Isaac Orr and Mark Hinaman talk about the sand market in oil and gas, energy policy in America, coal phase outs and if they’re good for society, and how nuclear has a role to play moving forward.
Watch the conversation on Youtube. Follow along with the transcript on Descript.
[00:00:00] Isaac Orr: Fun fictions dictate our actions moving forward. And that’s exactly what’s happening with wind and solar right now. And we’re gonna end up like free Willy unless we kind of shift and pivot our course here. There will be blackouts and that’s just going to happen and it’s gonna have to happen, right?
In order to get these people that have this kind of free willy feel good environmentalism to reevaluate their priors when it comes to wind and solar and, then maybe they look and say, well, okay, well let’s look at nuclear.
[00:00:29] Intro: Just because the facts are A, if the narrative is B and everyone believes the narrative, then B is what matters. But it’s our job in our industry to speak up proudly Soberly. And to engage people in this dialogue, those two and a half billion people that are on energy poverty, they need us. America cannot meet this threat alone.
If there is a single country, of course, the world cannot meet it without America that is willing to, we’re gonna need you the next generation to finish the job. Nuclear regulations, we need scientists to design new fuels, focus on net public benefits. We need engineers to invent new technologies for over absurd levels of radiation production entrepreneurs to sell those technologies.
And we’ll march towards this. We need workers to. With High Tech Zero Prosperity Football, diplomats, businessmen, and women and Peace Corps volunteers to help developing nations skip the development transition sources of, in other words, we need you.
[00:01:34] Mark Hinaman: Okay, welcome back to the Fire2Fission Podcast, where we discuss energy dense fuels and how they can better human lives. Today we’ve got Isaac Orr with us, who is a policy fellow for the Center of the American Experiment. Isaac, how you doing?
[00:01:48] Isaac Orr: I’m great. Thanks for having me on, mark. Appreciate the opportunity to speak to your listeners.
[00:01:53] Mark Hinaman: Yeah. Sometimes we have guests that have expertise that I don’t have. And sometimes we have guests that overlap or have antagonizing views. And I feel like I learned something from everyone always. But I suspect that you and I will have similar views on a lot of issues.
And so I’m, but I’m excited to chat with you about your space and where you’re coming from. So, Isaac, for our audience’s benefit, why don’t you give kind a 30 to 60 second intro on just kinda your background, who you are and then we can dive into some more of your background and what kind of stuff you’re working on.
[00:02:24] Isaac Orr: Yeah, sounds great. So I work at a place called Center of the American Experiment. It’s a conservative think tank located in Minnesota where I do energy and environmental policy. I work a lot. Modeling different energy systems with my colleague Mitch Rowling. We look at mining issues. We look at kind of the whole gambit of okay, well how do we have a prosperous abundant society for people?
We’re big fans of Norman Borlaug, who was of course a graduate of the University of Minnesota. So really we, we just try to bring an abundance agenda to the energy and environment space and yeah. I grew up on a dairy farm in Wisconsin, so one of my common gripes for anybody who’s listening to me on other shows is people think milk comes from the store and they think energy comes from the outlet.
So, really what I like, my, my druthers are, look, we need to get people educated about where things come from, otherwise they’re gonna take it for granted, and by the time they realize that it’s gonna be too late. So right now I’m basically saying, whoa, Nelly, we need to slow some of this stuff down and we need to actually have a, a real conversation about this and not just sound bites that are kind of traded back and forth on twitter.
[00:03:33] Mark Hinaman: Gotcha. No, that’s really helpful. How long have you been at the Center for Amer the American Experiment and, where were you before?
[00:03:41] Isaac Orr: Yeah, so I’ve been there for five years going on six, right. So it’ll be just five years. Before that I was at the Heartland Institute for about four years.
That basically takes me up to when I was a an aide in the Wisconsin State Capital. Really just outta college doing like constituent work, which I was not good at. I just didn’t have the the same passion for that as I did for policy. So I got a little sloppy from time to time. I could admit my own faults.
But really what kind of got me into this field in the first place was when I was something like regarding mining permits. There was discussion of legalizing. Iron mining in Wisconsin. I was writing, some pretty good responses to the constituents. So, that got me the job of just kind of writing the weekly newsletter for the state senator that I worked for.
And then, basically long story short, the president of the Heartland Institute read one of my. Articles and he is oh, well this is great. I’m gonna instruct my staff to write like this. And I said, well, I’ll do you one better, sir. Why don’t you just instruct me to write? And eventually that turned into a freelance opportunity and they created a position for me after that.
So you know, I’ve been here ever since. Nice.
[00:04:50] Mark Hinaman: That’s awesome. So I wanna. Do kind of an overview on the center, but I do wanna focus on you a little bit more, and some work that you’ve done. Your handle on Twitter is the fracking guy.
There’s not a lot of fracking in the state, or I, well, let me ask I, is there much fracking near.
[00:05:07] Isaac Orr: Well, you know the answer to that.
There’s no oil and gas deposits in Minnesota. But one of the things that’s interesting is I used to live in Wisconsin, that’s where I was born and raised, right. But a lot of the sand that they use for hydraulic fracturing comes out of Wisconsin, Western Wisconsin. It’s the, the northern white it’s a lot of a hundred mesh sand, before it was, Higher mesh when they thought that was better for oil and gas.
So, I actually started writing a lot about frack sand mining in western Wisconsin because a lot of people there were trying to stop it. Some people were just legitimately concerned about potential environmental impacts. Other people saw it as a way to starve the oil and gas industry of the supplies that they need in order to expand production.
