Oklo: A Laggard in the Nuclear Energy Space, Says Kerrisdale Founder

As an investor, I've always been drawn to companies with stable, predictable growth and robust business models. Recently, I've been keeping a close eye on the nuclear energy space, particularly Oklo Inc., a company that has garnered significant attention for its ambitious plans. However, a recent report by Kerrisdale Capital has raised some serious concerns about Oklo's viability and potential. Let's dive into the details and explore why Oklo might be a laggard in the nuclear energy space.

Firstly, let's address the elephant in the room: Oklo's unit economics. Kerrisdale Capital alleges that Oklo's fuel cost assumptions are nonsensical, with the company assuming it can acquire HALEU (uranium enriched at a low level) at just $7 per kg. Industry experts, however, estimate a more realistic price tag of $30,000 per kg. This discrepancy significantly impacts Oklo's projected overnight capital costs, levelized cost of energy, and cash returns, rendering its reactor commercially nonviable. A former Oklo employee confirmed that the company's projections are based on lowballed fuel cost assumptions, which, if accurate, would make the program unviable.



Secondly, Oklo's sodium-cooled reactor design faces several potential challenges and risks. Sodium-cooled reactors have a history of reliability problems due to the highly reactive nature of sodium, which can lead to fires and explosions if not properly managed. Oklo's reliance on low-enriched uranium (HALEU) as a primary fuel source presents another challenge, with the current sanctions on Russia making HALEU in short supply. Oklo's ambitious timeline for deploying its first reactor by 2027 is also questionable, given the company's lack of regulatory approval and the time-consuming nature of the licensing process.



Lastly, Oklo's timeline for regulatory approval and first reactor deployment is overly optimistic, according to a former NRC Commissioner. The company aims to submit a license application in 2025 and deploy its first reactor by late 2027. However, the Commissioner dismissed this timeline as "beyond optimistic" and estimated it could take at least four years to obtain a license. This delay would push the first reactor deployment to 2031 at the earliest, lagging behind competitors like TerraPower and NuScale, which have already received approval and are on track to deploy their first reactors by 2023 and 2024, respectively.



In conclusion, Oklo's ambitious plans for sodium-cooled reactors face significant hurdles, including unrealistic fuel cost assumptions, historical reliability issues, and overly optimistic timelines. As an investor, I'm concerned about Oklo's commercial viability and potential for growth. While the nuclear energy space holds great promise, Oklo's current trajectory raises red flags. I'll be keeping a close eye on the company's developments and will continue to evaluate its prospects in the context of the broader nuclear energy landscape.