Accelerating Advanced Nuclear Energy with Oklo’s Jacob DeWitte

What do you mean when you say you’re building on existing government research and nuclear technology?

We’re focused on bringing small, fast reactors to market. What I mean by “small” is 15 megawatts of electricity. What I mean by “fast” is a liquid metal cooled fast reactor that looks pretty similar to a number of reactors that have been built and operated around the world. The most notable one is in Idaho and was called the Experimental Breeder Reactor. That ran for 30 years and proved out some of these amazing inherent safety characteristics and even the ability to recycle used fuel. So that sort of set the stage for us there and allowed us to become the tip of the spear for advanced vision commercialization. We have a site use permit from the Department of Energy, a lot of regulatory traction, and fuel allocated in order to operate this kind of reactor.

What changed in the late 2000s that made you believe that an advanced nuclear energy startup was finally viable after decades of nuclear energy companies failing to deliver on projects?

It was a combination of factors. One of the interesting parts of the nuclear space is the ability to build on a lot of proven technologies and avoid that fundamental technology risk. We’re not trying to use a bunch of materials that haven’t been demonstrated or things like that. All of these technologies have been–to be quite frank—quite common in the nuclear industry historically. The timelines to develop fundamental new things are quite long, it’s expensive to do it, and sometimes the benefits turn out not to be worth it. So instead, we’re trying to focus on what’s been done before, but figuring out a way to do it that’s actually approachable from a cost and private market financing perspective. 

At a macro level, there were also significant changes occurring in the late 2000s and ramping into the early 2010s. There was significant support from a lot of leaders in the energy and climate spaces for advanced next generation nuclear technologies as the foundation for any strategy that wanted to mitigate climate change through deep decarbonization. So that created a positive policy environment that stimulated these kinds of things. 

A lot of this was happening while I was an undergrad and I remember thinking how cool it was. It was like a breath of fresh air because before there wasn’t a lot of receptiveness in the policy space for this kind of thing. But the DoD and NRC were becoming more aligned to work with industry and understood that there would be new entities, new companies, and new players. That was a major departure from the way things were done before in the nuclear space. 

One of the major drivers of that change from the government was a program called the Gateway for Accelerated Innovation in Nuclear. It was designed to help private industry with federal research and development capabilities at our national laboratories, and it sort of catalyzed a partnership mindset in the government space that was much more supportive. 

On top of that, there was a lot of evolution in terms of early stage hard tech funding that was starting to occur at the time. I attribute that to a number of factors, but I think it was largely a mix of recognizing the value–both literally in terms of potential return and from a societal perspective–of investing in technologies that are climate-related hard tech. So that stimulated a reinforcing feedback loop where high-net-worth individuals were driving this support with some visionary, early stage venture capital. They started by writing smaller checks, but then that started to scale and more institutional investors started recognizing the potential here. 

We also saw markets evolving on the energy side. They started moving increasingly toward renewables and independent power production. That embrace of decentralized or distributed generation supported many different kinds of business models than the conventional model of selling reactors to utilities. That was the big thing for us and an important enabler for us to get new customers, especially at the size of reactor we’re offering. 

Why do you think smaller advanced nuclear systems have a market advantage over larger legacy systems?

It’s a smaller system so it’s going to cost less money overall. That’s especially true if you’re building on what’s been done before. This is different from legacy systems because in that case you’d need a couple of billion dollars to actually build your first product. Instead, we’re talking about the tens or low hundreds of millions of dollars from start to turning these reactors on. That’s just a very different space to be operating in. What we’re doing isn’t the typical business of selling a big nuclear plan to a big utility that has experience with them. Instead, we’re selling it to people who don’t want to own an asset. They want to buy power from it. So now you can replicate models that were successful elsewhere in the renewable space through power purchase agreements and things like that because this is a dispatchable system. It’s 24/7 power, but you can control that output so it’s different from other renewable systems in that sense. 

Have the regulatory winds shifted in terms of creating a favorable environment for advanced nuclear systems since Oklo started?

I think it’s only accelerated, especially in the past 24 months. I feel like we’ve hit an inflection point of recognizing the value of energy security and decarbonization that is provided by nuclear. That is partially, if not largely, in light of Russia’s invasion of Ukraine. It created an environment where people want to see these things get out the door. 

What are the challenges of venture financing for companies working on highly regulated and technically challenging products like an advanced nuclear reactor?

 It definitely has some challenges, especially now. The world is a different place than it was 2 years ago. I think the challenge with the venture system as a whole is that most venture operates in a way that follows others, right? They’re not often leaders despite what they like to think. So that means they want to see other people putting money in the space and as more investors do that they start to invest in that area, too. Obviously this is a large–if not the largest–fundamental market. You’re tackling energy as a whole. So there’s a lot of space for a lot of players in here. What’s needed is more folk writing checks that drive more folks to realize that they need to have portfolio companies in the advanced nuclear space. That’s a slow process. 

But I think you’re going to see more appetite for these types of nuclear companies because there are some interesting fundamentals from a business perspective. For example, you don’t really have market risk. It’s more about making sure that you can develop and find the business model to most efficiently build a company. So venture financing is still a really useful model there. The challenges are often around timelines, but I think in the future that will be alleviated by more LPs demanding investing in things directly tied to decarbonization and societal progress more generally. So I think that will accelerate investments. 

I also think that different business models for nuclear companies that are more cash efficient that historical approaches in the industry have been will be helpful as well. At the end of the day, it works better for everyone. That said, I think there’s a tendency for venture to be a little timid in this space because of either a lack of knowledge or willingness to roll up their sleeves and understand the regulatory side of things. I think there’s a decent return to be made for investors that can understand that side of things. There’s a tendency to be very simplistic and buy into the story that the NRC can’t license anything. It’s a catchy narrative, but I think more and more folks are starting to recognize that isn’t what’s really going on. 