So, I wrote a series of six papers with my friend Mark Crewman Knocker who. Geologist at G Z A Geo consulting down in Milwaukee. And that, that kind of got me interested in it. But then after that, my first foray into this was explaining what hydraulic fracturing is and why it’s awesome.
And I went to school for Political Science and Geology at the University of Wisconsin Eau Claire, and that kind of helped me understand the, jargon and the scientific journals and stuff like. it helped me like translate that to, average person. Right. My friend Abby is she went to school for mechanical engineering at Madison and one of her favorite jokes is like, what’s an engineer’s most effective form of birth control?
It’s like their personality, right? So, sometimes, sometimes engineers can try to, go into a situation and alleviate concerns that, normal people have, normies have and walk away kind of instilling less certainty rather than more certainty in that situation. So, one of the things picked him of that.
Yeah, yeah, yeah. So one of the things I just try to do is I try to boil this down into a way that normal people can understand the risks and opportunities and feel good about it.
[00:07:01] Mark Hinaman: Nice. I’m curious on the Wisconsin Northern White Sand. So I mean, on the show, right, we say energy dense fuels, meaning we love nuclear.
We think that’s best. It’s the most energy dense, but, in kind of second or third place is oil and gas. And so it’s interesting to talk about those topics too. And certainly our background comes from that. So, a lot of people moved away from the northern white sand, at least in the Permian Basin.
They used to rail this in across the country because they thought it was better, higher, crushed. And was, was that impactful on Wisconsin and reducing the demand for that product? Oh, yeah. Or did you, I’ll ask the, maybe I’ll ask the question differently. Did you have exposure to that and
What was the impact?
[00:07:45] Isaac Orr: I mean, I didn’t have personal exposure or financial exposure to it really. But Sure. Like I went to school in western Wisconsin, so it was, it was good to see the economic activity that sand mining was generating over there, right? So, it has been tougher for those those northern white producers now that there’s a lot of, like in basin sand being used in Texas, right?
Mm-hmm. A lot of those same companies are setting up sand mines in Texas in order to serve that local need. When you look at the cost of railing that sand from Wisconsin down to Texas, it was a big expensive expense. Yeah. It was very expensive. Right. It’s a heavy commodity, right? it does have great crush strength, it’s got goods, it’s spherocity is good. There’s a lot to like about Northern White. And that’s why it’s still used a lot in places like North Dakota or other, shale basins that don’t have. Good enough supply of sand, right? Nobody says like the Texas sand is as good as northern white, but it’s cheaper and it’s closer.
And the, the permeability of this sand is, greater than the shale. So they do it right right? And that’s fine, right?
[00:08:49] Mark Hinaman: Im importantly the well results for the production results were not noticeably different long.
So, okay, so Center of the American Experiment. What is this group? It’s a think tank, conservative think tank, but what, kind of issues do you guys focus on? What are some of the big issues that you’re addressing right now? Yeah. Give us some perspective.
[00:09:07] Isaac Orr: Yeah, for sure.
So, we kinda run the gambit, right? I’ve carved out an energy and environment niche for myself, but we have two economists on staff. We have Public safety fellow. Basically he was a detective for Hennepin County, which is like the biggest county in Minnesota. It includes Minneapolis talking about rising crime rates.
How do we alleviate some of that? Which, is, is a real problem that’s happening all over the country. We have an education fellow who talks about, look, we’re spending a lot of money, but our test scores are going down. How do we try to reverse this trend? So, and then we have a healthcare fellow as well.
So really, we kind of run the whole gambit of okay, well what’s an optimal tax policy to retain businesses and, encourage new ones to start up. So, you name it, we’ve probably covered.
[00:09:53] Mark Hinaman: Gotcha. So talk to us a little bit about the energy work that you guys are doing. What are some of the key issues that you’re focused on?
[00:10:01] Isaac Orr: Yeah, for sure. So, Mitch Rowling and I have come up with our own in-house modeling stuff that we’ve done for, the last five years. It’s become a lot more sophisticated over that five year time, which is good cuz if you’re not growing, you’re atrophying, right. So, basically what we do is we model the cost of.
Proposed legislation, right? So if we have we had a 100% carbon free electricity mandate that got passed here in Minnesota. We modeled the cost of that. The governor of Wisconsin was, advocating for a very similar policy, but he was gonna try and do it through executive order. So we modeled the cost of that.
We’re talking hundreds of billions of dollars more than it’s currently being spent on the electric grid between now and 2050. In both of those proposals, I think it was 313 in the case of Minnesota and only 250 or something of that nature in Wisconsin, because they wanted to meet that goal by 2050 instead of 2040.
Right. So, we look at that kind of stuff. We’ve worked with other organizations in other states in integrated resource planning, right? We evaluate, okay, so Duke in North Carolina had their basically they wanted to decarbonize on similar, similar timescale as Xcel. They had four plans and we evaluated each of those plans, what it was gonna cost the customer, and then we offered a lower cost alternative that’s still decarbonized and no surprises.
It’s mostly nuclear power because it’s always on, right? So, and ultimately that’s, that’s one of the things that we try to stress to people. There are a lot of people out there that talk about the levelized cost of energy. And it’s usually wind and solar advocates who do this, and they’ll cite Lazard.
