Natural Resources Committee on Feb. 5th, 2013

[John Gilleland]

Mainly it had to do with baseload, as well as the diffuseness for solar and the diffuseness for wind. It gets down to energy storage, and they are intermittent sources. As everybody knows, the wind doesn't always blow, the sun doesn't always shine. There's a tendency for the wind to be blowing where the people aren't and the sun to be shining where they aren't, but there are some very good exceptions.

As we went through this, and just believed in mathematics and what the experts told us, we came up with the view that wind and solar should be pushed. We also came up with the idea that, via the arithmetic and by what experts themselves told us, perhaps 10% of the needs of people could be met by solar, if you're an advocate, and by wind somewhat more, but it left one quite short.

We then took a look at what people were advocating with regard to coal and the sequestration of C0₂, and we did not see very viable options there, plus some countries are a bit short on coal.

We moved from that to examination of nuclear concepts, and I won't say we disliked the nuclear, but we saw an opportunity to do considerable improvements over what we had seen used in the last century and the beginning of this century. The United States was doing, for example, innovative work in nuclear, but that pretty much ended in the 1990s. The belief that uranium was not going to be as rare as people thought, other priorities, and Three Mile Island all led to a decline in the basic research in nuclear.

You can argue somewhat about whether it's 10% for solar, or 15%, 18%, or 8%, but all of the discussions we had with the experts came out in that range, despite the fact that the solar constant, of course, multiplied by the surface area of the earth, is a very big number. The practicalities brought us to that conclusion.

It was an interesting experience, as in the initiation of it we had models—

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I've only got about four minutes left, so I'd like to get a couple more in.

As part of the analysis that you are doing, does the nuclear technology that you're talking about allow for different kinds of sizes? We've had different presentations that small nuclear could be in the future. Are you seeing that as a possibility?

[John Gilleland]

Yes, small modular reactors are a possibility. In the type of reactor we talk about, some of these inherent advantages are accrued only in the larger types of reactors. Ours tend to be in the range of a few hundred megawatts and above.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay.

You talked about testing. Realistically, if you don't have a model that's potentially licensed, what kind of testing are you doing today?

[John Gilleland]

Our focus is on materials and fuels. Because this particular type of reactor does not have to be fuelled very often—in fact, in some versions the initial load of fuel will last for decades—it means that the materials and the fuels that are in the reactor have to be warranted to be able to withstand that environment for decades.

That is the emphasis of our research. There's lots of other stuff, but if I have to pick out the main technology that we're working on, it's that.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay.

One thing we've heard before when it comes to modular reactors is that sometimes it's a real challenge getting some of these licensed. It can take a significant amount of time.

Have you had any discussions on that? And given that you're looking at a prototype by the early 2020s, have you entered into any preliminary discussions on what it might take to license your technology?

[John Gilleland]

Yes, we have. They are preliminary. We have worked out with experts in the field a licensing plan and what sorts of things you would have to do to gain that licence.

One of the advantages we have is that very similar reactors have been licensed before.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

If you don't mind me asking, what kind of budget have you allocated to bring this to fruition—to a prototype?

[John Gilleland]

To a prototype, it will take several billion dollars. That's what I can tell you right now, that it's in the order of $4 billion for a prototype. The research and design budgets are about a quarter of that.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you.

In terms of who you're working with, you talked about eight universities, five companies, and approximately 30 institutions around the world. Are you getting some of our major players that develop some of these major nuclear facilities involved in this? Are they interested in taking part in this with you?

[John Gilleland]

Yes, they are. Right now we're in preliminary discussions with a number of companies.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allen.

We go now to Mr. Nicholls for up to seven minutes.

Go ahead, please, sir.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

Welcome, Mr. Gilleland. My questions are going to be primarily for you.

Mr. Allen mentioned modular facilities. The previous study we did here was trying to find alternative power sources in the north, which uses diesel fuel. While we were doing that study, I discovered the travelling wave reactor, and I'm interested in asking you some questions about it.

The fourth-generation reactors seem different from previous nuclear technologies. They seem to promise to be cleaner and smaller. I'd just like you to maybe outline or summarize the advantages of the technology in terms of security issues, proliferation issues, and environmental safety.

[John Gilleland]

First of all, our approach is not very small, but I'll be happy to talk about the proliferation advantages and safety advantages.

Proliferation advantage comes mainly from the fact that the fuel is left inside the reactor for some length of time. The proliferation advantage comes because eventually the reactor system can sustain itself without the need for enrichment plants. In Iran and other places, you know that's a problem. Because depleted uranium and natural uranium can be used as the fuel and used much more efficiently than previous reactors, you don't need to take the waste and separate out plutonium, make a new fuel and put it back in; therefore, one has eliminated the proliferation risk of reprocessing, as it's called.

