What Climate Tech is Overhyped and What’s Not

(Bloomberg) -- There's always big ideas in the climate technology space, but it can be hard to get your head around all the different types of technologies making waves. What’s real and what’s low-carbon smoke and mirrors? This week on Zero, Akshat Rathi teams up with venture capitalist and Catalyst podcast host Shayle Kann to talk about which climate technologies are working, and which are going nowhere.

Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday. 

Our transcripts are generated by a combination of software and human editors, and may contain slight differences between the text and audio. Please confirm in audio before quoting in print.

Akshat Rathi  0:00  

Welcome to Zero, I’m Akshat Rathi. This week: Hyped just right?

Whatever the mood on climate these days, there’s always big ideas in the climate tech space.

But it can be hard to get your head around all the different types of technologies making waves, and to separate what’s real and what’s low-carbon smoke and mirrors. 

So this week I’m teaming up with Shayle Kann to play a game of Overhyped, Underhyped or Hyped just right. 

Shayle is a venture capitalist at Energy Impact Partners. This episode is a collaboration with the Catalyst podcast that Shayle hosts and where he interviews tech experts about decarbonization. 

Together we’re going to talk about some of the climate technologies that are working, the ones that are going nowhere, and some that we can’t wait to see reach their full potential. 

Akshat Rathi  1:05

Shayle, welcome to Zero.

Shayle Kann  1:07  

Thank you, Akshat, welcome to Catalyst.

Akshat Rathi  1:09  

Well, this is a different kind of podcast, and we're making it across an ocean, but with similar politics in the background.

Shayle Kann  1:20  

Yeah, maybe. I have a question for you. You're in London, right, and you work for Bloomberg Green. And one thing that I have found is that in the US places where ‘green’ or ‘clean’ or ‘climate’ is in their name, have been having an interesting set of discussions around nomenclature. Is that true for I mean, Bloomberg is obviously based in the US, but so I'm curious how you see it from the Bloomberg perspective, high level, but also in the UK and in Europe? 

Akshat Rathi  1:51  

Yeah. So Bloomberg News is a global news organization, but yes, it is US headquartered. I would say there isn't that much muzzling of terms as it's happening in the US government, but there's certainly a backlash on the politics here. So there is a party called the Reform Party that's on the rise over here, doing better in the polls than the main two parties — Labour and Conservatives — and they are against net zero. So we are usually a step behind America, but then eventually catch up.

Shayle Kann  2:24  

Well, in this case, I'm not sure I want you to catch up, but let's see what happens. All right, so this is going to be fun. What's our plan here?

Akshat Rathi  2:33  

So we're going to do something different, where we're going to go through a number of topics that our producers have selected, where we're going to say whether we think it's underhyped, overhyped or hyped just right, and explain our positions for why we think so. Let's start with meeting load growth for electricity, which is a hot topic everywhere. But specifically within that, what do you think about distributed energy resources? What are they and where do you land?

Shayle Kann  3:03  

So distributed energy resources is a grab bag category of a bunch of different things. I would say. The way I define it is anything that you deploy at a customer site. So it's sitting behind the meter, the customer side of the meter that either generates energy, stores energy or shifts load. So a canonical example that generates energy, think rooftop solar. Stores energy: think power walls and batteries, home batteries, batteries of buildings. Shifts load: think smart thermostats, right where you can shift it. And there's a broader array of things that fall within that, but get grouped together as distributed energy resources (DERs). On the question of DERs for meeting load growth, which is the question here: is it overhyped, underhyped, or hyped just right? I think my argument here would be in in the circles that I travel in, which are pretty wonky energy tech circles, it's becoming increasingly hyped, because we're just starting to see this wave of announcements that are inexorably coming where there are going to be partnerships between hyperscalers or data center operators and third parties who do aggregations of DERs to deliver capacity to get data centers on the grid and things like that. That's coming, no question. And so it's starting to bubble up into the hype world. But I think that my world is a pretty small portion of the world, and broadly, I think even in the data center universe, it has not really been considered very much yet. Like mostly it is, we're going to build a data center, can we get grid capacity? If not, can we build a big gas turbine? And so my argument is, because of all that, it is still underhyped as of today.