Because they’re pretty, there’s a to total garbage report. Well, so here’s the thing. I don’t think the report is garbage. I think the context in which the renewable advocates are using that report is garbage. Right? Because on page one, that’s that report. On page one of the report, it says, this does not account for the fact that you need more transmission for renewables.
That’s not factored into our cost analysis. You don’t need to, we do not factor in the cost of providing reliable electricity all of the time using renewables. Right? So what they’re doing is they’re taking some of the most charitable assumptions that you can use for a wind project or a solar project and telling you what the cost of that one atomized facility would be if it were operating under these parameters.
And it is the wind and solar advocates who say, see, Wind and solar is lower cost than all of these other sources, but they’re not incorporating the additional utility profits that accompany a new any, new infrastructure, right? If you built a new power plant, a nuclear plant in the state of Minnesota the utility that built it would be making billions of dollars in profit on top of that.
That’s just the way it works. It’s the cost of service regulation, right? So, but the thing is like you get to spend a lot more. On wind, solar, and battery storage than you would on a nuclear power plant because, I think as n r says battery storage facilities only last 15 years.
That’s what they’re modeling. Wind facilities last up to 20. We’ve had experience in Minnesota where Xcel Energy, which is the largest utility investor owned in Minnesota, is Repowering facilities after eight years, nine years, 12 years, right? So halfway through their lives, they’re basically entirely refurbishing these assets, and that’s mostly to requalify for federal subsidies, right?
But how does it make sense to evaluate the cost of an asset over 20 years when realistically it’s only operating for 10? Right. These are the arguments that we make in the, the publications that we put out. So long term, this nuclear power plant’s gonna last for 80 years, maybe longer, right?
And it’s ultimately going to provide the highest value for the rate payer, but it’s not gonna provide the highest value for the shareholder, and therein lies the rub That’s. You have all of these utilities talking about how they’re gonna increase their wind, solar, and battery storage facilities and maybe use nuclear on the margins.
Right? And it’s because wind and solar and batteries are perpetual cash machines for the utilities and their shareholders are gonna love it. So, we just try to call balls and strikes on that sort of stuff and, when necessary try to embarrass people for their bad.
[00:14:24] Mark Hinaman: Yeah. So cost analysis for Minnesota and Wisconsin, have you guys ever considered doing something for Colorado?
I mean, I know you work with Xcel or Xcel covers that territory. Yeah, comes Colorado too.
[00:14:36] Isaac Orr: We’re working with the Independence Institute right now on that actually. So, we finished our report. We looked at, okay, so what would it cost to, retire Comanche one, two, and three, I believe there’s a big coal plant out in Craig, Colorado.
And then also replace the natural gas by 2040, which I think is what, governor Pollis is looking to do out there. And what, what would it take to replace that with wind, solar, and battery storage? And boy, howdy. Is it expensive? I don’t have those numbers off the top of my head. But we also look at the cost of a few other proposals out there, which is really cool cuz this is a new thing that we’ve done.
We looked at the cost of electrifying Home heating out there. So we were able to get the, the hourly natural gas consumption from the Colorado Springs Utilities because there are municipal utility and they have to give you their data through an open records request. Even though they’re not happy, they have to.
So we were able to get the hourly natural gas demand. We converted that into megawatt hours, accounted for the fact that, a furnace isn’t as efficient as like an electric resistance heater. So we could have an hourly electricity profile for home heating and figure out, okay, so what’s the peak capacity that you would need in order to.
Essentially deliver the same amount of heat via wind, solar, and battery storage. And for, home heating. And we even did it with heat pumps, so, We went out, we found one of the most efficient heat pumps. It’s the, we used the assumptions for the Mitsubishi Hyper Heat. It was rated the best cold weather heat pump for I think it was Carbon Switch, is the, website.
And, I called a few technicians. I had them like, come out to my house and tell me like everything I needed to know about this thing. So I did my homework on it. And then we actually took the hourly temperature for Colorado Spring. And compared that to what the coefficient of performance or the efficiency of the heat pump would be in order to actually have an hourly power draw.
That you would have. And the thing about a heat pump like that is they cut out at negative 13. Like they just stop working at negative 13. And that’s not such a big deal if you’re in Texas and like you only have those temperatures like once every 20 years. But it’s really bad when you do have it cuz you’re not ready for it.
But in a cold weather climate like Minnesota, then you’re s so l right, that it is just not gonna be good enough. You’re gonna need some sort of electric resistance heat, which has no well, it does not have a huge efficiency, gain over a natural gas furnace or at least enough to make it worthwhile, right?
Plus, electricity’s way more expensive than natural gas. So why would you ever do that? It doesn’t make sense from a cost perspective. And then we looked at also like hourly electric vehicle charging data in order to say, look, we’ve decarbonized the home heating sector, the light duty vehicle sector.
And we’ve also decarbonized the electric grid. And I think the, final numbers are over 600 billion through 2050. Like it’s pretty. And I, I don’t have these, they’re not in a report that’s published, so I don’t wanna spoil too much. But it’s a really cool report and encourage you to check it out when it’s available.
[00:17:52] Mark Hinaman: What’s the timeline on that, when it might be released?
[00:17:55] Isaac Orr: Well, we sent them the finished slides two days ago. And this is being recorded on St. Patrick’s Day. So I, really don’t know. I really dunno what the, the final is. It’s gonna be a lot of work to put that into a, readable format, but , look for that in the next quarter or so, I would hope.
