announcing my modular coal startup

=economics =energy =startups

 

 

I'm writing this post to announce my new startup, C2 AI, focusing on small modular coal power plants, which will be used to power AI models that design new small modular chemical plants.

 

 

the concept

You probably know that there are lots of startups working on "small modular reactors" (SMRs) for nuclear power. Wikipedia says:

 

As of 2025, there were 127 modular reactor designs, with seven designs operating or under construction, 51 in the pre-licensing or licensing process, and 85 designers in discussions with potential site owners.

 

Clearly, so many investors and startup founders wouldn't simply be mistaken about the economics of SMRs. With that in mind, it occurred to me that the key components of nuclear power plants are mostly the same as those of coal power plants and chemical production:

- pressure vessels
- heat exchangers
- electric motors
- storage tanks
- turbines
- pipes

 

China is still building chemical plants and coal power. The US government is, at least nominally, trying to reindustrialize. But the currently proposed industrial projects are all those outdated large designs, instead of small modular ones. So clearly there's room for a new startup here.

 

 

a view from inside BASF

For some reason, big chemical companies keep making their chemical plants as big as possible, even though we all know that small reactors that can be mass-produced and shipped easily are cheaper and just generally better. I know somebody working at BASF, so I thought I'd get his opinion on where they're going wrong. He said:

 

The biggest facilities, like large ammonia or methanol or ethane cracker plants, typically make 1 to 2 million tons per year. In terms of potential energy handled per year, large power plants are 2-3 times larger, so there's probably still room for scaling up, but chemical production is more limited in terms of regional demand and also how much money investors can get together for a project.

Ultimately costs aren't a matter of scale per se, they're a result of manufacturing methods, and scale is important in that it determines the choice of those. For example, large container ships can be quite cheap per mass despite small production numbers compared to consumer products, but that cost and productivity is not inherent in their size. As you noted, America has more shipbuilding workers than Japan, despite producing about 1% as much ship per year, and US military ships are correspondingly expensive. That's because the manufacturing methods used are different despite the similar scale and products.

There are advantages to being able to transport components over roads, but fairly large things can be moved, and the issues with that type of transport don't seem to outweigh the advantages of larger sizes.

If you look at small mass-produced pressure vessels, like a scuba tank or a CNG tank for a car, they're not particularly cheap compared to larger ones, but I think the bigger issue is piping. You see, a big chemical plant is not a big truck, it's a series of tubes. Somebody needs to weld or bolt all the connections together, and it's easier to weld one large pipe than 100 small ones.

And of course large turbines are more efficient, due to tip leakage and so on. That can also be a driving factor for scale, especially for something like a modern air liquefaction plant.

 

 

Obviously, a random employee at an incumbent company like BASF doesn't understand construction or economics on the same level as Silicon Valley people. I have a whole collection of insights from US tech founders for when I need some inspiration; here's a random example:

 

Human progress was measured in GDP per capita. The next era will be measured in GDP per humanoid

- Brett Adcock

 

Actually, here's a more relevant quote, something related to energy:

 

Do you suppose ships will never be powered by fusion?

- Paul Graham

That kind of visionary thinking is exactly what makes Paul Graham such a legendary VC.

 

 

why coal

I've explained the basic concept for my startup, but you might be wondering: why coal power in particular? There are a few reasons:

 

 

AI

AI is the hot thing in America right now. In terms of future economic prospects, it's kind of the only thing: 92% of recent US GDP growth was from AI datacenters. But that's OK: I have it from a reliable source that if we just keep building AI datacenters, everything will be work out somehow.

The fact that these datacenters need a lot of power is widely understood. So, some investors are interested in ways to solve that issue.

 

 

VCs

Current VCs are mainly interested in potential trillion-dollar companies. These days, most of the money is owned or controlled by people wealthy enough that a small chance of a small slice of a $1 billion IPO just isn't worth getting out of bed for. Electricity is a big deal, so the potential market size is large enough for big investors to care.

 

 

comparison vs nuclear

There's already from VCs interest in SMR startups. That means, at least for some investors, we don't have to go through a whole complicated argument - all we have to do is demonstrate the advantages of burning coal as a heat source over small nuclear reactors. China helps make that argument: while it has built a lot of nuclear reactors, they've built much more coal power than nuclear power, despite not having the nuclear power regulations that that US does. And some of those nuclear plants were needed for its large nuclear weapon buildup.

That makes for a simple argument, which is important when you're dealing with VCs. They have lots of important things to think about and can't afford to get bogged down in minor technical details the way I do.

 

 

global warming

There used to be a lot of concern about reducing CO2 emissions, but global warming has fallen out of fashion among political leadership. Germany is burning more coal, Trump is advocating for coal specifically, and CO2 levels have increased by a record amount. The current political winds favor coal.

 

 

the future is carbon-bright

AI is the future and it's time to get on board the freight train or be left behind in our smoke.

We're currently closing our pre-seed round, but we're always looking for 100x engineers who want to ship molecules. If you're tired of just moving bits and want to build the physical infrastructure for the AI revolution, DM me. We're hiring.