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Dan Yurman
Dan Yurman
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 ¡ Posted in Energy Business

DOE ~ US Needs to Plans 3X Expansion of Nuclear by 2050

  • DOE ~ US Needs to Plans 3X Expansion of Nuclear by 2050
  • NIA Report on Project Management for New Nuclear Development

DOE ~ US Needs to Plans 3X Expansion of Nuclear by 2050

AI and data center load growth is aligning the fundamentals for new nuclear with requirements for 24/7 power, valuing decarbonization, and investment in new generation assets.

In 2022, utilities were shutting down nuclear reactors; in 2024, they are extending reactor operations to 80 years, planning to uprate capacity, and restarting formerly closed reactors.

US DOE Launches First Update Of Liftoff Report

(WNN) Unprecedented load growth, renewed interest in Westinghouse AP1000s, and increased recognition of the value of the existing nuclear fleet – including plans to restart closed reactors – have prompted the US Department of Energy to issue an updated version of its Pathways to Commercial Liftoff – Advanced Nuclear report.

“Pathways to Commercial Liftoff” is a series of reports launched by the Department of Energy (DOE) to provide public and private sector capital asset managers with a perspective as to how and when various technologies could reach full-scale commercial adoption. The port includes an analytical fact base and critical signposts for investment decisions.

The first four Liftoff Reports – designed as “living documents” to be updated as the commercialization outlook on each technology evolves – on clean hydrogen, advanced nuclear, and long duration energy storage, were published in March last year.

The DOE launched the updated ‘Advanced Nuclear’ report on 09/30/24 at the same time as it announced nearly $3 billion in federal loan guarantees and grants to support the repowering of the Palisades nuclear power plant in Michigan, which shut down in 2022. The same week Constellation announced it plans to apply for a $1.6 billion loan from DOE to reopen TMI-1 in Pennsylvania.

In the past year the report notes there has been a widespread surge in electricity demand after decades of stagnation has increased the need for and interest in nuclear. Much of this load growth is being driven by artificial intelligence and data centers with a particular need for carbon-free 24/7 generation concentrated in a limited footprint.

“In 2022, utilities were shutting down nuclear reactors; in 2024, they are extending reactor operations to 80 years, planning to uprate capacity, and restarting formerly closed reactors.”

Nuclear energy provides a differentiated value proposition for a decarbonized grid. It generates carbon-free electricity, provides baseload power that complements renewables, has low land-use requirements, and has lower transmission requirements than distributed or site-constrained generation sources, as well as offering high-paying jobs and significant regional economic benefits.

The report identifies a committed orderbook of 5-10 deployments of “at least one reactor design” of at least 1,000 MWe as the first essential step for catalyzing commercial liftoff. If those 5-10 reactors are of the same design, construction costs are largely expected to decrease based on repeat building and learning by doing. DOE asserts that value and cost control increase as large reactors are built in ‘fleet mode.”

The primary barrier to committing to new nuclear projects cited by many potential customers is cost, or cost overrun risk. Measures to overcome this problem include including sharing costs across multiple units being under construction, public / private partnerships on funding, and ensuring on-budget delivery through improved cost estimating and implementing best project management practices, can help to overcome this.

Another barrier identified in the report is the lack of “nuclear and megaproject delivery infrastructure” in the US, and it says this must be addressed:

“The integrated project delivery model aligns incentives between owners and contractors to deliver projects on-time and on-budget. Funding constructability research could target the drivers of cost overruns and improve project delivery.”

Economies of scale

When it comes to costs, the report finds, large reactors provide “powerful economies of scale”, with generating costs at multi-units plants 30% cheaper per MWh than single unit plants. This makes large reactors a good solution for bulk electricity generation.

Because civil works construction drives capital costs, the value proposition for small modular reactors (SMRs) centers around maximizing design standardisation and factory production. While SMRs may be more expensive than large reactors in terms of dollars per MW and dollars per MWh, they potentially offer a smaller overall project costs. SMRs “may be the right fit for certain applications” such as replacing smaller retiring coal plants or industrial processes requiring high temperature process heat.

Microreactors could serve a variety of use cases where their compact size, transportability, and reliability are highly valued by specific customers. However, to justify investment in manufacturing facilities, microreactor designers may require a committed orderbook of some 30-50 reactors. The reports notes that an orderbook of 50 reactors “would only amount to 500 MW total for 10 MW reactors, which could be achievable for a single industrial customer.”

Since the first edition of the Liftoff report was issued, Vogtle units 3 and 4 have entered commercial operation. The two AP1000s were the first new nuclear units to be constructed in the USA in more than 30 years, and Vogtle is now the largest generator of clean energy in the USA – but lessons have been learned.

