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Paper Reports Proliferate on Future Benefits and Uses of SMRs

  • SMR modulesDOE, NEI, and several allied nuclear trade groups were busy in January issuing reports on ways to promote small modular reactors (SMRs). Their ideas about regulatory reform for advanced reactors are just plain common sense and deserve near-term action by the NRC. 
  • A case for SMRs as benefiting grid resiliency faces the reality that this is as much a market issue as it is one that relates to technical concerns.
  • A proposal for power purchase agreements from national labs for SMRs is likely to encounter tough opposition from utilities that already provide electrical power to these sites from plants that burn natural gas.

If the Department of Energy (DOE) and these trade groups could then engage with Congress to seek new authority for loan guarantees and targeted production tax credits for light water and advanced reactor designs of small modular reactors (SMRs) with the same level of effort they currently devote to grinding out paper studies, the problem of jump starting the SMR industry in this country might be solved in short order.

Power Purchase Agreements – The big idea that DOE has in its current round of SMR studies is to authorize its national laboratories to enter into power purchase agreements with SMRs to provide investors with certainty that there would be customers for the electricity they would generate once they come online.

The Nuclear Innovation Alliance (NIA) recommend this concept in their report in SMRs last Fall.  Both the NIA and DOE see this strategy as part of an effort to counteract the reality that SMRs, like the full size units, are at a competitive disadvantage in deregulated electricity markets. (More on this below.)

However, the investor owned utilities that currently provide electric power to the national labs might not be happy to see this initiative. The reason is that they have capital assets already in place that are generating this electricity with many more years of revenue service planned for them.

Given the number of states (senate) and congressional districts (house) involved in hosting 17 national laboratories, DOE is likely to run into a buzz saw of opposition against its plan to swap out the revenue streams from existing generating facilities for SMRs.

Overall, power purchase agreements for federal facilities sounds like a subsidy that is ripe for attack by natural gas suppliers and the utilities that operate gas fired plants. As long as natural gas prices stay low, say under $6-8/mbtu, it is going to be a significant fuel source for electricity generation and industrial process heat applications.

In fact, natural gas could dominate these sectors for the next several decades if not longer. This fact is not lost on Entergy and other utilities which have the majority of their generating facilities burning natural gas.

Grid Resiliency – DOE has published a report on “grid resiliency” which addresses the benefits of SMRs in keeping the grid up and delivering power to customers.

Yet, in Ohio the argument for “grid resiliency hasn’t moved the needle in terms of the governor nor in the state legislature over efforts to save the state’s two nuclear power plants which provide about 2 Gwe of CO2 emission free electrical power. In New York, its plans to save some but not all of its nuclear plants is being challenged in court.

In New York Governor Andrew Cuomo has prevailed in his efforts, aided by the deep pockets of green groups, to cause Entergy to abandon its efforts to extend the NRC licenses of the twin Indian Point reactors by another 20 years. How resilient the grid will be once the plants shut down remains to be seen. That grid supports the electrified railroads that move millions of commuters daily.

Overall, it isn’t clear how much traction DOE is going to get out of the “grid resiliency” report. (More on this below.)

SMR Power Purchase Agreements for National Laboratories

DOE believes that the way to provide “customers” for SMRs is to get Congress to authorize its 17 national labs to enter into power purchase agreements with utilities that would build them.  The Nuclear Energy Institute took a closer look at this recommendation in the DOE report which is over 100 pages long. Here are a few highlights from NEI’s summary.

According to DOE Long-term power purchase agreements between a federal agency customer and power-producing utility would help to significantly reduce the risk of constructing and operating the first small modular reactors in the U.S., the report says.

“By creating an authority that permits federal agencies to purchase power for up to 30 years, SMR developers will be able to use traditional financing to repay a project financed project or a long-term bond over an up to 30-year term, making the financing more affordable.”

Currently, only the Department of Defense has the authority to enter into power purchase agreements of 30 years in duration, in certain circumstances. Two national labs are working on SMRs but from different perspectives.

The Tennessee Valley Authority (TVA) is currently going through the Nuclear Regulatory Commission early site permit process for developing two or more SMRs at the Clinch River Site.

However, TVA has made it clear it has no plans to actually build an SMR at the site. Once issued by the NRC, the Early Site Permit has a shelf life of 20 years. All TVA is doing is keeping its options open without the risk of starting a major capital project before its time.

