Deeptech/Energy/Analysis/ Why nuclear should be the next boom market, according to investors This decades-old technology could be the future of green energy — but with a healthy injection of startup-powered innovation By Mimi Billing 25 January 2022 Mette Fløe Nielsen, is one of the early investor in nuclear. Mette Fløe Nielsen, is one of the early investor in nuclear. \Deeptech Nuclear fusion: The bet that Europe should have won By André Loesekrug-Pietri 5 January 2023 Deeptech/Energy/Analysis/ Why nuclear should be the next boom market, according to investors This decades-old technology could be the future of green energy — but with a healthy injection of startup-powered innovation By Mimi Billing 25 January 2022 For decades investors — and many people — shied away from nuclear power. But attitudes are shifting as nuclear energy is coming to be seen as vital part of the sustainable energy mix. Even sustainability VCs are talking (almost) openly about it. Even more interestingly for investors, there’s a gap in the nuclear market that startups — and astute investors — are best placed to take advantage of. New nuclear plants will no longer be the enormous, costly installations of the past — technical developments will allow them to be smaller, and hopefully safer. Why is nuclear energy suddenly trendy again? The shift to see nuclear power as environmentally friendly is very recent, says David Frykman, general partner at Norrsken VC in Sweden. “Sweden has long been one of a handful of green countries in the world and it is in big part because we have been able to lean on our nuclear power plants,” he says. But ironically, just as nuclear power is coming back in vogue, it has been getting harder to access. Sweden, like many other European countries, is having to decommission many of its nuclear power plants, many of which were built in the 60s and 70s and reaching the end of their lives. They are moving towards using renewable energy sources, but not quickly enough to fill the gap. “Sun, wind and water won’t be sufficient in supplying all our needs. When the traditional nuclear power plants are shut down in Sweden we are turning to import electricity produced from coal in countries like Poland and Germany. That is a big step in the wrong direction,” says Frykman. The Nordics and France are some of the least polluting nations, partly because they have more nuclear power to fall back on Continental Europe has long lagged behind the US and Canada when it comes to new nuclear power plants, but there could soon be a shift on the continent. 10 EU countries, led by France, have been pushing for classifying nuclear power as green energy in the EU. Although Germany has been opposed, the European Commission seems likely to side with France when it makes its decision in the next few weeks. This would make nuclear technology eligible for a lot more investment. What are new nuclear startups doing differently? The new kid on the nuclear block is the small modular reactor, or SMR. Like traditional nuclear power plants, they split the atom to extract large quantities of energy — nuclear fission. But they do it on a much smaller scale. A traditional nuclear reactor produces 1 gigawatt of electricity, enough to power around 750,000 homes. The SMR reactors are about a third of that size, but since they are modular and use new technology they’re cheaper to build. They also have new safety features. Some have moved away from using water as the coolant for a reactor. Steam is at risk of spreading nuclear waste if an accident occurs — as happened at Chernobyl. However, with new technology, even the water-based SMRs are now very safe, according to Staffan Qvist, a nuclear energy engineer and consultant. Some SMRs, especially in Europe, have decided to move away from water to use molten salts or lead as cooling agents. Supposedly, they can make them even safer and can create better ways of storing the energy. Nuclear waste still remains a problem, although smaller than previously. No one has so far completely managed to solve it. Who are the new nuclear investors? Long lead times mean investing in nuclear power is not for everyone. Initially, it was only people with very deep pockets, like Bill Gates and Warren Buffett, who bet on the technology with an investment in US startup TerraPower. European investors are starting to get into the game too. Geneva-based investor LIFTT, for example, backed the $110m fundraise by UK SMR startup Newcleo in August. “Our market research identified more than 130 projects on advanced reactors designs and most are focused on SMR concepts. About 30 are run by recent startups, including some looking to apply different kinds of technologies,” says Maria Cristina Odasso, head of business analysis at LIFTT. “These startups are attracting the attention of private investors driving an increasing funding activity from the venture capital world.” “We were not visionaries as such, just very lucky. Now, I wish we had done more investments in this space at that time” Other early nuclear investors include Lars Nielsen, the cofounder of Danish unicorn Sitecore, and his wife and tech professional Mette Fløe Nielsen. After the acquisition of Sitecore by Swedish EQT in 2015, the couple were eager to invest in the tech space. In early 2017, they came across a newly