Originally published at: Energy Post on 21 January 2016

In addition to its plans for building four huge nuclear power stations, the UK government has also announced it wants to become a global Centre for the development and manufacturing of small modular reactors (SMRs). This blog post assesses the UK’s plans and concludes that it could succeed, but only if the UK is able to scale up its efforts sufficiently and if the government provides active policy support.

Key Take Away

While NuScale and Westinghouse are targeting construction of their first-of-a-kind units in the UK by 2025, the real challenge will be to book enough orders to bring investors to the table to build factories to turn out SMRs on a cost effective production line basis. There isn’t enough of a market within the UK itself to generate these orders. This means both firms likely see the UK as a launch pad to gain market share in Europe and the Middle East.

Replacement of aging coal fired power plants in places like Poland and elsewhere in eastern Europe represent possible market opportunities. The primary reason is that a 50 MW, or even a 225 MW, SMR is still orders of magnitude cheaper than a 1000 MW unit. Plus, the first unit can, with its revenue, pay for the second, and so on.

The advantage for the UK is that it could develop a major export market for SMRs which will also generate jobs not only for direct manufacturing of the units, but also stimulate a second round of employment and growth with the supply chain for the production of reactors by the primary vendors.

Everything depends on both NuScale and Westinghouse passing through the gauntlet of the UK’s notoriously complicated and expensive generic design review process to certify the safety of their reactors. Both firms have made optimistic estimates of how long this will take. However, like the famous line from the movie “Princess Bride,” they may have to be prepared to be disappointed. Breaking ground by 2025 for either vendor may still be feasible, but new land speed records for bureaucratic action may have to be set in the process.

One Size Does Not Fit All

In congressional testimony in June 2009, then U.S. VP Al Gore said famously that nuclear reactors only come in one size “extra large.”  Gore’s comment was intended to dismiss nuclear energy because of the size of projects and their costs.

With a major effort now underway to build 19 GWe of large nuclear reactors over the next two decades, the UK appears to be headed towards doubling down on its atomic energy bet with a push to open up opportunities for small modular reactors (SMRs).

UK Energy Secretary Amber Rudd told Parliament in November 2015 that SMRs have “excellent” potential and that the current government of UK Prime Minister David Cameron “is doing as much as it can” to support the technology.

To that end the UK government announced £250m ($378m) funding over the next five years for nuclear research and development including a competition to identify the “best value small modular reactor design for the UK.” The UK is doubling funding for the Department of Energy and Climate Change’s (DECC’s) energy innovation program to £500m over five years, including research into SMRs.

The competition will be launched in 2016, which will “pave the way towards building one of the world’s first small modular reactors in the UK in the 2020s”, the Treasury said.

Mike Tynan, Director of the UK Nuclear Advanced Manufacturing Research Center, has been quoted in industry trade literature as saying he expects the first SMRs to be operational in the UK sometime between 2027 and 2030.

Doubling funding

The UK National Nuclear Laboratory (NNL) estimates the value of the SMR market in the UK could be worth £250-400 billion. While the cost of building an SMR currently runs about the same per Kw as their larger cousins, their smaller size makes them affordable to utilities that cannot take on the “bet the company” risk of a 1000 MW plant.

A report from the NNL released in December 2014 indicates “there is a very significant market” for SMRs to meet the needs of up to 7 Gwe of generating capacity by 2035. Keep in mind that SMRs come in sizes of 50-300 MW. An installed fleet of 7 GWe would represent as few as 20 SMRs and as many as over 100 depending on their size.

These numbers are important because the tally of customer orders will make or break conversion of production of these reactors from being built one-at-a-time to being mass produced in cost efficient factories. A factory that cranks out SMRs on a production line like so many washing machines can dramatically lower the cost per kilowatt compared to 1000 MW units. Both Westinghouse and NuScale are looking closely at supply chain partners to pursue this objective.

Tom Mundy, EVP at NuScale, told the Financial Times on 19 January 2016 the economics for SMRs only work if operators order a whole fleet of smaller plants, helping drive down the overall cost per unit. “We are not talking about economies of scale here but economies of multiples.”

High numbers

So how many orders for new SMRs does an SMR vendor need to go the financial markets to get funding to build a factory to make lots of them?

The answer, according to David Orr, head of nuclear business development for Rolls-Royce in the UK, which has been making small reactors for the UK’s Royal Navy submarine fleet for decades, is a minimum of about four dozen units and six dozen would be better. Those are high numbers which make some proponents of SMRs unhappy. The reason is this estimate means that turning out the first 50 or so SMRs for any firm in the business could be a high wire act.