[00:18:13] Mark Hinaman: Perfect. Well hopefully, we’ll, we’ll see when we actually release this. So, hopefully by the time we do the reports out in live and or potentially when we do release it, we’ll just have you back on. You can yeah. Walk us through it. Sure. So, yeah. So while you’re chatting, I did find, pulled up slide one on the Lazard report just to call attention to this, which I, just find this to be so crazy.
They say other factors could have potentially significant effects on the results contained herein. These include capacity, value versus energy. Value, transmission costs, significant permitting or development cost, cost of complying with environmental regulations. Exam, carbon emissions offsets. Yeah, it’s, it’s just like all of the things that go into a real energy system
Yeah, yeah.
To actually make energy work, right? They’re like, oh, we’re just ignoring all this. So anyway, just calling attention to that. The American experiment, it sounds like a relatively small team. I guess, is that true? You listed a couple of different departments and fellows that you, you guys have.
[00:19:13] Isaac Orr: Yeah, it’s probably like 15 to 20, like full and part-time people. I’d have to sit and count like whose office is where in order to, come up with an exact number. But yeah, it’s a relatively small organization,
[00:19:27] Mark Hinaman: Then think tanks. So, I mean, you guys aren’t a nonprofit, but I, I guess how’s that structured then?
How
[00:19:33] Isaac Orr: Yeah, we’re a nonprofit. Donations control anybody donations. Yeah. Yeah. So we’re a nonprofit organization, so, if you want to listen or make a donation after listening to this podcast listener it is tax deductible. Right. So, we’re funded by thousands of Minnesotans.
I think it was like 8,000 people. Our median donation is like $50. Wow. So, we’re truly a grassroots organization. Right. Not, some people write bigger checks than that, obviously, but, Yeah. So, it helps when we get out there and, a lot of think tanks just like to just kind of write the report and hope that it gets picked up.
But we do a lot of like gorilla marketing just because we know that the other side outs spends us like 10 to one. So, and 10 to one would be a generous ratio, honestly. So, we do billboards, we do radio ads. We, do a lot of like tours. We like go out and give talks to local service clubs all over the state of Minnesota.
So I’ve gotta go do one tomorrow on a Saturday, which is a bummer. But, I grew up on a dairy farm, so there’s way worse things I could be doing on a Saturday, right. In terms of work. So, yeah. You know that’s all right with me. But yeah. That’s it. So, that’s where we, get the majority of our funding and yeah, it’s good work.
[00:20:46] Mark Hinaman: Nice. I’m curious on nuclear specifically. Why is this a partisan issue? I’m so confused by it and I don’t know, maybe you can help educate me about, why the Republicans have picked it up and it’s, more on the Republican side because, I mean, I’ve been studying nuclear for years now, and it’s not been obvious to me in all of my studies that.
Based on the merits of the technology, notwithstanding it provides a reliable, dependable energy, would be yeah, supported by just Republicans. Like the fact that it’s clean and carbon free should be touted by people that, share the climate change agenda wholeheartedly. I’m just so confused by this.
[00:21:30] Isaac Orr: Yeah, that’s a really great question. I think that there’s just like a lot of, institutional and reflexive anti-nuclear on the left from, kind of like the boomers, right? Like, my folks are boomers, but they’re Republican boomers, right? So like they’re, yeah. They’re like, well, nuclear’s probably fine, but like we’ve also got this coal plant, so as long as the power’s on, I kind of don’t mind where it comes from.
But there was a lot of association with the bomb, frankly. Right. I think Michael Shellenberger does a good job of talking about this in apocalypse. Never just kind of going through the the reasons why people, don’t like nuclear. Jane Fonda didn’t help anything. So there’s still a pretty big constituency of that, and I think.
Younger democrats, younger liberals are a lot more open-minded to nuclear than the older ones. But, the boomers are still running the show in many respects. So, that’s gonna be something that’s gonna be, I don’t think that they’re gonna let that go easily. I think there’s also this kind of pervasive belief that wind, solar, and battery storage will be able to produce as much power as we need more affordably than.
Which is wild. It hasn’t been observed anywhere. It’s been tried, right? They basically have very expensive power, and then eventually if they push it far enough, it, it ends in blackouts. So, there’s been a very real reluctance to kind of come to Jesus when it comes to okay, well, are these energy systems that we’ve been promoting for the last 20 or 30?
Are they working for us or are they not working for us? And I think it was Mark Twain said, it’s easier to fool people than to convince them that they’ve been fooled. And I think we’re in that stage right now. There’s a lot of ego protection that’s probably happening on, the left.
Some people are a little bit more open to saying, Hey, yeah, you know what, I think I was wrong. But, it’s not an easy thing to do. In the meantime, we’re just trying to educate as many Minnesotans as possible. We’re nonpartisan, we’re conservative, or free market, but we’re not partisan.
So, whenever a group comes and asks me to talk to them about this stuff, I say, well, yeah, like there’s trade-offs for everything. Like nothing is perfect. There’s an environmental impact from everything, whether that’s, a new manufacturing plant, a nuclear power plant, or tourism, right?
So, It’s interesting. So Minnesota has some of the largest undeveloped deposits of copper and nickel in the entire world. We have more cobalt than any other state in the or in the country. But a lot of the same people who are pushing for 100% carbon free electricity mandates are also vehemently opposed to mining the the copper nickel cobalt that would be needed for the wind turbines and solar panels that they wanna put everywhere.
There’s a big disconnect and it’s, I think Robert Bryce does a good job of highlighting this rural urban divide. And, it goes back to you have this affluent class that just doesn’t know where stuff comes from, or they don’t care. So, they actually say oh, well, you know what Northern Minnesota, that’s where the, copper nickel deposits are.