Another example of collaboration between a small modular reactor developer and a national laboratory is NuScale Power, of which the Utah Associated Municipal Power Systems (UAMPS) is planning to build up to 12 50 MW units at the Idaho National Laboratory.

The report, conducted by Kutak Rock and Scully Capital for DOE’s Office of Nuclear Energy, builds on a January 2017 report which studies the options available to federal agencies looking to buy power from SMRs.

Resiliency Benefits of U.S. Advanced SMRs

DOE’s report also states that there are a number of benefits to SMRs, ranging from increased safety features that passively cool reactor cores without the need for operator action to better financing options thanks to quicker construction times, less components and smaller sizes.  Without getting any further into how well the report will be received, here’s a short list of some of the benefits of SMRs as seen by DOE.

Fuel Security – SMRs can easily store up to two years’ worth of fuel on-site, allowing them to maintain power during and after extreme weather events or other threats to the grid.

Flexibility – Certain designs, like DOE-supported NuScale Power, LLC, can vary their energy output over days, hours and even minutes. This allows SMRs to respond quickly to a grid outage and adjust to changing load demands.

SMRs can also start up from a completely de-energized state without receiving energy from the grid. This can help the grid meet system requirements in terms of voltage, frequency and other attributes when recovering from an outage.

Security – In-ground construction of SMRs make them less vulnerable to extreme weather events and other physical attacks on the grid. They also use minimal electrical parts that reduce vulnerability to electromagnetic pulses.

Independent Operation – SMRs can operate connected to the grid or independently, allowing them to power a campus facility or a military base or a national laboratory in the event of grid failure.

The report makes the following additional recommendations:

  • Extend the 2005 Energy Policy Act production tax credits to cover SMRs
  • Authorize the DOE loan program to continue to support advanced reactors
  • Include nuclear energy in the definition of “clean power,” and if EPA’s Clean Power Plan continues, add a rule that allows SMRs to be given credit as zero-carbon energy sources to encourage their adoption
  • Foster collaboration between DOE and the Department of Defense to identify facilities that can benefit from hosting or siting SMRs nearby to offer additional energy resilience.

Nuclear Trade Groups Seek NRC Licensing Reforms

Three trade groups in the U.S. nuclear industry have provided the U.S. Nuclear Regulatory Commission (NRC) a set of recommendations on how the agency can streamline licensing of advanced reactors to ensure American leadership in nuclear energy.

nuclear logos

Developed by NEI in coordination with the Nuclear Innovation Alliance (NIA) and the U.S. Nuclear Infrastructure Council (USNIC), the white paper, “Ensuring the Future of U.S. Nuclear Energy: Creating a Streamlined and Predictable Licensing Pathway to Deployment,” outlines the necessary steps to support innovation, commercialization and deployment of new nuclear technology.

However, the groups say that without a modern, streamlined and safety-focused licensing process that accounts for the unique safety characteristics of these designs, “this technology leadership is at risk” and other countries will begin to outpace the U.S. in the international market for advanced nuclear technology.

The fact is that this has already happened. Russia and China have made major investments in multiple advanced reactors designs.  China is on the verge of having an HTGR for export.

To ensure U.S. companies can still develop and build advanced reactors, the paper—which was developed by NEI with the assistance of NIA and USNIC—offered the following near-term objectives for urgent consideration by the NRC commission and senior management:

  • Reverse the trend of increasing regulatory costs and excessively long reviews: The paper urges the NRC to begin taking steps against “regulatory creep” by focusing its licensing reviews on areas that are safety-significant.
  • Align the regulatory framework for advanced reactors with their inherent enhanced safety: The report says the NRC urgently needs to continue its work with the industry to tailor its regulatory guidance and regulations to address the characteristics of reactor designs other than the large light water reactors.
  • Among the potential inherent safety features of advanced reactors that should be reflected in design reviews are less complex designs leading to larger safety margins, slower accident progression, less likely and smaller off-site releases, and smaller emergency planning zones.
  • The trade groups say that modernizing design requirements via a more technology-inclusive, performance-based and safety-focused regulatory process would reduce unnecessary regulatory burden, reduce licensing and operating costs, and improve the economic viability of these technologies and the confidence of stakeholders.
  • Define licensing options clearly, including options for staged applications and approval: For some non-light water reactor designs, there needs to be a clearly defined process for licensing one portion of the design at a time. The industry is working with the NRC to apply the agency’s existing regulations that allow for staged, incremental review and approvals.
  • Related reforms are to develop better guidance for applicants to reduce designers’ uncertainty about the NRC review process, clarify pre-application interactions with the agency, and help remove unnecessary barriers to innovation.
  • Provide additional flexibility for changes during construction: Utilities and reactor builders need the ability to make changes during reactor construction without prior NRC approval for even minor changes. Without new or revised guidance and regulation for these processes, the result is increased construction costs, delays and unnecessary regulatory burden.