One of the things I’ve noticed is that later stage investors are often better suited to understand these kinds of regulatory challenges and long timelines. But then there’s this weird split where some later stage funds will be like “you’re not really a later stage company, so it’s not in our wheelhouse,” and then others are like “hey this is a chance to get you discounted before your revenues and that works for us because we’re confident you’ll hit the right milestones. But it’s constantly evolving. 

How can we change federal regulations to be more favorable to nuclear innovation?

I think there are a couple of ways this could play out. One is that I truly think hearts and minds have been changed. That’s already in place. We’ve passed bills with massive bipartisan support that are changing regulators’ minds. But I think the tendency is that we pass a bill and expect it to fix everything. The NRC is a dynamic organization that’s constantly changing. The industry is dynamic and constantly evolving, too. So we have to be smart about what we do here. What I mean by that is we have to be willing to iterate. We have this really cool moment of opportunity from a policy perspective to recognize where industry is going and the ability to unlock some of these technologies. 

There are, I think, the need for some foundational or wholesale changes, but I think there’s also the need for a number of changes that can be an on-ramp to that from the regulatory side. For example, a big thing is management and staffing issues. A lot of people at the agency don’t recognize that historically their mission is not to say no to everything but to enable nuclear power. There are ways from a management oversight and legislative perspective to drive people to understand that. Going further, it would be helpful to recast the purpose of the NRC as helping support and pioneer these changes in the nuclear industry. That one is probably a little trickier. 

A starting point is to align the NRC to provide support throughout the entire agency so they can determine what radiological materials are adequately safe for the public while recognizing all of the other benefits that come from these advanced reactors. Those kinds of things often aren’t very well accounted for by the NRC either implicity or explicitly. I think it would help to give the NRC far more support staff to help with the technical analysis and reviews. 

What does the regulatory process look like for a company like Oklo?

What it looks like when you submit an application is you’re submitting your design for your technology, showing how it behaves and how it is safe by analyzing it against a number of very challenging but nonetheless plausible scenarios. You’re trying to show that you’ve engineered the system so thoroughly that it doesn’t pose any undue risk even in extraordinary circumstances. The way regulators look at that is largely procedural and they’ve mostly looked at these proposals in the context of light water reactors. The problem is that the process doesn’t extend well to next generation systems where you have high degrees of inherent passive safety. The system is basically “physics safe.”  If something destroys the cooling procedures during operation, the system will heat up and thermally expand, but that expansion actually shuts the reactor down by causing more neutrons to leak out of the reactor than are staying in it. So there’s this natural feedback that cause you to shut down that is based on physics. You’re always able to stay cool by the natural circulation of the coolants. These are all well-known and understood in operational contexts. That presents an opportunity to look at these things fundamentally differently from a regulatory process perspective. 

At Oklo, we’re really at the tip of the spear on this. So there’s a lot of newness here. So right now there are a lot of opportunities for the NRC staff and agencies to look at these things more organically and enabling this stuff. Empowering staff to do that would be worth a lot. But because it’s a lot easier for them to do things as they’ve done them before, it adds a lot of inefficiency given the inherent differences between legacy and advanced nuclear technologies. So it’s much harder for them to stick their neck out and do something more efficient and modern that’s appropriate for the technology. If you actually align those things, that’s going to help a lot because you’re going to enable smart, technical, capable people in the agency to do their job. 

I think there’s another aspect to this which is how to intercede bills. The NRC itself collects basically 90% of their total budget from industry. They basically bill at $280+ an hour for every interaction you have with them as a company. That means the price to do anything is relatively high. In the grand scheme of things, it can be totally manageable, but if there were ways to modernize that and make it more efficient, that would be great. There’s a lot of appetite to modernize the NRC’s fee structure. At the end of the day, I think it’s better to have the NRC more like what we see in other spaces where the regulators collect fees, where it’s closer to 50% rather than 90%. 

Anyway, those are the important areas where I think we can lower the costs to get to market as well as lowering the timeline. We need to recognize that these things can be done faster. It depends on what you’re trying to do and how you’re trying to do it, but there are process improvements for ways we can look at commercializing something. If you’re trying to do something that’s fundamentally brand new, it should be easier to build very small prototypes. Right now it’s very difficult. It’s basically no more difficult to get a license for a first commercial power plant than to get a license for a small test reactor. The NRC and DOE have regulatory oversight opportunities to look at these things more efficiently. There’s a lot of room to improve how the NRC scopes, how much time they need to evaluate something, and how they evaluate risk. There are some structures in the NRC that are antiquated and no longer relevant.

Oklo just began the regulatory process for a pilot plant to recycle nuclear waste into nuclear fuel. Is the future of advanced nuclear going to see more vertical integration like this?

It’s a next step for what you need to do to control some of the most important things. Moving into fuel fabrication and development is something that is natural for the industry as a whole. GE, Westinghouse–they all make fuel for their reactors. It’s a natural extension because you control the most critical element of your supply chain. We’ve been working on this for a long time. We’ve built partnerships with national labs and commercial companies that have relevant experience so we’re able to develop what we need from a fuel fabrication perspective. At the end of the day, that’s going to be important to the business for controlling costs and supplies. Getting further into the verticalization in terms of sourcing the actual material our systems use is what enables them from a technological perspective. Fuel is one of the biggest and most important items for us. So the more we can do to control that, the better off we’ll be. This is also compounded by the fact that Russia was one of the producers of enriched uranium at these levels and now that’s obviously not on the table. So the best way to tackle this is by spinning up domestic capabilities because there’s going to be limited capacity for some time.