Akshat Rathi  4:47  

Yeah, that's an interesting perspective, I would say, in my world, which is a little bit broader, because I talk to policy folks and I talk to big businesses, and I talk to VCs, is that it actually used to be more hyped, because it was one way in which everybody was justifying having all these big renewables goals being set up. Because, look, don't worry about it, I know it is variable, but we'll have these technologies that are just going to come online within the next few years, and they'll make it easier to manage this variability in renewables. At that time, it was pretty hyped. Now, I would say it's underhyped, because it's not something people talk about that much, but those solutions are actually starting to bubble up. So we had the CEO of Octopus Energy, which is the largest utility here in the UK on the pod, and this year, they've launched a BYD lease program where you can just pay monthly to get a BYD electric car, and they would give you 12,000 miles of free range in a year, as long as you make sure that you put your car into the charging port whenever you're home, because they'll use the car for a virtual power plant, essentially. That sort of thing is now becoming very frequent. Like I get text messages from Octopus Energy saying, ‘hey,12pm to 2pm today, free electricity, use all you want.’ And so I feel like now those technologies are here and they can actually be put to use. And so they're kind of under hyped, because you could actually now see those things out there.

Shayle Kann  6:24  

Yeah, I think that DERs are in a second wave now, right? Like, I've talked about this before on the pod, but there was a wave of excitement around DERs, which I think is what you are referring to, maybe a decade ago. And at that point it was like, ‘Oh, we're going to decentralize the grid, and maybe this is going to disintermediate utilities.’ And none of that happened. But I think what is interesting, that's different, is the frame of the question here, which is, is it overhyped, underhyped, or hyped just right for the purpose of meeting load growth? And that was not a thing we cared about a decade ago when DERs first emerged. So I think this second wave that we're seeing now of DERs as a solution to managing load growth is interesting. It's one of the things that makes it more attractive now, alongside a bunch of other factors, as you mentioned, like the rise of EVs and EV chargers as a significant source of capacity is another one. Okay, so we're on the same side here. We both think it's currently underhyped. Let me ask you another one that I've talked about a little bit before on this pod, which is putting co-location with generation. So basically putting generation — largely gas — on site with data centers. Is that, as far as meeting the load growth challenge, do you think that is overhyped? underhyped or hyped just right?

Akshat Rathi  7:40  

I think it is hyped because I have been reporting on gas turbines, which are currently, as my editor put it, the Labubu of climate solutions. 

Shayle Kann  7:55  

I get it, that seems right.

Akshat Rathi  7:57  

They’re very high in demand, and there's a year's waiting list before you can get the one you want. And so sure, you know, in principle, if you could get a gas turbine, you would build it close to where the data center is. But can you even get a gas turbine? 

Shayle Kann  8:15  

Yeah, there is that. So you think it's hyped just right? Because it is a thing that would happen a lot, but the supply chain bottleneck is the rate limiter. I think that is generally true. I do think, as I've talked about a little bit before on my pod, I think it is a little bit overhyped. Not to say that we don't need a ton of new generation and not to say that we don't need a ton of new capacity on the grid, but the degree to which that capacity needs to be co-located with the data center, to me, is a little bit overhyped. We will see it happen. It's already happening in some places, right? You're seeing this in the US. We have the X-AI Colossus data center that has a bunch of gas turbines. Meta is building a big facility that's gonna have a bunch of gas, and a number of these projects will. But I think it's going to end up being the minority of new data centers, not the majority of new data centers. I think the implications from what you would see in the news is that every new data center is going to come equipped with a bunch of gas turbines. Again, not to say that we won't build a ton of new gas generating capacity, I just don't think it's all going to be co-located with the data centers.

Akshat Rathi  9:23  

I mean, the reason we are bringing this up is because building the grid has been so hard, right? The goal would be with co-location you don't have to wait for a grid connection to come through before you can build your data center. And sure, if you can pay really high prices for the gas turbines, which some tech companies can, then you might be able to do it, but most places won't.

