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Energy Efficiency is… Dumb

Many of the subscribers to this newsletter know me through commercial real estate but I also spent a few years early in my career as a renewable energy developer and have always maintained a presence in the energy industry. This topic is something I’ve been thinking a lot about.

Energy efficiency is often presented as religion - we must reduce our energy consumption! But there is nothing inherently “wrong” with consuming lot’s of energy as long as it comes from a source that is clean (meaning minimal negative externalities such as increasing carbon emissions) and sustainable.

The real solution lies in creating more energy sustainably. With the growing energy demand from the expansion of AI technologies and the near-shoring of manufacturing to the U.S. from China, power utility companies in the US are predicting massive growth in demand over the next decade. We need a lot more abundant clean energy sources to meet the demands of a growing and technologically advancing world.

The Promise of Abundant Clean Energy

In theory, if humanity has access to unlimited clean energy many problems can be solved by increasing the order of magnitude of energy available to them. Examples:

• Ensure Water Security: The world does not have a water problem, it has a salt problem. 70% of the Earth’s surface is under salt water and 98% of all water on Earth is salt water. Desalination is a highly effective and proven technology to produce clean water - it’s just energy intensive.

• Driving to Zero-Marginal Cost Manufacturing: Combining abundant, low-cost energy with automated manufacturing processes can produce goods with effectively zero marginal cost of production beyond raw inputs. (Here’s an interesting presentation about this from six years ago.)

Potential Solution

Okay, so how do we develop clean energy sources fast and at a scale large enough to meet this rapid demand for power? Renewables are definitely a part of this solution but solar and wind have intermittence limitations and the energy density generation per sqft is relatively low.

Nuclear energy, especially through Small Modular Reactors (SMRs), offers a promising path to energy abundance. Nuclear has the highest energy density of any power generation technology available. Uranium-253 has an energy density of 3,900,000 MJ/kg vs 55 MJ/kg of natural gas. That’s 71,000 times more energy dense!

Modern nuclear designs are highly advanced and in the event of an emergency default to an “off” state vs legacy reactors could potentially meltdown. Their modular nature allows for scalability and flexibility, making nuclear power accessible and adaptable to various needs. On the All-In podcast two weeks ago David Friedberg described China’s pebble bed reactor that is impossible to meltdown and their nuclear build-out (1:27:00).

Investing in nuclear power addresses not only current energy needs but also lays the groundwork for a sustainable future, enabling us to confront global challenges and seize opportunities for innovation and growth without being limited by energy constraints.

Energy efficiency, while well-intentioned, is not the ultimate solution to our energy challenges. To truly solve these problems, we must focus on developing clean, abundant energy sources. Nuclear power, with its modern safety features and potential for scalability, offers a real solution that could see massive deployment through the end of the decade.

We’re working on a nuclear development project now so if you’d like to learn more click the button below.

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Nathan Whigham
President
CA DRE Broker License: 01793655

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