Be careful about rose colored glasses when viewing the future of SMRs

  • SMRs “back on the agenda next year”, says new report by Nuclear Energy Insider, a trade and consulting group.
  • Two major developers of SMRs have walked away from further investment in the technology saying the technical and financial barriers for new customers are more or less the same for SMRs as for their 1000MW big brothers.
  • Only NuScale has prevailed in terms of making progress with commitments from a customer and a utility to purchase the power. It is halfway toward submitting a design for NRC safety review sometime in 2016.

Trade group bullish on SMRs

Following another year of turbulence a casual observer of the nuclear industry may be forgiven for concluding that Small Modular Reactor (SMR) development has stalled, but a new report by Nuclear Energy Insider suggests that, despite the negative headlines, it claims a new sense of clarity and purpose is emerging around the technology’s commercialization, and concludes that SMRs look set to be back on the agenda next year.

The trade report says that it draws on analysis from over one hundred hours of primary research and interviews with more than fifty leading specialists and decision makers, the report sheds light on the crucial challenges faced by the sector in the past eight months. It identifies the vital next steps required to promote confidence, stability and a clear path forward for SMRs.

“From the outside it will seem that SMR development has hit a brick wall, but to lump the sector’s difficulties together with the death of the so-called nuclear renaissance would be missing the point,” said Kerr Jeferies, senior industry analyst at Nuclear Energy Insider and the report’s lead author.

“The unique underlying appeal of the SMR offering remains intact and indeed unchallenged by any emerging power generating techniques, and there are clear signs that the missing pieces of the puzzle – commercial, technological, and regulatory – could start falling into place next year.”

The report finds optimism in the US market that the Nuclear Regulatory Commission (NRC) will establish policy on the broad siting and operational safety expectations concerning SMRs by the end of 2015.

Nuclear Energy Insider’s report was written before the NRC announced, based on the President’s 2016 budget, that in response it plans to reduce staffing by 124 positions in part from its New Reactor Licensing division. Note that the NRC said in its budget call of Feb 2 that there would be no layoffs in 2016. Still, it raises a question about whether the demand from the industry for SMR safety reviews will go up while staffing at the NRC is going down.

It also finds that vendors and potential customers believe that “NRC engagement with SMRs will provide impetus for other regulatory bodies around the world, paving the way towards globally exportable suites of products.”

That finding suggests that any SMR technology developed in the US might more readily find new customers overseas than at home.

“We found vibrant and intense discussions going on now, crystallizing around a smaller number of themes,” said Jeferies, “specifically, licensing and design certification, funding streams, and assembling the required supply chains.”

The Nuclear Energy Insider report predicts greater pressure coming to bear on the US government to fund SMR development. Outside the US, promising first-of-a-kind SMR projects are now under construction, in Argentina (CAREM-25), in Russia (KLT-40S) and in China (HTR-PM). What these projects have, however, is robust state backing. None of these projects involve a US vendor.

Federal commitment to building a demonstration reactor will be necessary if SMRs are to be a means of “rebooting” the US’s role as a leader in nuclear power, the report finds.

It is not clear that the Obama administration has much interest in this “rebooting” of the nuclear industry via SMRs. It is continuing its politically driven infatuation with solar, wind, and other so-called “renewable” energy technologies. The “green” wing of the Democratic party, whose support is needed to elect Hillary Clinton to be president in 2016, continues its hard over opposition to nuclear energy despite the work of such pro-nuclear green groups as the Breakthrough Institute.  Clinton has said little of any significance about nuclear energy other than some plain vanilla campaign rhetoric in 2008.

The Nuclear Energy Inside report also said, “Headlines around things like Generation mPower’s restructuring and reduction in activity create a pervasive sense of pessimism, but we believe a more accurate picture is that 2014 has been a teething year, and that the SMR story hasn’t even really begun.”

The report, “Small Modular Reactors: An industry in terminal decline or on the brink of a comeback?”, is available at no cost.

Nuclear Energy Insider has also announced the return of its Small Modular Reactor Summit, to be held April 14-15, in Charlotte NC. With new content direction and expert speaker line up, it could be a focal point for discussion on the multiple trajectories of the  SMR industry.

B&W, Westinghouse, and MidAmerican still wary on SMR future

While the promoters of industry conferences on SMRs paint a rosy picture of the future of SMRs, the tale from developers of the technology does not yet have a happy ending. Three potential customers ran into financial and regulatory headwinds which are no different than for plans to build the 1000MW units.

Babcock & Wilcox, at one time the recipient of millions in cost sharing money from the Department of Energy (DOE), is now a wary observer on the sidelines.

The firm spent a reported $80 million on SMR development work in 2013 and will spend no more than $15 million in the next financial reporting period. By the end of 2014 B&W had received $111 million from DOE, but will not get any more government cost sharing funding.