Shayle Kann  9:47  

There's also an interesting embedded question in that too, which is, at some point, will costs matter? Actually two questions, at some point, will costs matter, and at some point will uptime not matter quite as much, right? Because if you have the same uptime requirements for your AI data center as cloud data centers have historically, and you want to front run your grid connection by installing generation, you can't just build gas turbines, right? You have to build a lot of infrastructure, because you have to have really, really high reliability. So you're going to build your gas turbines, you're going to oversize some batteries. That's going to be really high capex. You might add, you know, additional layers to your UPS (uninterruptible power supply) system. There's a lot that you would build, and that comes at a real cost. Now, where we are in the cycle right now, you know, the reality is that the total embedded energy cost in compute is small compared to the capex of everything else, but mostly the chips. So maybe energy cost doesn't really matter, even if you're deploying a bunch more capex into that stuff. But there's an interesting question of will that ultimately matter? Which would dictate the degree to which this equation of speed to power versus cost of power shifts a little bit. I think inevitably it will shift. I just don't know when that is.

Akshat Rathi  11:06  

There's also the chance that these guys would go and build the power capacity where the grid connection is available, which there are many parts of the world where there is grid connection available. So, yeah, I think it is a little too hyped with co-location for data centers. Some will get it, but most people won't. Let's come to the next topic, which is following on from trying to build the grid. Here at Zero, we've done a series called bottlenecks, because we are seeing these bottlenecks to build the grid, especially in Europe and North America, show up in so many places. There's so many bottlenecks that it's not just about permitting and politics, but about actual objects. So where is generating capacity on your hype meter?

Shayle Kann  11:56  

On the hype meter as a bottleneck, right? So the question is, basically: overhyped would mean we're too worried about it. Underhyped would mean we're not worried enough about it. I think that the long lead times for gas turbines in particular is very well established and reported and understood by everyone, which, I guess, argues that it's hyped, because people do appreciate that. That is a real challenge, though there has been a lot of good data to suggest that generating capacity in the next few years is not the dominant bottleneck. Like there is enough capacity in enough places to deliver the kind of load growth for the next few years that the grid will need. So I think this will get to the next one where I think there is a real concern, but I would say generating capacity, to me, might be a little bit overhyped. The queues are long if you want to build new gas turbines, but I don't think that is going to be the rate limiter on load growth, at least through 2030.

Akshat Rathi  13:05  

I think that is right. We spoke to a utility CEO, the NextEra Energy CEO in the US, who said, ‘if gas turbines are going to be that expensive, that's just going to make solar plus batteries so much more attractive, and we'll build those instead.’ So there is certainly no reason to think all forms of generating capacity are in a bottleneck. And so all sorts of other things could be built. But there are other challenges in bottlenecks which are much more severe to me that we need to worry about.

Shayle Kann  13:41  

So that maybe gets to the next one, I think, which is transmission, deliverability, basically, is the way to put it. Do you think that is overhyped, underhyped as a bottleneck?

Akshat Rathi  13:51  

I think it's super underhyped. Let me give you a European example, which is that the Netherlands has 12,000 businesses waiting for an electricity connection. Companies like ASML, which is the Netherlands biggest company, most valuable company, isn't able to build an extra factory because it cannot get an electricity connection for the next few years.

Shayle Kann  14:17  

And is the Netherlands in the same situation as the US, where we just basically stopped building new transmission lines years ago? Not zero, but effectively zero for the past few years? Is that the situation in Netherlands, or in Europe in general? Or is it different there?

Akshat Rathi  14:35  

No, it's not that severe, because a lot of European countries are interconnected, and they have been building more interconnections between them. It's more that there are places around Europe where there is more generating capacity and there are demand centers which are typically further away from those generating capacity that aren't getting the power supply as it's needed. So the transmission hasn't been able to keep up with the demand that is showing up.

Shayle Kann  15:07  

And maybe I should know better, but I don't think of the Netherlands as having been a big data center hub historically, do you know?

Akshat Rathi  15:14  

No, I don't think so. I mean it certainly has some industry. A lot of it is oriented towards electricity because it's high-end manufacturing, but no, I don't think it's a big data center hub.

Shayle Kann  15:27  

Yeah, which is even more concerning if you think about the context of, there's this big, long queue to get grid connected in a market that hasn't yet seen the boom in very large load interconnection requests that we're seeing in lots of other places.

Akshat Rathi  15:43  

There is the aspect of DERs like distributed energy resources that is affecting the grids in Europe. So the Netherlands has the highest per capita rooftop solar in the world, which for a European country, it'd be like, ‘Oh, that's odd.’ but you know, that's what you get. You get cheap solar panels, and you get some policy available, and you'll deploy a lot of solar panels. But it's causing real problems at the transmission and distribution network locally, because the grid has been built over the last 100 years, and many of the objects on the grid are much, much older. So that brings us to the next topic, which is transformers. Transformers are this object that sit between generation, between a power plant and your home, because they have to make sure that the voltage at which power is delivered is just right for the devices that you're going to attach to it. Where do you land on whether transformers are overhyped, underhyped, or hyped just right? 

