> So all of a sudden the nice town clinic has $2,500,000 in debt, raise prices accordingly...
From a financial engineering perspective this is wrong.
Both equity and debt have costs of capital. Debtholders expect interest, capital holders expect RoE. The money going to debt interest is money that would previously have gone to equity, but now does not because the equity is replaced with debt.
Crucially, the costs of debt is lower than the cost of equity because of the interest tax shield. Therefore, the vet clinic now requires less revenue to maintain or even increase its return to equity.
Technically true, but RoE expectations from a PE firm are typically a lot higher than from the original owners of a small business.
And the LBO model is much less resilient to economic headwind. Let's assume a 25% EBITDA margin business, with most costs fixed (like the clinic example). Unfortunately revenue drops 20% because of external factors. It would maybe have a tiny profit left, tax would also be tiny and there is no interest to pay. The shareholders receive near zero, absorbing most of the problem for a year waiting for times to get better.
Now the same business, same reported EBITDA, but paying a large interest sum every year to the bank. If revenue drops 20% they can't pay their interest, and banks don't just wait for next year. Now the business has the restructure, agree with the banks what that looks like, or face a bankruptcy risk.
While the new PE shareholder has a better RoE due to leverage in the upside scenario, the business (and the PE) could be completely cooked in a downside scenario. For the PE this is a calculated risk, they optimise the overall portfolio. But for the employees and customers this isn't a great scenario.
> the vet clinic now requires less revenue to maintain or even increase its return to equity
The small-town vet would have probably accepted a lower RoE. More critically, they’d have been more willing to absorb shocks to said RoE than a lender will to their debt payments.
Small businesses are notoriously bad about calculating RoE; bookstores that own a building that would rent for way more than they ever make in a month, etc.
Nice, I like the sodium fast reactor concept. Produces less waste, can be passively cooled when shut down, and doesn't run pressurized so reactor vessel can be thinner.
Sodium leaks can be nasty, but they can be dealt with.
Are there any nuclear alternatives that don't include strapping low grade bombs to the reactor core (PRW/BWR: water separation -> hydrogen + oxygen -> boom, like happened @ Fukushima) or using coolants that instantly start violently combusting when exposed to air or moisture (sodium)?
I love the promise of nuclear energy, and I understand that every single engineering decision has tradeoffs, but these tradeoffs just seem so bad? Are there really no better options?
There have been some sodium cooled designs that have used a closed cycle gas turbine using nitrogen as the working fluid for the secondary circuit, in order to avoid any issues with sodium-water reactions with a traditional steam Rankine secondary circuit.
There are also fast reactor designs using lead as the coolant rather than sodium. These are interesting, but less mature than sodium cooling. Sodium is better from a cooling and pumping perspective though.
A eutectic is an alloy that has a lower melting point than any of its components.
Lead-bismuth eutectic or LBE is a eutectic alloy of lead (44.5 at%) and bismuth (55.5 at%) used as a coolant in some nuclear reactors, and is a proposed coolant for the lead-cooled fast reactor, part of the Generation IV reactor initiative. It has a melting point of 123.5 °C/254.3 °F (pure lead melts at 327 °C/621 °F, pure bismuth at 271 °C/520 °F) and a boiling point of 1,670 °C/3,038 °F.
Yes, some lead cooled reactor designs have used LBE, others pure lead. Though AFAIU so far the only lead cooled reactors that have actually been built and operated in production have used LBE. There is a pure lead cooled reactor under construction that should be started up in a few years if the current schedule holds.
The improvement is more on the fuel cladding for classic pwr or pebble bed reactors... But even without all this, nuclear is one of the safest sources of power on the planet, because we made it so
Nuclear today isn't that much different from steam engine - the fundamentals make it a technology of the past clearly losing to the today's tech, in this case to the massive solar/wind accompanied by the battery storage.
Nuclear will work in space, as it is the only tech feasible beyond the Mars orbit.
May be, may be the fundamentals will be sufficiently, to make it feasible on Earth, different for thorium MSRs and hopefully for fusion (my favorite is fusion driven thorium reactor - no need for fusion breakeven and relatively safe as turning off the fusion, the source of neutrons, stops thorium fission)
Thorium is inefficient. And its related to steam in that steam converts to heat and power. Differentiates considerably on the front end.
Nuclear solar and wind are all natural complements. This stupid this or that argument only empowers old oil and gas tech looking to hold on to the future.