You shouldn’t want mining. You should be enjoying. You should be promoting the tourism industry and you know those jobs are. Lower paid than mining jobs. So you can get a, like a mining job that pays you 90 grand outta high school, right? That is a real job that gives you the opportunity to build generational wealth.
Buy a house, put your kids through college, like that’s the American dream right there. And like they’re saying, no. You shouldn’t have that job. Scoop my ice cream when I come up from Yeah, like Memorial Day to Labor Day. And nothing makes me angrier than that. As somebody who grew up in rural Wisconsin we’re only three hours away from Illinois in that part.
So we get a lot of like Chicago people up on the weekends and, they spend a lot of money in town. We also have to deal with the attitude that comes along with that. And there’s like this kind of gross paternalism that that comes with, people that make their money in white collar jobs and they don’t really appreciate the necessity of the blue collar jobs.
And, unfortunately there’s a lot of that. And it’s not just isolated to Minnesota or Chicago, right? I feel like the, the coasts also kind of feel that way about the Midwest.
[00:25:46] Mark Hinaman: Absolutely. Let’s zoom in on the mining piece a little bit cause I find that fascinating. I’ve had the same conversation and it’s, actually not a podcast where I asked the deputy director of Colorado’s energy office if, we need more renewables, why don’t we have more mining in Colorado to support that supply chain?
And her response as well. The minerals have to be there. But in this circumstance, just like you said, there’s large deposits. So minerals would be relevant for this energy transition. I’ll put that in quotes for as many people understand it or think it should occur. Why do you think this hypocrisy exists?
Is it strictly ignorance and people ignoring it? Yeah. Kind. Give me your thoughts on. Why it exists and then how we might remedy that and fix it.
[00:26:34] Isaac Orr: So I just think that the money is good for these NGOs, right? So the, the Minnesota Center
[00:26:40] Mark Hinaman: people believe it because the NGOs that are promoting these ideas spread the gospel that we can build everything on renewables and batteries and that’ll be good enough.
But then totally ignore, Hey, these have to be mined somewhere and we’re gonna pillage the. Do it
[00:26:56] Isaac Orr: Well, there’s that aspect, but there’s also the fact that the NGOs raise a lot of money off of help us stop poly mat or this copper nickel mine and we’re gonna save Minnesota from like acid mine drainage everywhere.
So that’s like a big source of their funding is scaring people about the risks of copper nickel mining. Right. The other source of their funding is scaring people about climate change and saying, oh, well, if we don’t, pass this a hundred percent carbon-free electricity bill that doesn’t lift Minnesota’s ban on new nuclear power plants.
Then your grandchildren aren’t gonna have a good world to live in, right? So they have this kind of dichotomy where like their funding sources are kind of schizophrenic, right? On the one hand they get paid a lot of money in donations to fight mining projects. On the other hand, they also get paid a good amount of money to promote wind, solar, and battery storage.
So like to them, they try to reconcile this by saying, oh, well, we can just recycle our way into a circular green economy. And it’s no. That’s just not how it works. Everyone who calculates the amount of wind, solar, and battery storage capacity that you need for this is gonna tell you that you need to drastically increase the amount of mining that’s occurring.
And if you don’t do it in the United States where we have strong environmental protections, and more than anything, we’re affluent enough to care about the environment, right? I’m a big believer in the kunitz curve, which basically says, as you start off developing, as a society, right, you don’t care very much about the environment because you just wanna put food on your table and you want a roof over your head.
As you become more affluent, the, and you have a stable source of income, you have a stable source of. Then environmental protection becomes a higher priority for you, right? Like it’s Maslow’s hierarchy of needs as long as your base. Satisfied, then you are going to aspire to bigger and better aspirations.
Right? So then at some point in your development, you hit a point where you’ve basically peaked in terms of your environmental degradation per unit of G D P. And after that you go down, it follows a bell curve for, for the listeners. Right? So, I think that’s, that’s right. In developing countries where a lot of this mining is gonna happen, they’re on the front end of that bell curve, whereas we’re on the back end.
So we have the means in order to, have responsible mining here in the United States. Is it gonna be perfect? No, nothing is, but it’s gonna be a hell of a lot better than anything that happens in the DRC or venezuela.
[00:29:28] Mark Hinaman: Great answer. So, it, I mean, just addressing it truthfully like you did.
So you, guys strike me as pragmatic. You mentioned that many of your analyses of how to get to net zero includes nuclear.
I assume that you don’t have some religious affiliation with the technology or, really liking it for. No reasons. Why are you guys so pragmatic about it and what, what do you like? Nuclear specifically.
[00:29:56] Isaac Orr: Well, actually, mark, that’s not true. I really like Ninja Turtles, and I’m hoping that someday we can recreate that. And that’s what my, pro-nuclear advocacy is based in. No, but in seriousness, right?
Yeah. I loved it as a kid. Yeah. Isn’t that everybody’s reason? That’s the, the closeted reason behind all of this is the Ninja Turtles. But yeah, that’s exactly right. Mark. So we like nuclear power. But that’s not to say that we think everything should be nuclear tomorrow, right? Or that we should be rushing headlong into that because that has its own, potential problems.
So, When we talk about our lower cost decarbonization scenarios in our reports, that’s just what we call ’em, that’s our nuclear scenario. Generally, we say, look, we have these existing coal plants, these existing natural gas plants, and they’re good assets, and we should be utilizing them until they can’t run anymore, right?