Shayle Kann  16:49  

So again, if the question is overhyped, underhyped as a bottleneck to load growth, to meeting load growth, then I think that they're overhyped. I want to clarify: Transformers are incredibly important, and there is a bottleneck, and the lead times are very long, and I've witnessed it firsthand, both from the utility side and the load side, it is a problem. I don't think it is the rate limiting factor. Even today, with long lead times, it's an annoyance to get anything built, but things will still get built. And certainly those lead times for transformers are still shorter than they are for gas turbines. But I do think we also will see a lot of new transformer manufacturing capacity come online in the next few years. The lead times are going to come down, and I think we will see a way of new technology. I'm an investor in a company called Heron power, which is building solid state power electronics. I think stuff like that is going to revolutionize that sector. But even in the absence of things like that, I don't think it is going to be the thing that stops the load growth from getting met. So I'm going to say overhyped on that one.

Akshat Rathi  17:59  

I would go underhyped, if I look at the non-data center crowd. Because transformers are needed for everything. And in my reporting, I've come across many, many projects — like housing projects — that are completely on hold for 18 months because they're missing this one object that they need before they can power the area. And so it is affecting a lot more people. The people who can afford to pay for it, or can jump the queue and get the object, then, yes, they can get there. And then on the manufacturing side, again, my reporting says these companies are very conservative. They will invest, but only if they have surety that there will be demand for transformers for 20 years or so, which they are not yet sure there will be.

Shayle Kann  18:50  

I totally agree with that, and it's already evident in the fact that we've had these long lead times for transformers back to 2021-2022. It's not a new thing, and it has been persistent for longer than I think a lot of people expected, in part because of the conservatism of that industry. Who, to be fair to them, they've gone through cycles before where they've over invested and then been underutilized and so on. And so they're reticent to do that again. I think that the expansion of capacity is not entirely going to come from the incumbents, though. I think there's going to be a wave of upstart companies, whether they're doing traditional, oil-filled transformers or solid state stuff like Heron is doing. I think they're going to fill in a lot of the supply gap in the next few years, even if the Hitachis is of the world expand capacity slower than you would want them to.

Akshat Rathi  19:42  

Join us after the break for more of my conversation with Shayle Kann. And hey, while I’ve got you here, fancy writing us a review on Apple Podcasts or Spotify? Recently JFred1988 wrote: “Zero will prompt even mildly-interested listeners to get pumped about green politics and technologies.” Thanks JFred.

Shayle Kann  20:15  

Let's take a diversion for a second here. You had a thing that I have no context on, but you want to talk about this that's relevant to my day job, which is, you wanted to talk about venture capital as a tool for scaling climate tech. You want to grill me on something here, I just don't know what.

Akshat Rathi  20:33  

I would happily grill you on many, many topics. But this one, I wanted to put on the hype  or underhyped list, because it's your business. From the perspective of venture capital helping scale climate solutions, I think VC is overhyped, because that model might work in America, and I don't know if it's working. Because there are not that many companies that have really been VC oriented, big climate champions right now. The rest of the world is building climate solutions, and a lot of those companies aren't VC backed. BYD wasn't a VC-backed company while it became an electric car giant. So to me, that is one model. It can work in certain cases, but it's not working in so many cases. So perhaps it's time to look at other forms of ideas that would allow existing companies to pivot towards climate solutions, which also can happen.

Shayle Kann  21:36  

I think what we've broadly seen historically is that venture capital, particularly venture capital in the US, I will say, plays an outsized role relative to the dollars that go into it. It plays an outsized role in getting new technologies into commercialization, like from the lab to the market. And usually there's one or two pioneering companies that are venture backed, that do that and are the first. So if you want to talk about BYD — what would BYD be if Tesla hadn't been Tesla? It's an interesting question. If there had never been a Tesla, would BYD still be what it is today? Would it have scaled as quickly, or was the existence and proof of a company like Tesla the thing that caused BYD and the Chinese government to deploy a lot of capital into it. You've seen versions of that, I think, a lot of times. 