Finally, you can take this reduced amount of waste that the reactor produces and put it directly in the ground. Some folks at MIT and Berkeley are advocating the use of the bore hole, which means you immediately dispose of the waste. So the infrastructure is so simplified and the number of times you have to refuel so reduced, the approach to proliferation is much more attractive.

When it comes to safety, the reactor operates at higher temperatures. This is not our idea; it's been put forward before. If you have a reactor that operates at these higher temperatures and something goes wrong, clever engineers can arrange a chimney effect basically that allows this coolant, which is very good at conducting heat, to dispose of that heat à la the chimney effect to an infinite heat sink, namely the atmosphere. You can screw up the operations, the operator can do the wrong thing or not, a wave can come and shut down diesels, but this thing will stay cool enough to be fine.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

My second question is twofold. Regarding the target markets for TerraPower, which countries are you thinking about selling this technology to? Have any Canadian agencies contacted you about this technology, governmental or private?

[John Gilleland]

I'll start with the second first. No, no Canadian agencies have contacted us. I had experience decades ago with Canadians who were working on fusion and nuclear, but that's a decades-old experience.

We are trying to interest large companies in the United States, Japan, Korea, etc., in adopting this. Our plans are not to become a Westinghouse or a Toshiba; our plans are to influence the direction of nuclear in the world. We'll get something out of it, we hope, but we're hoping that the profitability presented to these large firms will motivate the sales everywhere in the world—China, eventually India, Africa, etc. You could ask what good are these reactors around small villages, but the fact is that villages in some parts of the world are huge populations. Our goal is to do this development and catalytic investment, which will influence the big players.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

It's funny, Mr. Gilleland, because we're talking today a lot about changing the nuclear liability regime here in Canada. In terms of liability issues, it hasn't been updated in quite a while. It's surprising to me that no Canadian agencies have been looking into your technologies. It seems on paper that it would be a safer option, so I'm puzzled that the Canadian nuclear agencies haven't been in contact with your company.

My third question regards funding for this innovative idea. I know the Department of Energy is involved in this. You have the Los Alamos National Laboratory and Lawrence Livermore. I'm wondering what the funding mix is. I know private investors are involved in this as well.

In terms of Mr. Gates talking about getting a prototype online by 2022, what has been the funding mix to get to the point of commercialization for this idea?

[John Gilleland]

Right now the funding has been entirely private. It has been from Mr. Gates and other visionary investors. The government has been very supportive, helping us in ways it can to allow us to have discussions on a foreign basis as well as domestically. They've been very cooperative in making research samples and materials that they have worked on in the past available to us. They've cut through the red tape so that we could do that. The national laboratories have been very helpful because of the support from DOE.

But the funding, including most of the money in the national labs, has come from us. Eventually when it comes time to—

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Just to clarify something, the Department of Energy's implication is that there is a spending implication for that department in terms of their collaboration with you. Is that correct?

I know, in terms of funding, maybe activities of your company have no direct subsidy from the U.S. federal government, but they are using the weight of those agencies to assist you, and there is a spending implication there.

[John Gilleland]

I think there is. We pay for CRADA's joint development things, but some of the stuff they've had available they've gone ahead at their own expense, whereas the specific tests conducted precisely for us have used our funds. But, yes, indeed, because we generated this interest, a true intellectual interest, in the labs, they've gone out of their way to do things for us as well.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Nicholls.

Mr. Simms, you have up to seven minutes. Go ahead, please.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you.

I just want to follow up on the conversation you just had about that. You alluded to direct help, but also that cutting down on regulations makes it a lot easier for innovation. In this particular case—and the question is for both, from both sides of the border—do you look at things like tax credits that are available, in a large sense, to help you innovate, or do direct subsidies become a better mechanism by which you can move?

Now I know, Mr. Gilleland, mostly you're private money, but I'm sure you have some experience, if you would like to weigh in on that first.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Gilleland.

[John Gilleland]

Right now, of course, they're tax credits because we're not profitable. But my experience in the past with renewables, for example, and some nuclear stuff.... One of the great times in California, when I was doing this sort of work, was when the regulators would allow research to be an allowable expense for utilities. When that went away in California, it had a profoundly negative effect. This may be useless information to you, but I'm just giving you my own experience here.

I found direct funding from a government very useful if it was attached to an attitude that you're allowed to take reasonable risks for big rewards. That's typically not a government characteristic, unless it's declared clearly to be R and D, in which case, of course, you're forgiven for more give and take in the results.

I think the ARPA-E that DOE has going is a refreshing change from some of the ways I've seen governments fund things. Again, I'm speaking of my experience in the U.S. I apologize for having very little experience in Canada.

I don't know whether this is helpful.