My dad farms with Ford tractors, and Ford hasn’t built a tractor since the 1960s. So I am a big fan of utilizing an asset that you’ve paid for until you can’t use it anymore. Right? Like, why waste it? And in that regard, if you want to plan for nuclear power in the future to, replace some of those coal plants, reuse a lot of that same infrastructure.
That’s cool. I’m, I’m all right with that. And the reason that we support nuclear, American experiment. And why I support it personally is I do think it’s the only technology that will be able to be better or lower cost than, coal or natural gas in the future, in the long run, right? So, when you look at the energy density of nuclear power, you’ve got like a AAA batteries worth of uranium that produces as much power as what, half a ton of coal, something like that.
So, that is a huge opportunity to have a more e. Economy, lower cost, electricity, and that’s gonna be good for everybody. So, that’s, where I think the promise of nuclear power is. Let’s see if that develops and let’s, do what we can to make sure that it does. But until then, like I don’t see any point in throwing out these, these reliable generators that we already.
[00:32:01] Mark Hinaman: So I wanna touch on affordability and then get your views on how we can potentially build more. So the, the affordability piece hyper important. I mean, when, I talk to opponents or people that are skeptical of nuclear power often they say, well, notwithstanding waste and the technical challenges and public opinion, at the end of the day, it’s just more.
How or why is nuclear cheaper or should it be cheaper? And yeah, why, why is that better than some of the alternative generation sources that we have?
[00:32:35] Isaac Orr: Sure. Yeah. Well, I mean, we look at this in our report, so if you look at, I think it’s figure 16, in our Minnesota report, we look at the cost of running a grid on 100% wind, solar battery storage with about 20% of minnesota’s existing nuclear fleet, still contributing to that. And when you’re looking. Those additional costs that, Lazar doesn’t look at. You have basically we, we wanna look at what is the cost to serve load, right? You have this demand. What’s the cost of electricity to serve that demand with different energy resources?
So that includes transmission, additional property taxes, cuz you have more property to tax, right? Utility profits, I may have said that already. Then battery storage. And then you have these insane overbuilding and curtailment regimes because, everybody realizes that battery storage is cost prohibitive.
So what they say is, well, let’s just build way more wind and solar than we need. And that will make sure that we have enough electricity when it’s cloudy out or it’s not very windy and we can just turn it off or curtail it when it’s very windy or very sunny. Right? So that adds a lot of cost to the grid.
It’s redundant capacity that’s not doing a whole lot. So we figure it out that it would cost about $272 per megawatt hour to serve load with wind and about 472. With solar under the assumptions that we used, right? So, we also look at the a p r 1400, which is the Korean nuclear reactor. We like that one because it tends to get built on budget and on time, like in the United Arab Emirates, and.
That one starts out at about 70 bucks a megawatt hour when you, build it new and over time that cost goes down because the plant gets paid off. You’re paying fewer utility profits on on that plant. So it gets downed. Like I think the first one in our model gets built in 2034 or 2035, and it sounded like 60 bucks a megawatt hour by 2050.
If you were to, kind of push that out let’s look at the entire cost of this p r 1400. After 30 years, you’re probably looking at electricity below $40 a megawatt hour. That’s just how a depreciated asset like that runs over time, right? It just has fewer overhead capital costs.
It needs to pay off. Fewer other expenses. You have maintenance obviously, that’s, really what we, we should be thinking about. We should be thinking about the long term. But the way that utilities make money and they’re always trying to appease shareholders at quarterly meetings is basically the exact opposite of what the rate payer ultimately wants and needs, which is reliable, low cost electricity.
So they can. As much as they want and not have to do some, like ghoulish demand response regime. Right. So, we’re big fans of nuclear when it comes to building new stuff like Sure. Look at that. But it’s also gotta compete with gas. So, like let’s, figure it out.
[00:35:34] Mark Hinaman: Yeah. The utility system just feels so perverse, just like you said. They’re incentivized to build more and it has to be on all the time, and that’s just super expensive. So I like your guys’, I’ll dive into your model and some of the numbers after our conversation should’ve done it before, but last life, life gets in the way.
But yeah, the, over 250 is $270 megawatt hour for wind. 400 over 400 megawatt hour for solar. That’s fascinating. Versus you said, 70 to and, dropping. $70 per megawatt hour for nuclear. And that’s because, I mean, nuclear essentially solves problems can be on when you need it. It’s deployable, dependable. Yeah.
[00:36:14] Isaac Orr: Well, yeah. You don’t have to build seven X the capacity of your peak load. With nuclear, you can get away with having a 10% reserve margin instead of a, 700% reserve margin. That’s just how it works, right? Like sometimes wind is producing a lot of power, but sometimes it’s hardly producing anything.
We look at, hourly data from the US Energy Information Administration for miso Midcontinent Independent Systems operator. It is the regional grid for the Midwest, essentially 15 states and all of the wind on Miso. So there is a, period. January of 2020 where there was an 80 hour wind drought, right?
So all of the wind in this 15 state footprint was producing less than 10% of its installed capacity, and for 42 straight of those hours, it was below one and a half percent of its potential output. So virtually zero. And there’s, this isn’t like a polar vortex or anything where they actually have to shut the wind turbines down at negative 22 to prevent them from damaging themselves, right?
This is just like normal weather. This is a wind drought that just happened to happen. So, you have to plan around that, right? So you have to plan around your peak electricity demand, but you also have to plan around these, these Troughs that happen with wind and solar for no reason other than the weather changed.