Akshat Rathi  22:28  

Yeah, one other example would be CATL, which is the largest battery company. You know, what would it be if lithium ion phosphate had not been invented in America and then first commercialized by A123, which is a venture backed company?

Shayle Kann  22:43  

That's right now, that's a good example. There is a separate question that I think is a good question, which is, do the venture investors, and the companies that they invest in, reap the full reward of that invention and commercialization? And A123 is a perfect example of that. That company went public and then went bankrupt pretty quickly. So maybe the answer to that is no, although some early investors did make some money on it. So I don't know that that is a different question, and that's one that I grapple with all the time. But if you're just taking the big step back, 30,000-foot ecosystem view, I still think it is true that relative to the dollars deployed, because where are the dollars actually getting deployed? In total volume, they're either getting deployed into the BYDs and CATLs of the world, or they're getting deployed in infrastructure, right? The real money goes to building big solar projects and things like that. But on the impact to dollars invested ratio, I would still claim venture capital plays an outsized role.

Akshat Rathi  23:44  

I would just push back on one thing, which is: there's a phrase that Dan Wang, this guy who wrote Breakneck used, which I liked, which is, ‘America is good at going from zero to one,’ like creating something that didn't exist, ‘but China is good at going from one to 100,’ really giving you the solution at the cheapest price possible. But a lot of that zero to one in America happens because of the level of science funding and the talent that it has. And the basic sciences and the research which in the current administration is going to go down or is going down already. And so there is a risk that that thing that VC enables, which is translation of this immense amount of basic science into a usable product becomes harder.

Shayle Kann  24:30  

Yes, I agree with that. And I think it is incumbent upon the US to do everything that we can to maintain that position as the part of the world that is best at going zero to one, and then arguably competing for the one to 100 as well. But I don't think it's a foregone conclusion that we will. I'm saying historically, it is clear to me that that is true. Looking forward, we've got work to do there.

Akshat Rathi  24:56  

I have another weird one that I've picked for you, which is, what do you think about the hype on the Paris Agreement helping shape businesses towards climate solutions. Overhyped, underhyped or hyped just right?

Shayle Kann  25:10  

So I don't think I have a good answer to this one, because to be totally honest, I don't hear about or think about the Paris Agreement at all. Like basically zero. So maybe that tells you something. Certainly in my world, it's not hyped. I can tell you that, but I couldn't tell you whether it should be hyped or not. Do you have a view? Are there things that are downstream of the Paris Agreement that are affecting my world that I just don't know came from Paris? Or is it just sort of a it's there, and it's a big geopolitical thing, but it's not really affecting business?

Akshat Rathi  25:45  

Yeah, I would say this is the bit, as a journalist that I find fascinating, because I see many worlds. And the Paris Agreement actually works, as I've seen, across all these worlds. But some people have very strong views, and other people have no views. So let me explain. In climate diplomacy, the Paris Agreement is this document that was agreed on in 2015 by all countries in the world, which is, in principle, voluntary, but sets a goal of 1.5 or 2 degrees Celsius warming that all countries must keep to. It was 25 years in the making, that's how long it took to come to a conclusion. And then what you got was a voluntary agreement. And a lot of the people in diplomacy are happy and sad at the same time, like we have something, but it's not good enough, and they think about it a lot. We meet at COP meetings every year, which we're going to do in Brazil next month, in November, at COP 30, and we'll talk a lot more about those words. And the people in that world continue to be frustrated by Paris. But Paris's impact on businesses is actually quite big, because it has become translated into government policy, and then government policy gets translated into all forms of directions that businesses are taking, which they may not always explicitly tell you it is because of Paris. They'll say it's because of government policy, and every government has its own policy, but its tentacles have a far reaching impact, even if most people don't see the direct connection.

Shayle Kann  27:33  

I believe that, and I also think probably I'm colored by the fact that I'm in the US where our relationship to Paris has been fraught and back and forth over the years, as opposed to Europe, where it's been consistent. And so probably the policies have had more time to take hold. But it is interesting your point that people,either have very strong opinions about Paris or no opinions. I'm clearly in the latter camp there. All right, we're short on time, but I think we should do a quick grab bag of additional technologies and decide whether we think they are overhyped, underhyped or hyped just right. So let's start with a battery chemistry: sodium ion batteries. Overhyped, underhyped, or hyped just right?