founded Danish startup called Seaborg Technologies. “At the time, a nuclear startup was not seen as a tech company, but for us, it sounded so exciting,” Fløe Nielsen says. “In the end, it ended up being just the two of us and and a very few other investors.” “We were not visionaries as such, just very lucky. Now, I wish we had done more investments in this space at that time,” she adds. Other investors are watching the industry but not investing yet, partly because they have a more pessimistic view on the timeline for these startups. “Combined with long lead times, the capital investment requirements in any of the nuclear technologies are high. We are talking about hundreds of millions of euros or more,” says Terhi Johanna Vapola, founder of Finnish deeptech investor Helen Ventures. Vapola has analysed the sector but so far not invested. Companies, not governments, will lead this It’s not just VCs watching new nuclear startups — corporate investors are interested too. Swedish energy giant Vattenfall recently invested €1m in Fermi Energy, a company looking to bring SMRs to Estonia. Big shipping corporations like Maersk are also looking at the technology. “I believe this space is not going to be led by governments alone — it will take them too long to get behind this. It will be the big corporations that will. And not just the transport corporations and energy companies but also the big technology companies. How else will they cool all those data centres in the future?” Fløe Nielsen says. “These startups are attracting the attention of private investors driving an increasing funding activity from the venture capital world” If Google and Facebook were to sign agreements with small nuclear providers, it could really change the market. It wouldn’t be the first time. According to Qvist, the boom in wind power in Sweden was due to power purchase agreements between large tech companies and wind power companies. “This is a likely path in deregulated energy markets in Europe. We have seen this happening already in the US between some data centres and existing nuclear power plants as well as agreements for new-generation SMRs.” Car manufacturers could be another surprising backer for new nuclear reactors. Rolls-Royce is already developing an SMR in the UK, for powering its factories — even though SMR nuclear plants are small, there’s no prospect of it ever powering a single car. “We can write off that idea immediately. That would be a very large, heavy and expensive car,” says Qvist. Cargo ships, however, are a different matter. “It could work well for very large container vessels and bulk carriers, that is an excellent technical match. Aircraft carriers and large submarines have used nuclear power for propulsion for many decades, as well as a handful of civil cargo ships.” European nuclear startups that are catching the attention of investors Seaborg Technologies Founded in Denmark in 2015, Seaborg Technologies developed its nuclear reactor technology by building small scale reactors on barges and uses molten salt instead of water as a cooling agent and in the uranium fuel. It has raised over €20m, mostly from business angels like billionaire Anders Holch Povlsen, who also owns 10% in Klarna; Unity cofounder David Helgason and Lars and Mette Nielsen. LeadCold LeadCold is a spinoff from KTH Royal Institute of Technology in Sweden, founded in 2013. Since 1996 the founders have been working on a nuclear technology using lead as a cooling agent. The company’s reactors are small at 5×5 metres, produce 55 megawatts and are intended for serial production in automated factories, but it is also working on an even smaller version for off-grid applications. The company is backed by EIT InnoEnergy and KTH Innovation Fund. Copenhagen Atomics Starting with a white paper in 2014, Copenhagen Atomics uses molten salt as coolant and fuel for its SMR. In addition to building its first reactor, the company also sells molten salt test loops. The company’s waste burner will run on long-lived waste from traditional nuclear reactors and thorium. It has so far raised €20m, according to the company. Transmutex Founded in Switzerland in 2019, Transmutex’s goal is to solve the problem of radioactive waste so that next-generation nuclear energy can become a central solution to climate change. Using technologies tested at CERN, the process of “transmutation” involves bombarding the atoms of long-lived waste with fast neutrons to transform them into stable elements while producing energy. After securing its first round of financing of $7m, Transmutex is developing the architecture of its future accelerator and sub-critical reactor on simulation programs. NewCleo London-based startup Newcleo, with Italian founders, uses lead as a coolant, similar to LeadCold, and finalised a $118m funding round in August 2021 with backers such as the Italian Club degli Investitori, US-based Exor Seeds and LIFTT. Moltex Energy Founded in 2014 in the UK, Moltex is developing an SMR with salt as the cooling agent and a waste burner that runs on recycled nuclear waste. In 2019, Moltex became the first-ever nuclear reactor design company to raise money through a crowdfunding campaign, securing £5m in less than a month. Mimi Billing is Sifted’s Nordic correspondent. 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