Adams Atomic Engines, Inc.





Marketing Nuclear Power

by

Rodney M. Adams

Paper presented at the 1995 ANS Summer Annual Meeting held in Philadelphia, PA, June 25-29 1995.

Background

The United States market for new nuclear heated electrical generators has been weak for over two decades. The last successfully completed nuclear order was placed in 1973, when there were still people being drafted, when Richard Nixon was still President and when I was just entering high school.

No other industry in the country has done so much to make the world cleaner and more secure and received so little credit for doing so. No other industry is moving so slowly to take advantage of its unique strengths. Perhaps no other beneficial industry is in such danger of being legislated and talked out of existence.

It is time to begin discussing a new sales strategy. The existing plan is not working very well.

Marketing As a Business Function

Marketing is one of the fundamental jobs of any successful organization, whether the goal of the organization is to make a profit, help the downtrodden, or send a man to the moon. Marketing is not limited to advertising, promotional material, or personal relationships developed by salesmen. It is a team enterprise that requires a focused effort to identify potential customers, to learn what the customer needs, to develop suitable products to meet those needs, to package products in a form that will attract customers, to price the products at a level that will encourage purchases and to inform potential customers of the product benefits. A good marketer emphasizes benefits, not technological features.

Several components of successful marketing have been missing from the efforts of the nuclear industry. The industry has ignored a huge segment of its potential customer base. It has failed to develop products to meet the stated needs of the few customers it has identified. It has failed to package its products in an attractive form. It has a spotty record in pricing its product competitively. Finally, it has forgotten to tell customers about its benefits in a manner that will be accepted and remembered.

Power Suppliers, Not Baseload Plant Builders

It is technically possible for nuclear energy to replace chemical energy in almost any application. Nuclear energy can be used for small DC power supplies, for moderately sized heating and power units, for ship propulsion, and for large scale electrical power generation. Only the last has received any attention from the commercial nuclear industry, even though researchers have recognized the other markets and even developed prototype products to serve them.

Nuclear Batteries

In a world where billions are being spent to develop better batteries for portable computing devices, camcorders, artificial organs, zero emission vehicles and cellular telephones, where is the nuclear industry? Nuclear batteries that were launched over a decade ago are still in use in outer space helping to provide us with detailed pictures of distant planets. Plutonium heated pacemaker batteries designed to outlive their hosts have been proven technology for over twenty years.

It should not be difficult to figure out a way to sell people on the idea of powerful batteries that can last for years, not hours. It might be especially easy to sell the batteries to those who frequently experience low power warnings on their laptop PC. Since many of those people are influential opinion leaders or decision makers, it would be good for the whole industry to produce long-lived nuclear batteries. They might be a perfect means to introduce influential people to the benefits of our using nuclear energy over chemical energy.

Power for Remote Areas

In developing countries and in remote areas of industrialized countries, there are few sources of reliable electricity. The customers are spread out, making it costly to string enough of them together to make a modern central power station feasible. Terrain or distance from supplies can make fuel deliveries difficult and expensive. In these situations, the power system of choice is often a diesel engine that runs on a curtailed schedule to conserve fuel. Power can cost as much as 50 cents per kilowatt hour, with 25 cent electricity being common. If people are willing to pay 25 cents for a kilowatt-hour of electricity, there is a potential market with impressive rewards compared to those available in the United States. This market is a natural for a compact nuclear plant that does not have fuel supply constraints.

Ocean-going Ships

There are tens of thousands of commercial ships plying the world's oceans carrying as much as 95 percent of the world's trade as measured by weight and volume. Most of those ships maneuver out of port at low speed and then go to full power for their journey in order to maximize productivity. Because ships cost a great deal of money, the owners try to keep them employed for as much of the year as possible. The current power system of choice for this market is a large diesel engine.

The mode of operation, however, is a lot like a baseload power plant, an application where nuclear energy has a significant fuel cost advantage. Additionally, because a ship must carry its fuel in space that could be devoted to revenue producing cargo, the compact nature of nuclear energy is also advantageous. The plant needed to serve this market is about the same size as that needed for small power grids. The reliability of nuclear reactors as sea going energy sources has been adequately demonstrated by extensive military experience.

Traditional Customers

Even in the electrical power plant market in industrial countries, the nuclear industry has often failed to serve its customer needs. Though there has been progress made in the effort to license advanced light water reactors, there is no sign that utilities are ready to begin purchasing them. The customers have said that they do not need any new baseload capacity right now, but that is the only product that the nuclear industry has to offer. The electrical power market continues to grow, however. Utilities and independent power producers are buying intermediate sized generating plants that more nearly match the existing growth rate.

Product Packaging

The way that power systems look is becoming increasingly important. Although it is rarely explicitly stated, one of the reasons for siting disputes is aesthetic. People do not like large facilities that dominate the landscape or spoil pristine views. Stacks and cooling towers sometimes attract protesters who might not otherwise be bothered by the plant.

Nuclear plant designers should take advantage of the natural characteristics of nuclear energy to reduce the visual impact of the plants and to make them attractive places to visit. There is no need for a tall stack to be associated with a nuclear plant; there are no noxious gases that must be continuously disposed of. There is also no need for giant cooling towers, especially ones that call to mind the shape of a mushroom cloud. Obviously, it is easier to landscape a nuclear facility than it is to landscape one that is surrounded by a coal yard, storage tanks or an ash pile. We should take maximum advantage of the way our plants look.

