Navigant Research Blog

A Pair of MIT Scientists Try to Transform Nuclear Power

— September 27, 2012

Leslie Dewan and Mark Massie are Ph.D. students in nuclear engineering at MIT.  For most of their peers, the options upon graduating are pretty simple: teach, or work for one of the national labs.  Dewan and Massie, though, decided on an unconventional path: like a couple of Stanford grads, they’ve formed a start-up.  Incorporated in 2011, it’s called Transatomic Power, and its mission is to transform the nuclear power industry.

Transatomic’s product is called a “Waste Annihilating Molten Salt Reactor.” If you’ve read my book, SuperFuel, you’ll recognize it as an update on an old reactor technology that was pioneered at Oak Ridge National Laboratory, in the 1950s and 60s.  SuperFuel focused on another type of molten salt reactor, a Liquid Fluoride Thorium Reactor, or LFTR.  Dewan and Massie’s design is fuel-agnostic in the sense that it can run on either uranium or thorium; as the name implies, its signal feature is that it can consume spent fuel from conventional light-water reactors.  Transatomic joins a growing list of start-ups, including Flibe Energy, that are trying to revolutionize nuclear power by bringing back alternative fuels, including thorium, and alternative reactor designs.

(A quick note on the uranium fuel cycle: Most uranium in the ground is the isotope uranium-238 (U238), which is not fissile, and thus is no good for producing power.  Conventional reactors require fuel in which the percentage of the isotope U235 has been enriched up to 3% to 5%, or “reactor-grade” uranium.  Uranium that is enriched to around 20% U235 is weapons-grade.  That’s why it’s a relatively easy step for countries with enrichment capability, like Iran, to build nuclear weapons programs.  Thorium requires no enrichment.)

‘A Leapfrog Move’

“Nuclear power is in a cul de sac,” Russ Wilcox, the CEO and co-founder of Transatomic, told me in a phone interview.  “The nuclear industry knows it’s in trouble, it’s not quite sure what to do, and it’s just trying to survive for the moment.  It’s a fabulous time to do a leapfrog move.”

Wilcox was one of the founders of E Ink, which commercialized electronic paper materials originally developed at MIT’s Media Lab and ended up licensing the technology to Amazon, for the Kindle, to Barnes & Noble’s Nook, and so on.  E Ink was sold to Taiwanese company Prime View for nearly half a billion dollars in 2009. Transatomic’s plan is to build a prototype reactor in 5 years, commercialize the technology in 15 years, and have reactors come online by around 2030.  The company doesn’t plan to build and operate nuclear power plants, but to license its reactor technology.

Molten salt reactors (MSRs) can achieve much higher burn-up factors than conventional uranium reactors.  In other words, while conventional reactors harness only around 3% of the available energy in a given volume of uranium, MSRs can capture much higher percentages – up to 98%, according to Transatomic (I should note that the nuclear experts I consulted for SuperFuel believe that burn-up factors of 50% are more realistic).  Beyond that, the company is not releasing details of its patented reactor technology.

Liquid-fuel reactors, such as MSRs, also offer inherent safety advantages: because the fuel is liquid, it expands when heated, thus slowing the rate of nuclear reactions and making the reactor self-governing.  Also, they’re built like bathtubs, with a drain in the bottom that’s blocked by a “freeze plug.”  If anything goes wrong, the freeze plug melts and the reactor core drains in to a shielded underground container.  Essentially, if Transatomic’s design works as advertised, MSRs could solve the two problems that have bedeviled the nuclear power industry: safety and waste.

Noting that China plans to build a liquid-fuel reactor (likely powered by thorium) within 5 years, Wilcox says that he and Dewan and Massie – currently the entire staff of Transatomic – would prefer to build the prototype MSR in the United States, but will consider another country if the licensing or financing proves too difficult here.  (The Nuclear Regulatory Commission recently licensed a two-reactor nuclear plant in Georgia, the first new reactors to be licensed in this country since 1978.  The reactors are conventional light-water uranium powered models.)

In SuperFuel I noted that the nuclear power industry has a generational problem: most of the leading executives in the industry are now in their 60s.  It will take a new generation of scientists and technologists to spark a revival in nuclear power technology.  Transatomic Power is an encouraging sign that this is beginning to happen.


