it tougher for the others.  We believe Terrestrial Energy is well placed to benefit from this changing world, and to contribute in a positive way to a brighter energy future.

Thank you very much.

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