Cost Focus

The nuclear industry has not paid enough attention to cost. In conversations with people who were associated with the industry during the 1970s; the term "gravy train" is often used. I have spoken with a contractor who performed ten minutes worth of welding after spending two weeks on per diem awaiting job procedure reviews and approvals. Several recent studies indicate that nuclear spare parts cost as much as five times as much as an identical item without the word nuclear attached. The nuclear industry has priced itself out of the market.

There have recently been some impressive moves toward reducing nuclear costs, but we have to do more. We have to work with legislators and regulators to fight rules that do not improve safety, especially those that require enormous expenditures. We need to work to reduce the size and responsibilities of the Nuclear Regulatory Commission, especially in areas like SALPs, which go beyond the federal government's constitutional authority. We must remember that every dollar that the NRC spends comes from the nuclear industry.

The industry should also move away from a dependence on service and spare parts supplies. How many of you would continue to buy automobiles from a company that makes most of its money from service or the supply of consumables? It is not good for the long term health of the industry to have customers start accusing suppliers of planning systems for obsolescence.

Benefits, Not Features

A common mistake made by engineering driven companies is to focus marketing efforts on features, not benefits. In computer marketing one can see this tendency clearly when ads focus on megabytes or processor cycle speed. In power system marketing, a focus on features is indicated by thermal efficiency numbers or plant capacity. Marketers need to realize that customers care more about how a product will make their lives easier or more prosperous than they do about a list of innovative features.

Few electricity customers understand how much nuclear energy benefits them personally. The message needs to be simple and true. Here are some example statements:

The industry leaders know these facts; they are frequently mentioned in trade publications and promotional material. Industry representatives are making an effort to inform the public about the benefits associated with nuclear energy. However, the effort is failing because of a lack of commitment and an inability to learn from the successes of other industries.

Advertising and media relations

In the United States, we have a professional communications industry that is capable of convincing large numbers of people that it is cool to smoke small rolled up tobacco leaves, that the masses of bathing beauties will appear if you drink a specific brand of beer, that certain oil companies are more concerned about the environment than they are about making a profit, that natural gas is the clean power production fuel, and that one brand of aspirin is better than another.

It is often said that people's emotions have been stirred against nuclear power through the use of dramatic pictures like those ubiquitous mushroom clouds and the huge, similarly shaped TMI type cooling towers. With the help of photographers and artists, however, we have the ability to match that drama by showing how strong fuel shipping containers are, how clean our power plants are, how small they are when they do not have cooling towers and how dirty our competitors' facilities can be.

As technical professionals, we need to learn to recognize the skills of creative professionals. These people often spend as much time learning to phrase words and mold opinion as engineers do in learning to convert from one set of units to another. We need to learn to work with those professionals to make our message accessible to the people that we want to reach.

Popular media outlets have the capacity to alter people's opinion of nuclear energy in a negative direction; the same outlets have the potential to alter people's opinion in a positive direction. The industry can aggressively use the strengths of mass media in several different ways.

One obvious strategy is to purchase time so we can tell our message our way. We can focus attention on our low cost fuel, our job creation ability, our contribution to local tax bases, and our environmental cleanliness. We can let our opponents try to keep people worried about nine year old accident news or about the health effects on people who do not yet exist.

Advertising must be consistent and frequent in order to work. We could take our cue from the American Gas Association which spends tens of millions of dollars per year publishing simple, one page magazine advertisements about the cleanliness of natural gas compared to other fossil fuels. This campaign, along with the work of the gas appliance companies has helped to convince Americans that gas is clean, safe, energy efficient, and reliable. Never once do the ads mention pipeline explosions like those that recently happened in New Jersey, Russia, and South Korea.

We also need an effective media relations campaign that places positive messages and reinforces the good news. How many times have you heard about the incredible reductions in the time needed for refueling outages or the impressive increases in plant capacity factor? How many of you know how the median cost of nuclear energy compares to that from other sources?

Recently the Utility Data Institute published a list of the 25 lowest cost electricity plants in the U.S. Five of the 25 on the list were nuclear. There were only three plants on the list east of the Mississippi River, one was a coal plant in Indiana and the other two were nuclear plants in Virginia and South Carolina. There was not a single gas fired plant on the list.

The media outlets will listen to good news, especially if we are consistent advertisers. Another name for an advertiser is a media customer, and no business purposely goes around ignoring the requests of important customers.

Conclusion

The nuclear industry marketing effort mimic those of industries that have successful convinced people to buy their products. The industry should take the following action:

The nuclear industry is not dead. People continue to purchase energy, our core product, in increasing quantities. Energy is not a fad, but the industry is highly competitive.

In every market battle there are people that seek to eliminate competition instead of working to supply a better product. That is certainly true in the energy business. We will never convince everyone the nuclear is the way to go, but we can certainly convince one customer at a time that nuclear energy can meet his particular needs at a competitive price. That will be a rewarding endeavor, but success will depend upon a well-planned and executed sales strategy.


I am intrigued. How can I find out more?


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