Retreat on EVs Not a Rout

— September 25, 2012

Toyota’s announcement that it is cutting back on a planned battery electric vehicle (BEV) launch is the latest bad news for believers in emissions-free driving, but it reflects the reality that vehicle batteries still need improvements before BEVs will be ready for the mass market.  While fleets with compatible driving routes and some consumers are more than happy with their BEVs today, other uses stretch the vehicles beyond their limitations.

Like several of its peers, Toyota never fully committed to bringing a BEV to the masses.  The eQ (originally the iQ) was only intended by Toyota to be a limited production vehicle for fleets at best, so reducing production to a hundred or so isn’t really significant to the overall demand for BEVs.  Toyota has always believed that fuel cell technology is the long-term answer for zero emissions driving, so the company pulling back from a tepid market should not be viewed as a surprise.

Of more concern is dwindling demand for the Nissan Leaf in the United States, and the company’s having to deal with dissatisfied customers in Arizona.   With sales of the Leaf falling below 1,000 cars for the past few months, Nissan is wisely retooling the battery pack for 2013.

As I have said several times at industry events, the state of BEV technology in 2012 is not sufficient to create a market of a million vehicle sales annually.  The automakers need to come out with battery packs that can retain a greater percentage of their storage capacity for longer, cost half as much, and have improved energy density, so that they can serve many driving cycles.  Improvements are being made on all of these fronts, and second- and third-generation BEVs will perform above today’s levels.

It’s important to note that it’s not all dark days for BEVs.  Renault ‘s electric vehicles are selling well in Europe, and the Fluence is being launched in South Korea as the Renault Samsung SM3.   Better Place is likewise having success with the Renault vehicles in Denmark and Hawaii.  And in Norway, EVs are now an impressive 3.6% of new vehicle sales.

And then there’s Tesla Motors, which is so confident about the robustness of its battery packs, that the company is curiously developing a fast charging network.

The BEV market is divided between “true believers” (Nissan, Renault, Coda, Tesla), pragmatic companies that are equally invested in plug-in hybrids (GM, Ford), and “only if we must” companies (Toyota, Fiat-Chrysler, Honda).  Going all-in today or fully dismissing the market for BEVs are both dangerous strategies.  The verdict on their long-term viability won’t be in until at least 2015, so until then, a pragmatic approach is likely best.


Navistar Emerges from Emissions Struggle

— September 25, 2012

Earlier this month we saw the final blow to a system of diesel exhaust gas treatment and the end of a saga that has dominated talk in the heavy duty engine market for a couple of years.

To recap: Back in 2001, the EPA issued new rules saying that by 2010 diesel engines could not emit more tham .20 grams per brake horsepower of nitrogen oxide (NOx).  By 2010, there were two ways to meet these requirements: selective catalytic reduction (SCR), a system that sprays urea, or diesel exhaust fluid (DEF), into the hot exhaust gases to break the NOx, and exhaust gas recirculation (EGR) which reduces NOx by lowering the combustion temperature in engines.

By 2010, Navistar was the only U.S. diesel engine maker to be pursuing an EGR strategy, but the EPA had not yet certified EGR engines as compliant with the new standards, whereas competitors’ SCR engines had been ruled compliant.  In July 2011, Navistar sued the EPA, claiming that SCR systems do not meet the 2010 Clean Air Act requirements because drivers can opt not to refill the exhaust fluid tanks, leading to emissions significantly higher than the 2010 standards.  Predictably, other engine makers including Mack, Volvo, Cummins, and Daimler AG were none too happy about this and filed a lawsuit of their own.

Navistar continued selling engines that did not meet the 2010 requirements, with credits banked prior to 2010.  In February 2012, these ran out, and the EPA allowed Navistar to sell engines with a $1,900 fine.  The engine manufacturers’ suit claimed the EPA did not follow and did not provide the legally required period for comment or formal notice.  In June, a federal court sided against the EPA, opening Navistar to further fines or an actual ban on sales of its engines.  This resulted in an about-face for Navistar on SCR and the exit of its CEO in September.  Lewis Campbell from Textron (conglomerate manufacturer of Bell Helicopters, Cessna aircraft, E-Z Go golf carts, and others) was appointed.  However, Navistar investor and takeover artist Carl Icahn slammed Navistar for how the choice was made and asked for new board seats to be released to investors, essentially indicating that this saga hasn’t quite finished playing out yet.

What does all this mean for Navistar in the smart transportation space?  I don’t see a huge impact either way, but as Navistar tries to emerge from this debacle, its resources for smart transportation R&D will likely be constrained.

