Green Nuclear Restart ..........

Green Nuclear Restart....

May 2, 2024

NUCLEAR GREEN BONDS AND RESTARTS ARE NEW NUCLEAR STRATEGIES TO FIGHT CLIMATE CHANGE AS DEMAND GROWS 

Expansion of nuclear electricity generation is one approach to help solve the Nation's greenhouse gas emissions problem.  New strategies such as the issuance in 2024 of $900 million of 30-year green bonds for nuclear facility extension and maintenance was the first corporate green bond for nuclear. Other strategies include recommissioning of closed units and technological development of smaller modular nuclear units (SMRs).  There are strengths and challenges in the resurgence of new nuclear generation which are outlined here. This comes at a time when there is a significant growth in electrical demand as the timetable to get to net zero carbon emissions narrows. 

Nuclear generation was 18% of the 2023 US total electrical output. The Energy Information Administration reports a 50-year trend of nuclear capacity, which reflects a steady amount of total nuclear generation capacity.  However, as a percentage of total future electricity supply, nuclear has fallen and limited new nuclear capacity has thus far been built.  

A decade ago, there had been twenty applications before the Nuclear Regulatory Commission (NRC) for construction of large-scale nuclear generation projects. But those applications were terminated as the construction costs of the initial projects skyrocketed which made the financing of new capital-intensive power projects difficult. This coupled with lower natural gas prices since 2009, have put the projected economic viability of nuclear generation in peril. But new nuclear reactor technology and federal incentives have awakened the new nuclear generation potential which is strengthened by the fact that nuclear generation is carbon-free. Nuclear generation with it is around the clock dispatch is viewed as an important attribute since it will ease the expansion of renewable energy such as wind and solar to deal with the intermittent nature of those sources of electricity. 

The new strategies to accelerate pace of new nuclear generation and extend existing unit lives include:

Nuclear Green Bond: 

The green designated bonds issued for nuclear will use bond proceeds for maintenance, expansion, and life extensions of its nuclear power generation facility. This new source of capital financing for nuclear generation projects may become attractive to sustainability investors.

Recommissioning and Extensions 

In March 2024, the US Department of Energy announced a $1.56 billion conditional loan commitment to restart the 800 MW Palisades nuclear plant in Michigan. Alongside the existing plant, 2 (SMR) units are planned. This would be the first nuclear plant to be recommissioned in the US. DOE estimates that 4.47 million tons of carbon per year across 25 years of the plant’s life will be achieved.  This may serve as a model for other shut nuclear units around the US to be considered for restart.  In 2023, there was a total of forty-one nuclear reactors that have been shut down in the U.S.

Also, the NRC is now reviewing the life extension of sixteen existing and operating nuclear reactors, such as PG&E’s 2,250 MW Diablo Canyon. Life extension permits units to operate twenty additional years with scheduled capital and maintenance improvements made. 

DOE and IRA

The Inflation Reduction Act  (IRA) is providing support for existing and new nuclear development through investment and tax incentives for both large existing nuclear plants and newer advanced reactors. For example, the IRA provides $15 per Mwh production tax credits to incentivize new plant construction. The U.S. Department of Energy (DOE) released its Fiscal Year 2025 budget request, which includes nearly $1.6 billion for the Office of Nuclear Energy (NE) The request includes $694.2 million in research and development activities meant to help advance reactor and fuel technologies, address gaps in the domestic nuclear fuel supply chain and utilize the latest artificial intelligence and machine learning tools to optimize performance.

Generation III and IV Safety Enhancements 

Over the next five years the Nuclear Regulatory Commission (NRC) expects to review twenty-five licensing applications for small modular reactors. The new “Generation III and IV” reactor designs incorporate decades of advancements in nuclear physics, materials science, systems engineering and digital controls. The DOE has $11 billion in loan-making authority for advanced and SMR development and supply chain issues. 

As an example, In 2024, Terra Power, filed with the NRC an application for an advanced construction permit for a 345MW advanced reactor to be located in Kemmerer, Wyoming, that uses Natrium technology. The design uses a sodium-cooled fast reactor with molten salt-based energy system. 

The safety designs of the SMRs and advanced reactors all have similar features, and the safety concept is based on passive systems.  This means in the event of a natural disaster, like a flood, no operator intervention or external power source is required to safely shut down the reactor and prevent overheating. That is because passive systems rely on physical phenomena, such as natural circulation, convection, gravity, and self-pressurization.

Obstacles to New Nuclear Generation 

The challenges to nuclear electricity generation becoming a larger share of US electricity, share some of the same issues faced in the past from the safe disposal of nuclear waste to competitive threats to the economics of nuclear generation.

Research and development continue on the safe storage of spent nuclear fuel. Over 2,000 metric tons of spent nuclear fuel is added annually at 70 reactor sites in thirty-five states in the US. The U.S. currently does not recycle spent nuclear fuel, but research and development continues. For example, the new SMR reactors will be able to utilize recycled fuel. 

Nuclear generation facilities are long-term assets and recognizing the carbon-free value amidst the threat of competitive alternatives remains the biggest challenge. For example, the Vogtle Nuclear Units 3 and 4, that were connected to the power grid in 2024 and if they operate as planned, could operate for 60–80-years.  This would provide carbon-free electric power while providing the power grid with   dispatchability energy. As Georgia brings on more solar facilities, it is now better prepared for the renewable energy intermittency. The question remains will Vogtle’s high fixed costs be a burden as competitive energy markets persist. Already, the obstacles in the push to new nuclear generation was seen in the end of the decade-long effort of UAMPS to bring to construction a SMR project in Utah. 

Another potential obstacle is the regulatory lag that can be expected to take place as the NRC gears up to license the upcoming SMR projects and license extensions and recommissioning. The Department of Energy (DOE) expects the NRC will have to increase its evaluation capacity from 0.5GW/year to 13 GW/year to meet increased regulatory review demand. The rigorous NRC review is required to ensure the plants can operate safely but the time delay remains an obstacle. 

Conclusion

In 2024, nuclear generation provided almost one-half of the carbon-free electricity in the US and its role in grid stability provides certainty for reliability as more solar and wind facilities are added to the power grid where nuclear facilities are located. Acceptance of its role will have to be balanced against public perception of its safety and the economics of its cost in a competitive electricity market. 

Dan Aschenbach

AGVP Advisory/Partnership with MFS Associates