A Comparison Of A Small Modular Reactor And A Batchelor Party.
There Are Many Lessons To Be Learned From The Surprising Similarities In The Timeline Of Each Project.
I have been thinking of this for a while. In this article, I will be making comparisons of SMRs versus a Jolly Boys’ Outing [reference Only Fools and Horses if you are not aware of the term].
When a proposal is first made, there is a lot of interest and excitement built around all of the positive outcomes of the change.
However, as the actualisation date approaches, people start to consider the negatives and often distance themselves from the idea.
The Jolly Boys Outing
I have organised and attended numerous trips away with my friends over the years. Birthdays, Stag Nights/Batchelor Parties, Golfing Trips in the UK and abroad with overnight stays in many instances.
When you first propose — “we’re going to Vegas for four days in 18 months” — you are met with a wave of excitement and interest — “this sounds great, I’m in”, “I can’t wait to get away for four nights”, “I can save the money by then, sign me up”. “Let’s do this!”
Following the initial excitement, people usually need to commit to attending by paying deposits for hotels and flights.
With the need to commit, people start to show elements of negativity towards the whole thing — “actually I can’t afford it”, “I should spend my paid holiday time with my family”, “my wife doesn’t like the idea of me going to Las Vegas”.
You start to get your first dropouts, but people commit a little money and stay positive about the whole thing in the main.
As the weeks and months go by and the date of the holiday approaches, the ratio of the negative versus positive feelings toward the whole thing starts to swing more towards negativity.
So much so that the consequences of losing a deposit and causing the organiser hassle is far less than dealing with the negative consequences of the holiday.
So people drop out and, in some instances, even start to talk negatively about others still going on the trip.
Finally, you get to the execution phase, where the final plans are made, plane tickets printed, hotels paid, and currency ordered. At this point, you have three groups of people left in the race:
- Those that cannot drop out (Best Man, family member etc.)
- Those with no negative consequences of the trip (single, no children etc.)
- The converted (the benefits of the trip outway the negatives)
Hopefully, the number of people still going on the trip is enough to remain justifiable to the rest of the group and the trip goes ahead successfully.
Small Modular Reactors
Small Modular Reactors, SMR’s or Generation IV Nuclear Reactors, are a new generation of nuclear reactors under development across the globe.
SMRs come with the promise to provide nuclear energy more flexibly, requiring less capital outlay and land usage than traditional large scale reactors.
Similarly to our Jolly Boys’ Outing, SMRs, need to present the idea and get initial upfront investment for investors (the deposit), which many SMR startups have accomplished so far.
As the technology starts to get closer to realisation, the magnitude of the work needed to get the permissions to build and operate the units is better understood.
Additionally, there is much work to maintain public support behind the technology.
Just like our lad’s holiday, at the end of the process, there will need to be enough support for any SMR to ensure that there remains a financial case to support the project in the future.
Currently, (March 2022), there is a lot of excitement around SMRs. There is lots of positivity around the technology is cheaper, more flexible, more attractive, palatable to the public.
Although China has an operating SMR [reference], those from the US, Canada, UK and France are about ten years away from realisation [reference].
We can confidently say that the positives of SMRs currently outweigh the negatives because most of the technologies have been provided with a ‘deposit’ as upfront funding to continue to the next stage of development.
Small Modular Reactors are now at the stage where development continues to make good progress, and the months and years roll on by. As the date approaches an SMR being delivered to a location, the negatives will start to creep in.
We are not far enough down the road for people to drop out but there are already questions about whether the SMRs will be as cheap or small as promised.
We may be starting to see this as recently, in January 2022, the NRC rejected the Oklo SMR licence application stating “information gaps in its description of Aurora’s potential accidents as well as its classification of safety systems and components”.
NuScale did receive approval from NRC in September 2020, but this came at a cost of $10+ million.
With investors having to put more money in to support the endeavour, will we see dropouts?
It is yet to be seen how the balance of positive vs negative perceptions around SMRs will affect progress in the future. As key decision points approach, I hope that the positivity around SMRs is enough to make them a reality.
Optimism Bias, Loss Aversion and The Endowment Effect
The above are some of my thoughts on the comparisons between building a Small Modular Reactor and the organising of a Stag Do I am attending in Las Vegas in May.
I couldn’t leave the article there, and I had to research whether this is a common pattern.
I am a project manager by trade and personality. So, naturally, I look to my experiences and knowledge as a PM to make sense of all of this.
I found three rules or patterns that explain the reasoning behind the events.
We can see optimism bias as the proposal is made in our tendency to overestimate the likelihood of experiencing positive events and underestimate the possibility of experiencing adverse events.
And in both the above examples, this is particularly clear when the reality of the proposal is perceived to be far off in the future.
As we move along the process, we find loss aversion in that we, as human beings, experience losses more severely than equivalent gains.
So, as the pendulum swings with more negative aspects of the project setting in (earache from your wife or challenges from a regulator), we can start to irrationally weigh the stronger feeling higher than the perceived losses.
And finally, as we approach the final stages of realisation, a future step in both instances above, the endowment effect results.
The endowment effect is where an individual places a higher value on an object they already own than the value they would put on that same object if they did not own it — “a bird in the hand is worth two in the bush!.
This type of behaviour is typically triggered with items that have an emotional or symbolic significance to the individual, as both do above.
Staying at home with the kids isn’t so bad after all!
The current Large Scale Reactors aren’t that bad after all!
Final Thoughts
This is the most I have enjoyed writing an article to date. It has taken me the most time, needed a lot of effort, and taken considerable research.
But, the fact that I have taken a snippet of a thought in my head, that two very different scenarios in my life seem to be following the same pattern, and turned it into this article has given me a lot of satisfaction.
Where to go from here for SMRs? [And the Stag Do]. I think that should be a topic for another day.
SMRs will indeed have a place in the global energy mix in the future. They remain far enough away for optimism bias to prevail, but this will change with progress from vision to decision.
Hopefully, the nuclear companies putting their money into the technology are ready and willing to see them through despite the inevitable challenges.
Hopefully, you will have found the above interesting, insightful and thought-provoking. Please ask any questions in the comments below.
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