The firm at one time had a partnership with TVA to design and license two 180 MW mPower SMRs at the Clinch River site. That partnership did not move forward. Instead, TVA is developing an Early Site Permit (ESP) for submission to the NRC, but has not named a vendor. That’s typical for an ESP which, once approved by the NRC, has a shelf life of 20 years. TVA’s next nuclear project is more likely to be the completion of one of the Bellefonte units by 2020 or 2022.

Meanwhile, B&W lacks a customer and, understandably, is reluctant to invest more of its own money in SMRs without one. B&W CEO Jim Ferland told a Charlotte, NC, business trade press newspaper on Feb 26 that he sees the future of SMRS as “still being up in the air.”

First Energy is nominally still interested in the B&W reactor. The firm is also a member of NuScale’s customer advisory board and sent a senior executive to attend that body’s July 2014 meeting.

A similar fate enveloped efforts by Westinghouse to develop a 225 MW SMR in partnership with Ameren in Missouri. The project did not qualify for DOE funding, and Ameren has failed twice to win legislative approval for CWIP to finance development of either a new fuill size 1650 MW EPR reactor from Areva or an SMR from Westinghouse at its Callaway site near St. Louis.

The Pittsburgh based global nuclear firm, which is owned by Japan’s Toshiba, exited the SMR field in February 2014. However, it continues to fund a research effort at the University of Missouri looking into what is needed to develop a supply chain for the 225 MW SMR design. Dr. Joseph Smith, Director of energy research at the university, is trying to quantify needs and gaps in manufacturing infrastructure with an eye toward promoting its location in Missouri.

Efforts by Warren Buffet’s MidAmerican Energy to pursue an SMR in Iowa met a similar fate in 2012 with consumer groups led by AARP prevailing in a legislative battle over CWIP. It is the second time Buffett has pulled the plug on a nuclear energy initiative. Previously, MidAmerican briefly explored the concept of building a 1700 MW nuclear reactor in Idaho. The initiative ended the same year its was started with no real money put into the project.

NuScale is the sole survivor of the US SMR shakeout

In point of fact only NuScale, backed by DOE cost sharing money and Fluor (nyse:flr), its primary investor, is making significant progress toward commercial development of an SMR in the US. The firm reports is it about halfway towards completing the documentation for submitting the SMR for NRC design review sometime in 2016.

Economic development groups in the State of Washington are pushing for NuScale to build its factory to manufacture SMR components there. This push is based on the fact that Energy Northwest, which owns and operates the Columbia Generating Station, is one of NuScale’s partners in planned deployment of the first units.

NuScale is believed to be looking at several sites in the US to build the first of twelve 50 MW SMRs for a Utah utility. A site in eastern Idaho is among the front runners. NuScale also opened an office in the UK to develop international customer relationships. The firm has a partnership with Rolls-Royce which has decades of experience building small, high performance nuclear reactors for the Royal Navy.

Holtec, the quiet company

Holtec, a Florida manufacturer of components for nuclear reactors, is developing a 160 MW SMR. It has been low key in its public announcements about the effort. While it applied for DOE money, it did not qualify, but is pursuing its technology development efforts with private sector money.

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6 Responses to Be careful about rose colored glasses when viewing the future of SMRs

  1. Martin Burkle says:

    Small Modular Reactors avoid the problem of “the world’s largest” but may be too costly to compete. The NuScale reactor design is well funded and organized. Quite a bit of documentation is available including a list of suppliers for various components. However, the fabrication and economics of the reactor vessel seem to missing from all descriptions of the NuScale reactor. No supplier of the reactor vessel is listed.

    The NuScale reactor will produce about 1/20 the electricity of an AP1000 whose reactor vessel weighs 340 tons. So, if scaled down, the NuScale reactor vessel would weigh 12 tons but it will actually weigh 264 tons. NuScale includes the steam generator inside the reactor vessel making it much longer and much heavier and much more expensive.

    I fear that the first NuScale order of 12 reactor vessels will immediately swamp the Japanese or South Korean foundry (I assume no US plant can make a 264 ton reactor vessel). Both cost and delivery will be problems.

    So if we stay with LWR, I think we get to choose between “the world’s largest component” or the “worlds’s most expensive reactor”.

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  2. eknuckle says:

    The skepticism toward the US SMR program has been existent and well founded from the beginning because it’s fairly obvious to many observers of the nuclear industry that being smaller doesn’t necessarily mean easier to license, site, protect, and operate.

    Even though these latter issues are not deal breakers concerning the financial viability of SMRs, the one key issue that has never been clear cut is whether there are any significant savings and reduction of investment risk associated with manufacturing and construction; i.e. modular construction, vs. the “stick build” approach of its larger brothers and their propensity for huge cost overruns. It should be obvious that any sensible utility executive given an investment choice of natural gas fired plant or an SMR is going for the lower risk option.