That said, in the short term, the reversal could help Navistar’s natural gas trucks.  Navistar already has a relationship with Cummins for natural gas engines for Cummins’ trucks.  This upheaval in the diesel truck engine sector may push Navistar to market its natural gas options more heavily to avoid the battle over NOx emissions.  The fledgling electric truck program (E-Star along with a bigger sibling in development with AMP) may not see the same benefit, since the program costs and retail pricing are significantly higher.  Longer term, Navistar’s natural gas truck unit seems likely to remain solid, but the electric truck program could be at risk without a fast turnaround on declining profits.

One thing can be said for sure: truck manufacturing (cleantech or not) doesn’t generally thrive in the midst of this sort of upheaval.


As EV Sales Continue to Disappoint, Makers Eye Car Shares

— September 25, 2012

EV makers who have tried to develop a model for the mass market have not done well to date, as they must convince buyers that the high initial costs of EV ownership will be offset by the lower ownership cost of more efficient vehicles.  While the argument is mostly true, it takes a long time for an EV to pay itself off (see table below).  In a robust global economy with lots of young progressive buyers aged 18-35, it might be easier to convince potential customers.  Unfortunately, EVs have emerged in an economy that is bumbling at best, and vehicle ownership among those aged 18-35 is falling drastically.

Est.  Total Cost of Ownership Comparison at Current Fuel Prices with 120,000 Lifetime Miles, United States: 2012

Vehicle Class Electricity Price Average Vehicle Price Estimated TCO
BEV-100 Midsize (with tax credit) Low 35,230 34,995
HEV Gas <2.0L Small   21,973 35,422
4-Cyl, 1-2L Gas Compact   17,184 35,588
BEV-100 Midsize (with tax credit) High 35,230 36,423
CNG Compact   26,155 37,398
PHEV-10 Midsize (with tax credit) Low 32,000 40,086
PHEV-10 Midsize (with tax credit) High 32,000 40,821
PHEV-40 Compact (with tax credit) Low 39,145 41,730
HEV Gas 2.4L Midsize   26,783 41,736
4-Cyl Midsize Diesel   23,973 41,867
4-Cyl Midsize Biodiesel   23,973 42,527
4-Cyl, 2.4L Gas Misize   22,421 42,876
PHEV-40 Compact (with tax credit) High 39,145 42,982
SSV 4-Cyl 2.4L Midsize Gas   28,613 47,499
6-Cyl Gas Midsize   26,881 51,882
4-Cyl 2.4L FFV Midsize   25,263 53,440
6-Cyl FFV   29,670 62,169

(Source: Pike Research)

The struggles of EVs aimed at the masses has pushed back deployment in favor of other new plug-in EV models, as plug-in hybrid sales represented by the Volt and Prius Plug-in have shown strength.  The best example of this phenomenon is Ford, which has de-emphasized its Focus Electric in favor of its C-MAX Energi Plug-in Hybrid.

Despite all of this, bright spots are emerging through innovative business models.  One early success has been selling the vehicle and leasing the battery.  Another is simply selling the service the vehicle provides (not the vehicle itself) through car shares.  While the former is certainly an interesting financial concept, its practice is confined to select European markets.  The latter, however, is seeing worldwide adoption.

Car share programs like ZipCar and Hertz Connect have been early adopters of hybrid and efficient vehicles as the fuel savings have cut costs significantly.  A more interesting development has been the increased number of vehicle makers eyeing car shares as launching points for their EVs.  The first major automaker to try this was Daimler, through its subsidiary Car2Go, which has put 300 pure electric Smart ForTwos in San Diego and 300 in Amsterdam.  Other automaker programs utilizing EVs include Renault’s Twizy Way in France, BMW’s DriveNow in San Francisco, and Kandi Technologies’ future EV car share in Hangzhou, China.

The strategy behind this movement has a strong business case as it 1) mitigates the high initial costs of EVs by distributing the EV premium throughout a community of members, 2) allows progressive young motorists the chance to experience the benefits EV ownership without the costs, and 3) harnesses the growing trend of car ownership avoidance among those young, progressive, would be buyers.

The EV movement may be flagging due to a lack of individual interest at current costs, but that doesn’t mean EVs won’t be on the streets.  The major existing car share programs like Car2Go are gobbling up prime service territories.  Automakers on the sidelines are falling behind in a market that could prove as profitable as the Prius is for Toyota.


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