In summary the paper says, these needed changes will enable the use of new and innovative advanced reactor technologies and are essential to preserve the future of nuclear technology in the United States and the nation’s role as a leader in technology innovation.

SMRs ‘Crucial’ to Decarbonizing the UK Economy

WNN: Small modular reactors (SMRs) could be “a crucial technology” in efforts to decarbonize the UK’s energy system, according to a report published by the Policy Exchange. The report makes recommendations as to how government policy can lay the groundwork for their development and deployment.

The reports says, “It is clear that in meeting our low-carbon energy needs that nuclear power should play a crucial role.” The Policy Exchange says in its new report;

“Decarbonizing our existing electricity system with 100% renewable energy would be possible, but unnecessarily expensive and perhaps unsustainable. The intermittent nature of solar and wind would mean that large amounts of under-utilized backup capacity would be required at great expense to the consumer/taxpayer.”

The Policy Exchange says the reality is that in Western economies, “traditional nuclear power plants are not thriving.” Utilities are having problems financing new build projects while vendors are struggling to reduce costs and complete projects on schedule.

More significantly, the collapse of the V.C. Summer nuclear project in South Carolina, due to mismanagement, has given other utility CEO’s in the U.S. a yellow caution flag in terms of making the “prudent investor” case to their boards and stockholders for new construction.

Meanwhile, the UK government restarted, after a long delay, the first phase of an SMR competition to identify the best value SMR design for the UK. A decision on how to proceed with the second phase is due in the coming months.

The Policy Exchange report says, “The government should choose at least one Generation III+ design SMR to take forward through detailed design to demonstration. The metrics on which to judge the best SMR should be simplicity of design, potential for cost reductions and the speed of deployment.”

Rolls-Royce Awards Contract For UK SMR Module Demonstrator

NucNet: Rolls-Royce has awarded a contract to the government-backed Nuclear Advanced Manufacturing Research Centre to develop a module demonstrator for the UK Small Modular Reactor (SMR).

The demonstrator, to be developed at the Nuclear AMRC’s Birkenhead facility near Liverpool, will help develop an understanding of modules and confirm details of design and cost for the planned SMR. Rolls-Royce did not say how much the contract was worth.

Matt Blake, a chief engineer at Rolls-Royce, told NucNet: “Modular design is central to our UK SMR power station, not only for the reactor components but for the construction of the entire plant.

Rolls-Royce is developing and evaluating a range of modularization techniques which could be used to build a new fleet of SMRs. It is leading a consortium of British companies to design an SMR to deliver “low-cost, low-carbon energy”.

Rolls-Royce said the UK SMR could produce reliable energy for as low as £60 (€68, $85) per megawatt hour – competitive against wind and solar. Through its innovative approach to modular construction it can avoid the complexities, delays and overspends often associated with large nuclear reactor projects.

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Bas Gresnigt's picture
Bas Gresnigt on February 7, 2018

Even without the usual doubling of nuclear’s costs when realized, the proposed prices (€68/$85 per MWh) are way above (a factor 2 to 3) the widely expected costs of electricity in ~2030, the moment SMR’s start to operate.

The recent Dutch tender shows that even offshore wind is now offered for 60%.
And the price decreases are widely expected to continue!

So there won’t be a real market for SMR’s….

Not strange as SMR’s use similar cumbersome, hence expensive, fission processes as current nuclear reactors.

Bas Gresnigt's picture
Bas Gresnigt on February 7, 2018

Sorry. Correction:
Please read “…even offshore wind is now offered for 60%.”
as
“even offshore wind is now offered for less than €30/MWh (Cap.Factor 60%).”