Akshat Rathi  28:11  

So I know you've done a couple of episodes, so you probably have a better, more informed view on this. My view is that, as somebody who's written about batteries for the last decade, getting new chemistries out to a commercial use case is really hard. When companies do that, kudos to them. But given the pace at which lithium ion chemistries have fallen in price and the amount of manufacturing capacity that's been built around the world, if I look at BloombergNEF projections, sodium ion will make an impact, but such a sliver, even after 2030, that I feel like today sodium ion is overhyped. Because people think it could make a big difference, but really it may not.

Shayle Kann  28:57  

I think it's hyped just right. First of all, I don't think it's that hyped. To be honest, people talk about it, but I think for all the reasons you described, and everybody having had the same history that that you're talking about, people are reticent to go all in on this as the next big battery chemistry, apart from clickbaity articles. But I think there is a degree of hype that is warranted, largely because it seems pretty clear that some of the big Chinese manufacturers, CATL included, are investing a lot in sodium ion and are actually deploying. I mean, your point about getting new battery technologies into the field is true. They're doing it, though, in China, and so it's coming. The question to me is sort of the one you're alluding to. What portion of the market does it take up? And the last version of a big chemistry shift, which is a smaller chemistry shift than this one that we saw, was the rise of LFP. And that has been a huge deal. Will sodium-ion be the next wave of the same type of thing? Or is it going to be a more niche solution because it's lower energy density and so on? I don't think we know that yet, but it's coming from from CATL and its cohort, so let's just see what happens.

Akshat Rathi  30:10  

The next one is advanced geothermal, where do you land on hyped, underhyped hyped just right?

Shayle Kann  30:17  

So in the US, advanced geothermal is very hyped. I would say it's hyped for a bunch of reasons, some of them legitimate success of companies like Fervo Energy, who are sort of pioneering it. But also there's a political lens to that, because our new administration, our Secretary of Energy in particular, Chris Wright, is super bullish on geothermal in general. He likes geothermal and nuclear, those are the two overlapping clean energy things that he's full-throatedly in support of. And so as a result of that, it is highly hyped. That may be warranted, let's see where it goes. But it's very early days. Fervo is hoping to have its first 100 megawatts of its first big project online sometime next year. So I guess my argument here would be it's somewhere in the hyped just right to maybe slightly overhyped stage in the US. I'm curious, though, from your more global perspective, the degree to which advanced geothermal is talked about. 

Akshat Rathi  31:19  

So this is one where typically the rest of the world is following the US on its hype cycle. And so clearly, there's a lot more talk about advanced geothermal, because the US has shown some success already. And surely, being able to apply Shale drilling type technology could make many other parts of the world which don't always have great geothermal resources suddenly more valuable. The difficulty, I feel like, is that it's overhyped, because the level of other types of talent and infrastructure that you need to deliver on advanced geothermal exists in the US, but will take a long time in other parts of the world to build. So engineers who can manage shale-type drilling, or like a study of the subsurface, that would allow you to do it in the right way. All of that just takes a long time. And I don't think that expertise exists in the rest of the world quite as much. And so we are going to see not as many projects built as many people think there might be. 

Shayle Kann  32:24  

It's an interesting point, right? Because one of the reasons that it is so attractive in the US is that we do have all this expertise from oil and gas that is being leveraged for advanced geothermal. But of course, we are a country that has that expertise, has the resources, has been drilling, has been doing horizontal directional drilling for a long time. Invented it, in fact. So, yeah, that's a good point. Okay, last one, continuing on the same vein of technologies that Secretary of Energy Chris Wright likes: advanced nuclear. Overhyped, underhyped, or hyped just right?

Akshat Rathi  32:54  

Yeah, it's got the similar vibe as advanced geothermal in that, in principle, wouldn't it be nice if we could build small modular nuclear reactors, because then we could make many of them and try and lower the price of nuclear, which has been going up and up and up in Europe and North America. And again, the hype is following on from America, where countries like the UK are now asking Rolls Royce to make a small modular reactor. But the reality is, the only countries that have functioning civilian small modular reactors are Russia and China. And the countries who have been building nuclear, not just domestically, but also around the world, are Russia and China.