Right. So, there’s just a lot of chaos as BF Randall would say in the system now. And managing that is expensive.
[00:37:46] Mark Hinaman: Yeah, makes sense. And yeah, those troughs and the variability has been fantastic for the natural gas industry. Oh, for sure. Spiking for sure. It’s really good for them.
[00:37:57] Isaac Orr: Well, I mean, there’s a reason Aubrey McClendon was giving money to the Sierra Club for the Beyond Coal Campaign, right? Yeah. He wanted that market share and he got it eventually. He’s not around to enjoy it, but yeah, I mean, the natural gas industry loves wind and solar because it gives basically a monopoly on balancing that load or so they thought right now in Colorado, I believe the environmentalists are eating the gas industry. And to that, I would say, told you so. Like those guys thought that they had it all figured out and they were so smart and they were gonna get rid of coal and balance with gas, and they were gonna line their pockets.
And now it’s well, you can import your gas from Wyoming guys because Colorado’s not gonna let you drill it here.
[00:38:40] Mark Hinaman: It’s baffling. Well, when you look at, is it usage of gas? No, it’s not baffling, but I, meant it, it’s amazing given the utility generation balance.
Yeah. Meaning if you look at any of the conversations with Xcel and they have to publish these, right?
But between the governor and Xcel or the Energy office and Xcel, it’s all, Hey, are we gonna have enough gas? Do we have enough gas? Is there enough gas?
So, let’s skip to or pivot to deployment of new nuclear and more nuclear. You guys model that it, would be a good thing if we wanna decarbonize.
It helps cost, but how, do we actually do it? Pretty question.
[00:39:24] Isaac Orr: So, yeah, I think that’s a great question. Two three of your favorite points. Yeah, I don’t know if I know the answer to that, frankly. I think that the, whole tech idea where you’re gonna be putting in small modular reactors at existing coal sites, right?
I think DOE is looking into that. That’s probably a pretty good idea. Like, why not reuse a lot of the same equipment that you already have at a coal plant when that equipment is ready for prime time? I think that’s a great idea. I think coal is great. I think that The, basically the regulations that have forced us to shut down a whole bunch of coal plants over the last 15 years we’re a massive mistake. We are basically paying the price for that now in terms of higher utility bills and less reliability. I mean, winter storm Elliot proved that right? Very recently PJ M didn’t have an pjm, almost had to initiate blackouts, and everyone thought PJM had way more capacity than they needed.
But when your pipeline delivery system isn’t working and you’re relying on just in time gas to produce, just in time electricity and relying on imports, then you’ve got Meredith Inn’s Fatal Trifecta and. That’s a really bad situation to be in. So the onsite fuel storage that comes with nuclear, that comes with coal is valuable.
It has not been adequately valued in energy markets for the last 15 years. We had an onslaught of terrible e p a regulations that were mostly from the Obama administration that are now, fomenting blackouts. So, we’re, in a real reliability pickle, and the first thing we need to do is stop.
And to the extent that you can replace a, coal plant with a nuclear plant, cool. Do it I’m fine with that. Don’t do it prematurely, right. Make sure the technology is ready for primetime. Honestly, like this is a question for. Five years from now, eight years from now.
Mostly because like you have all of these cool small modular reactor technologies that are still paper reactors, right? They haven’t demonstrated anything yet. I mean, they’re cool in theory, but in reality I kind of have a hard time like saying like anything other than let’s keep an eye on this technology moving forward and see if it works.
If you wanted to have an APR 1400 replace a coal plant, I guess I’m cool with that. I guess I’d rather like the use of natural gas for Generation first, right. Because like in, especially in a cold weather climate like Minnesota, we are seeing higher home heating bills now, and part of that’s because we’re burning more gas for electricity generation and not just saving it for, home heating purposes.
So we are stressing our, electric grid well, and our natural gas delivery system. Because we’re trying to make one, do one fuel, do too many jobs, right? It’s like natural gas is a great tool, but it’s not the best tool for every job. Let’s keep some of that high value electricity generation space for nuclear and coal, and then kind of like let consumers enjoy the, dividend of that through lower heating costs.
So yeah if that’s practical, then I’m practical.
[00:42:30] Mark Hinaman: Nice, Given nuclear’s long build time or lead time you mentioned five years might be an appropriate timing, but wouldn’t it be prudent to start now?
[00:42:40] Isaac Orr: Well, yeah. I mean, the best time to start building a nuclear power plant was 20 years ago. The next best time is like tomorrow theoretically.
But I think people are rightfully spooked about what happened at Georgia, right. Have we kind of done an autopsy of those plants? No, cuz they’re not online yet, right? Let’s, figure out where people messed up. And clearly they messed up because it went a lot longer and cost a lot more than it was supposed to.
Like I don’t think that that’s a reason to never build an AP 1000 in the United States again, but let’s have a good hard look at where we screwed up and where we can prevent that in the future. And maybe that’s a conversation for two or three years. Look at what happens in other countries where they’re building that.
Where can we take best practices and bring that back over? But, to. To act like there’s no risk on the upside of the cost curve is I think, whistling past the graveyard with nuclears. So, I think it’s a higher value than doing wind, solar, and battery storage. I do. But like the, industry’s got some, stuff they need to figure out and a lot of it’s just like nuts and bolts.