“Delivering the first projects reasonably on-time and on-budget will be essential for achieving liftoff of the next wave of nuclear in the US. Vogtle provides essential lessons for project delivery.”

The report adds that the costs of those two units “is not the correct anchor point for estimating additional AP1000s given costs that should not be incurred again.”

“The nuclear industry is building momentum to break the commercial stalemate as utilities and other potential customers see the successful operation of Vogtle Units 3 and 4, anticipate sustained electrical load growth, and internalize IRA (Inflation Reduction Act) benefits. However, the industry must overcome remaining barriers to achieve liftoff.” .

“New nuclear has a critical role in decarbonization, strengthening energy security, reliability, and affordability while providing high-quality, high-paying jobs and facilitating an equitable energy transition. Industry, investors, government, and the broader stakeholder ecosystem each has a role to play in ensuring new nuclear achieves commercial liftoff and rises to meet the challenge in time.”

The report is a collaborative effort of the US DOE Loans Programs Office, Office of Clean Energy Demonstrations, Office of Nuclear Energy, Office of Technology Transitions, Office of Policy, and Argonne National Laboratory and Idaho National Laboratory.

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NIA Report on Project Management for New Nuclear Development

Developing new nuclear power projects is a complex and challenging task. Project development for an energy project involves investing in, coordinating, and executing a range of activities from site selection to licensing and engineering. Technological advances offer the possibility of developing nuclear power projects of a variety of sizes and capital requirements, opening the door for new approaches to project development.

NIA’s new report “New Nuclear Project Development” by NIA Senior Fellow Stephen Greene provides a primer on project development including what roles need to be filled, the stages of project development, and what capabilities are needed to be a project developer.

The report is intended to serve as a resource for stakeholders including regulators, congressional staff, media, developers, advocates and others interested in the role of nuclear power in meeting our climate and energy commitments.

Full text of the report is available for download here

Interest is growing in the significant role nuclear energy could play in decarbonizing energy production and improving energy security, with an increased focus on what it takes to bring a new nuclear energy project to fruition.

This paper describes the key responsibilities that need to be fulfilled during the development of an energy project, the challenges to development of nuclear energy projects, and potential solutions.

The paper seeks to clarify expectations for new nuclear energy project development and enable stakeholders to understand how the risk allocation for the next few nuclear energy projects may need to be different from that of energy projects with more established technologies and greater construction experience.

Image: NIA

Energy project development requires fulfilling many roles, including:

• Project developer – manages siting, permitting and licensing, community engagement, economic analysis, financial structuring, and most importantly, identifying the other project participants and negotiating agreements with them
• Customers for energy offtake
• Engineering, procurement, and construction contractor(s)
• Equipment suppliers and technology licensors
• Operators
• Equity investors and lenders

Many organizations with experienced project management organizations, including electric utilities and large industrial companies, may be able to effectively develop energy projects. Independent energy project developers, similar to those that have developed many fossil-fired and renewable energy projects, may serve a valuable role through disciplined risk management and the opportunity to leverage experience with multiple projects and a variety of situations. However, independent project developers have historically not developed nuclear power plants.

Three Key Factors Unique to Nuclear Energy

Three key factors make independent development of new nuclear energy projects more challenging than other types of energy projects:

• Large capital requirements

• The project development (pre-construction) timeframe is longer, and the cost is greater, than for projects using currently prevailing energy technologies

• Due to the limited commercial maturity of advanced nuclear technologies and the dearth of recent construction experience, supply chains and construction capabilities are limited, and it is more difficult to allocate risks efficiently for a nuclear energy project today than it is for projects using more established energy technologies

To be able to move forward on advanced nuclear energy projects despite the limited experience with the technologies and construction, other parties such as public utilities, industrial customers, and governments will need to step up and agree to take on key elements of project risk. In particular:

Key Elements of Project Risk

• Sponsors and offtakers, such as public utilities and industrial customers, may need to provide additional support for development due to the cost, time, and risk.

• Successful financing is likely to require sponsors and offtakers to backstop some part of project costs, at least for the first few projects of a given technology.

• Policy changes to reduce the cost of nuclear energy project development would also reduce the risk inherent in project development, facilitating more potential projects. A key area to improve is the cost and time required for licensing. Current NRC reform efforts and the ADVANCE Act are promising steps to improve the licensing process, but more actions should be considered.

• Additional government support to backstop project risk would accelerate the development and deployment of nuclear energy projects.

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