Shayle Kann  33:42  

And South Korea. If you want to include South Korea, like APR-1000s, right?

Akshat Rathi  33:46  

Agree, yeah, South Korea too. And to suddenly imagine that a new technology will unlock nuclear in Europe and North America, to me, is overhyped.

Shayle Kann  34:00  

I think there's an interesting question/ We're heading into a nuclear world, which is sort of between, I don't know what to call advanced nuclear and not advanced nuclear. But let me just frame up two groups. Group one says we need to just have a couple of technologies that are kind of the front runners from large OEMs, right? So this would be the AP-1000 from Westinghouse, and maybe the BWRX-300 from GE Hitachi, which is an SMR that's a 300 megawatt reactor. Those are the furthest along. They're bankable OEMs. Forget all this other noise. We need to go deploy as many of those as possible, right? And then the other argument is, there's a whole bunch of new technologies coming from a whole raft of companies that could be deploying SMRs or micro-reactors or whatever, and some of those need to go win as well. And I don't think it's clear yet which direction we’ll head, if either. One thing I do worry about is that I personally think in the long run, nuclear probably ends up looking like gas turbines look today, which is in the gas turbine world, there are basically three OEMs that control like 70-75% of the market. It's an oligopoly, essentially. And I don't see a really strong reason why it would be different in nuclear. So we need to get through this winnowing. We need to cull the herd a little bit to get to the point where we're deploying enough number of individual reactors to get down that cost curve, and that's going to be a messy process to get there. So I guess my answer is that I think advanced nuclear, if I broadly define it to include all of those things, seems hyped about right to me. But I worry that we are over hyping too many individual technologies, reactor types, companies, relative to what we actually need to do in that market. 

Akshat Rathi  35:54  

That's an interesting one. I mean, on gas turbines it's Siemens GE Vernova and Mitsubishi, which are the three giants. To the extent where China has been trying to make a gas turbine manufacturing industry, it's not really succeeding, because it's just so specialized, and the supply chains are so tight. And the supply chain also ends up being one where the same parts are used by jet engines, for example, so like real complications. Nuclear, to me, it's hard to see if it comes down to those three. Especially with the kind of political layer attached to nuclear, where transfer of fuel and which country can build in which country, is tightly coordinated by the IAEA, the International Atomic Energy Agency. That makes it much harder for me to see just the sort of market forces that drove gas turbine M&A happening in nuclear.

Shayle Kann  36:50  

Does that argue, what you're saying, for there actually being more OEMs than there are in gas turbines?

Akshat Rathi  36:56  

I think there'll be national champions and more of them. Whereas Siemens, GE and Mitsubishi are more than national champions. Sure, their countries support them, but they also have such large customers in other countries.

Shayle Kann  37:09  

It's interesting, because I could see an argument for what you're describing pushing in the reverse direction, which is that getting through the gauntlet of being a nuclear reactor OEM is going to be so hard because of all the additional layers, that even fewer companies are going to get through it. Adding the national lens to it maybe complicates it a little bit, but I could see that being an argument for maybe there aren't three. Maybe there's really one or two, rather than there being 30.

Akshat Rathi  37:39  

Well, you're imagining a more peaceful world than I think we are going into. But I hope you're right.

Shayle Kann  37:45  

All right, I think we’ve covered a bunch of stuff here. This was fun. Thank you Akshat for doing this with me. 

Akshat Rathi  37:50  

Yeah, this was great fun. Thank you for suggesting the idea. 

Akshat Rathi  38:11  

And thank you for listening to Zero. And now for the sound of the week. That is a machine making a copper heat sink, which helps remove heat from chips running in AI data centres. They require huge amounts of electricity to run, much of which is wasted as heat. And of course, data centers are transforming power demand around the world. This was the subject of a recent Bloomberg Big Take, linked in the show notes.

If you liked this episode, please take a moment to rate and review the show on Apple Podcasts and Spotify. Share this episode with a friend or with someone who thinks their technology is underhyped. This episode was produced by Oscar Boyd and Daniel Woldorff. Our theme music is composed by Wonderly. Special thanks to Shayle Kann, Sommer Saadi, Mohsis Andam, Laura Millan and Sharon Chen. I’m Akshat Rathi. Back soon.

More stories like this are available on bloomberg.com

©2025 Bloomberg L.P.