Steam usage is a wonderful invention. It's certainly not a technology of the past. Nuclear will work anywhere you don't want to have oversized transmission network and where weather conditions aren't stellar, unless ren are combined with another firm source like gas/coal/geothermal/hydro
The AGRs are advanced reactors that use an inert coolant, CO2. In fact they have been designed to cool down quicker than any credible loss of coolant. And have been in service since the 70s, with some slated to go on until 2030.
I mean the LWR fleet has proven to be incredibly safe by any objective measure with deaths per TWhr as good or better than wind/solar. The very incident you mentioned had a direct death count of 0 or 1 depending on who you ask. Industrial shit blows up all the time, you just don't hear about it because it's normal and accepted.
What needs to improve about nuclear is our ability to deliver it on time and on budget. Safety is already more than adequate.
That is never going to happen until we are building more of a consistent design. I think every LWR is use today is a custom bespoke piece of equipment.
Yes, standardizing on a handful of designs will help immensely, as well as building two or more reactors on one site to share the overhead costs between units.
For example, building out more AP-1000s is really a no brainer. The first-of-a-kind is always expensive and the AP-1000 was especially so due to many factors. We bore that cost and now we should reap the benefits of Nth of a kind builds.
The International Atomic Energy Agency (IAEA) maintains a database of advanced reactor designs, ARIS [1]. It lists 119 reactors. A lot of them are small modular reactors, and the IAEA has published a book with details about them [2]. Some of these reactors have applied for NRC approval, and you can find an enormous amount of details at the NRC website [3].
To answer your question: numerous reactor designs are very safe.
Let's start with the most techonogically mature: helium cooled gas reactors. Helium is a noble gas, chemically inert, transparent to neutrons (the only substance in the universe to have zero neutron absorption cross-section), and it has a hard-to-believe high heat capacity by mass. The downside is that helium is somewhat expensive and it can leak. China has been operating 2 such reactors for the last 4 years [4]. In the US, there is a reactor design, Xe-100, that is quite similar to the Chinese design. It is quite difficult to come up with a scenario where something bad can happen with such reactors. The only problem is that they are quite expensive to build and operate, compared to water reactors.
There is one design that is very similar to the design of helium-cooled gas reactors, the only difference is that the coolant is not helium, it is a molten salt. In the US, the company Kairos is pursuing NRC approval for their reactor Hermes. The molten salt has lower heat capacity than helium by mass, but much higher by volume. There is no need for pressurization. The salt used here is a mixture of lithium fluoride and beryllium fluoride (FLiBe). Fluorine is an extraordinarily corrosive substance, but exactly because it is so, the salts that it forms are extremely stable. Still, stable or not, they can't match the inertness of helium, so such molten salt reactors are a bit more challenging when it comes to the contact between the coolant and the reactor vessel. However, they are extremely far from being a "low grade bomb". These reactors are almost as safe as they can be, albeit a bit below the inherent safety of helium cooled reactors.
> The story took another surprising turn in 1993, when Wyman's 30-year-old son from his first marriage, Stephen, married Smith's mother, Patsy, then aged 46, making Smith her own step-grandfather’s ex-wife.
People have had a hard time believing he is who he appears to be, and tried to dig up bits of dirt or play gotcha with him. But my guess is that he really is just a wholesome, genuine, passionate guy…in an industry filled with customers and companies who often aren’t.
Berkshire had a pivot where, decades back, Munger convinced Buffett to switch from investing in bad companies at a great price to good companies at a good price. Their new strategy is still active.
That said, the turnaround 'mission' you mention about still happens, but is more associated with private equity than Berkshire.
Not quite right. The pivot was from good companies at a great price to great companies at a good price (unless you can get a great price, but that’s unlikely).
Over the long run the latter is a better and more scalable strategy.
They also have a history of buying good private companies at a good price and then let the management keep cooking. This is especially relevant to family businesses that want liquidity for the heirs and good long-term (indefinite) stewardship rather than selling to some PE vulture that will destroy their legacy.
From a financial engineering perspective this is wrong.
Both equity and debt have costs of capital. Debtholders expect interest, capital holders expect RoE. The money going to debt interest is money that would previously have gone to equity, but now does not because the equity is replaced with debt.
Crucially, the costs of debt is lower than the cost of equity because of the interest tax shield. Therefore, the vet clinic now requires less revenue to maintain or even increase its return to equity.
reply