    It’s not unexpected for organizations to convince themselves or go along with the optimism and hype as long as government money is being offered for R&D but ultimately there has to be a market out there. Nonetheless a skeptic would still hope for NuScale to be successful if only to provide some clear evidence of the SMRs real cost and benefits.

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    • @eknuckle

      Do you honestly believe that a company like Fluor would be planning to spend $700 – $900 million on design and licensing in order to qualify for a federal grant that is limited to $226 million?

      The DOE program for SMR design and licensing is barely enough to compensate a company for the fees it will be charged by the NRC to review the license application.

      To put the subsidy in perspective, please note that a mid December 2014 bill to add a one year extension of various tax credits ended up costing taxpayers about $6 billion to provide investment tax credits to wind turbine developers for projects they had already built without any promise of a subsidy.

      That same bill also provided a gift of $28 million to T. Boone Pickens Clean Energy Fuels by extending a tax credit for “alternative fuels” that includes compressed natural gas and LNG.

      Again, that subsidy did not encourage any changes in behavior, it simply gave money to wealthy corporations for actions they had already decided to do anyway.

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      • eknuckle says:

        @adams “Do you honestly believe that a company like Fluor would be planning to spend $700 – $900 million on design and licensing in order to qualify for a federal grant that is limited to $226 million?”

        Why would you assume that my comment was speaking to NuScale? Their work was already in progress when they applied for the tax credit during the first round but were declined during the DOE selection process. Nevertheless, they continued to pursue development and subsequently qualified for matching funds during the second round; can’t blame them for that. As to the other organizations that are, or were, in the running … well, we just have to judge based on their progress and DOE’s track record on funding projects. As to whether subsidies can distort markets and affect decision making; the answer is yes. As to whether that is good or bad thing is questionable.

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  3. I’m a bit more optimistic about SMALL modular reactors. I emphasize the word small because neither Westinghouse nor B&W were actually designing or planning to build small reactors. Though they were officially below the 300 MWe line that the IAEA uses to define a small reactor, each unit of either of those machines would have been powerful enough to power an aircraft carrier by itself.

    Our aircraft carriers, however, have never been dependent on a single reactor. The first one used 8 individual reactors, the Nimitz and Ford class carriers use a two reactor plant. The redundancy is a valuable asset, especially at sea.

    When I was working on mPower, I was dismayed to learn that the construction projects would require one of the world’s largest cranes in order to install the equipment in the underground containment. The containment construction plans were equally disturbing to someone who recognizes the economy of mass production and predictable schedules.

    Westinghouse has made it quite clear that its SMR will produce something greater than 225 MWe. It has also stated that its design is a scaled down version of the AP1000/AP600. If you stay on the same technology path, the “economy of scale” equations taught in engineering economics classes work pretty well.

    NuScale has taken a route of almost radical simplification. Their systems do not require reactor coolant pumps at all. Each module has its own containment, which is manufactured in the factory and shipped to the site with the pressure vessel. Each of the 12 modules is a complete power plant, which should make it possible to produce some revenue all the time rather than having complete shutdowns every 18-24 months. The overall structures, systems and components required for a NuScale are different enough to enable them to be on a different scale-cost curve than a more traditional PWR.

    Martin is not correct about the limitations of the forging suppliers. The important limitation is the overall diameter and mass of the upper and lower heads, not the total mass of the pressure vessel. Building a tall pressure vessel is done by stacking a number of concentric rings and welding them together. Those horizontal welds are not the weak points that longitudinal welds once were.

    Because NuScale’s vessels are rather slim, there is a wide base of potential suppliers. The negotiations are somewhat complex; so it’s not surprising that there are no listings yet of the chosen suppliers.

    Bit of hearsay – unfortunately, one of the most capable potential suppliers to NuScale may be prohibited by a dumb contract agreement from working on their pressure vessels. It’s probably prudent for me to refrain from naming names.

    PS – For people who are interested enough in SMRs to make a substantial investment in information, Strategic Insights (http://strategicinsights.ca) has also recently published an SMR report that is much more than a cut and paste from news sources or vendor press releases.

    http://strategicinsights.ca/wp-content/uploads/2015/02/Teaser-for-Public-Final.pdf

    Disclosure: I was a senior advisor and paid contributor to the report.

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  4. Broadsman says:

    Economies of scale are still very strong for full-sized LWRs. I lead a study at one prominient vendor and concluded that we could give the client a 10% power uprate at $600 per kW. The market is really going the other direction – bigger and better.

    Look for a 2000 MWe reactor in our lifetime.

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