So come to me with an answer and then I’ll say, okay, sure. But who wants to be the early adopter for something that just had a, pretty bad track record here in the United States. So, that’s why I think the APR 14 hundreds cool. Like they’re, putting a new one on every, year over in the United Arab Emirates.
So, if you had a contractor like that and they had some certainty from the NRC that, they won’t. Their designs changed around halfway through the build. Cool, let’s try it. Let’s have a shining example of how this can work, but let’s, be realistic about it.
[00:44:22] Mark Hinaman: It sounds like there’s an opportunity here for, maybe a think tank to write a paper or a report and do a postmortem on comparison between Vogel, right?
The plant you mentioned in Georgia, and then the UAE projects, and contrast them and say, this one costs us much, this one costs us much. And really, I identify the differences in, how the industry might apply those learnings here, in the us.
[00:44:44] Isaac Orr: Yeah, it sounds like a great idea.
[00:44:48] Mark Hinaman: I’ll be looking for that on you guys’.
Agenda. Yeah. Okay. Well, Isaac, we’ve, kind of coming up on our time. I guess in closing, I’ll ask you to leave us on an optimistic note. Where do you see the energy industry specifically going col the next five, 10 years? Are, are things changing? What gives you optimism for the future?
[00:45:10] Isaac Orr: Well, I think for the next five or six years we’re going down the tubes, mark. That’s where we’re going. We gotta change it. We gotta pivot, right? That’s five words. Yeah. Well, and that’s the thing, right? Yeah. But people don’t think that there’s a problem yet. And at least or they can’t identify what the problem is, right?
So you have this very comfortable class in the, white collar jobs and they think that this is good, right? Oh yeah, we’re going to wind and solar. This is. But they, don’t wanna really think about it beyond that, right? So it’s kinda like recycling recycling’s, total bullshit. Unless it’s metal, don’t do it because it’s a waste of energy and it’s a waste of money.
But people throw all kinds of crap in the recycling that they shouldn’t because they want it to be recyclable. Right? Same kind of idea here. Like I have this theory that it’s free willy environmentalism. Do you remember that? With the whale that from like 1993 I know this is gonna be like purely a millennial thing, but after that movie, all these kids wrote the producers and said, well, we should actually free the whale.
And so they tried. This whale had been captured when it was two years old. It was in a tank in Canada for a while. Then it got sent down to Mexico where it was in the tank. That was way too small for a, full grown killer whale. And it was, it wasn’t even in saltwater, it was in a freshwater pen with chlorine.
So it was like not a healthy animal. And then they’re like, okay, well let’s rehabilitate this whale. It’s been in captivity for 20 years. So they did three years of trying to train this whale to be a whale. And within three years of releasing it, no, it was actually two years of releasing it.
The whale died because it didn’t know how to be a whale in the wild. But we let these. Fun fictions dictate our, actions moving forward. And that’s exactly what’s happening with wind and solar right now. And we’re gonna end up like free Willy unless we kind of shift and pivot our, course here. So, but there will be blackouts and that’s just going to happen and it’s gonna have to happen, right?
In order to get these people that have this kind of free willy feel good environmentalism to reevaluate their priors when it comes to wind and solar and, then maybe they look and say, well, okay, well let’s look at nuclear. We’re willing to accept some of the, risks that come with Over budget on a project or having it take longer because we understand that it’s a long-term practical move, but we’re not there yet.
And it’s gonna take people’s well, basically the hard hammer of reality smashing people’s misconceptions about this. And, that sucks because it’s always the people who can least afford a blackout that are hurt the most by it. Right. And the, the prices also go up on the way to the blackout.
So this is, it’s the comfortable class just kind of having maybe rational ignorance, right? Like it’s not their fault that the the lights have always come on, so they’ve never had to think about this before. So they kind of let stupid ideas become their preferred narrative, but, eventually there’s gonna be collateral damage and until it’s them, they’re not gonna.
[00:48:21] Mark Hinaman: Well, what I, what I heard is it’s gonna get worse before it gets better, but hopefully after it gets worse it will get better and,
[00:48:27] Isaac Orr: oh yeah. You wanted an optimism, didn’t you? Sorry, I didn’t, well, I, before you say the optimism
[00:48:31] Mark Hinaman: thing, I do love the whale analogy. Let’s highlight this a little bit.
Even for nuclear adoption, it’s, almost like we’ve got this boomer class that was terrified of the bomb and they’re never going to be able to be rehabilitated. So to speak, to live in a world that like nuclear is okay. So we just have to, expose them to it.
And then once they pass and their time and power is over, then the people that grow up as whales in this, yeah, progressive nuclear world will be more comfortable with it and can actually yeah, survive in it. But that’s fun metaphor. Dual dual purpose. All right. So optimizing. Yeah. I’m gonna force you to, yeah, leave us on a high note.
[00:49:11] Isaac Orr: Well, I mean, what was it? Winston Churchill said The Americans always do the right thing after they try all the wrong ones. It’ll happen we’ll get our fingers slammed in the door enough times, and we’ll pull our heads out of our rears. But until then, it’s not gonna be fun. So, eventually, The Dark Ages lasted for a long time.
Right. I don’t think it’s gonna last that long, there’s, there’s gonna be a course correction cuz there has to be.
[00:49:35] Mark Hinaman: I love it. Okay. Isaac Gore policy Fellow for the Center of the American Experiment. It’s been fantastic to chat with you. Thanks so much for taking the time.
Really appreciate it.
[00:49:45] Isaac Orr: Thanks for having me on Mark.