Former US Energy Secretary Steven Chu is more optimistic. He thinks the 10th unit of the same design is the tipping point where real cost savings start to appear.

The real test will be the number of commitments for orders that will convince investors to open their checkbooks to fund a factory. This chicken and egg conundrum hasn’t dampened interest in pursuit of the market.

The idea in the UK is that it could establish itself as a global center of manufacturing SMRs for export even supporting multiple vendors and their supply chains, all of which would add thousands of high paying jobs to the economy.

However, the UK must do more than just hold a competition for a design and facilitate access to the generic design review process. To be successful, it will need to take pages from the US playbook. This means funding cost sharing with SMR developers for technical design and licensing costs. Export credits would help make inroads into global markets.

Real leverage for domestic deployment would include rate guarantees to bring investors to the table. The UK is keen on deploying SMRs in the North of England including Sheffield, Manchester, and Cumbria. The question is whether it will have the capacity and political will to link its economic development initiatives to SMR manufacturing and deployment of the first units in these places.

Less costly

While the US based firm Westinghouse put its SMR effort with Ameren in Missouri on ice in winter 2014, in October 2015 it submitted an unsolicited proposal to partner with the UK government to license and deploy its 225 MW light water reactor (LWR) which has a design that puts all the components inside the reactor pressure vessel (RPV).

The design (right) uses a passive safety system to address emergency cooling. The entire facility is built underground.

The heart of the Westinghouse proposal is a “shared design development model” that would engage the UK government and UK companies in the reactor supply chain like Sheffield Forgemasters International Ltd.

The firm is one of a handful of British companies which can fabricate safety-critical cast and forged components within nuclear power stations.

In 2010 the two firms tried to convince the UK government, without success, to provide a major loan to the firm to allow it to build a capability to forge the extremely large components needed for full size nuclear reactors. It may be that the two firms are planning to make another run at the concept now that the current government is so enthusiastic about SMRs.

Since SMRs are much smaller, the forging capabilities needed to build reactor pressure vessels for them are similarly downsized, and less costly, in terms of manufacturing requirements. This makes the possibility of new financing more likely though so far the UK government hasn’t formally responded to the Westinghouse proposal.

Westinghouse would have to take its SMR reactor through the UK’s notoriously complicated and costly generic design review to get a license to build them. However, the company says that since its SMR borrows many design features from the AP1000, which has mostly completed the process, it could shave a year off the process for the SMR.

This confidence may be misplaced as the firm has just encountered new headwinds with the AP1000 and the design review. The Office of Nuclear Regulation (ONR) is calling for the firm to “re-baseline” the entire effort. ONR said it hopes the effort would support making decisions about the AP1000 in January 2017.

NuScale sets sail

US-based NuScale, which is rapidly making progress toward submitting its design to the Nuclear Regulatory Commission (NRC), the US regulator, for safety review in late 2016, is looking for partners to deploy its 50 MW SMR in the UK. NuScale Chairman and CEO John Hopkins told World Nuclear News in October 2015 that it wants to develop an aggressive timetable to deploy its SMRs across the pond. He said the firm is scouting for appropriate sites and seeking partners for investment and to help develop its supply chain. NuScale has opened an office in London.

In 2013 Rolls-Royce joined Fluor Corporation in supporting NuScale’s efforts to progress towards deployment and commercialization. According to NuScale, UK based Rolls-Royce supported NuScale Power in its submission to the United States Department of Energy’s Funding Opportunity Announcement (FOA) to bring innovative SMR technology to market.

NuScale is planning to leverage a relationship it has with the UK National Nuclear Laboratory (NNL) through its major investor the Fluor Corp. That company has worked on nuclear fuel design with the NNL. With an eye toward a supply chain, the firm is partnered with the Nuclear Advanced Manufacturing Research Center.

The UK is the most attractive overseas market for NuScale as it has the most robust and practical commitment to nuclear energy outside of China and Russia. India is fading as a market for new nuclear reactors due to its continued commitment to a draconian nuclear supplier liability law and the immense political and financial influence of its existing coal mine operators.

According to NuScale a nuclear power plant based on its technology is comprised of individual NuScale Power Modules™, each producing 50 megawatts of electricity (gross) with its own factory-built combined containment vessel and reactor vessel, and its own packaged turbine-generator set.

A power plant can include as many as 12 NuScale Power Modules to produce as much as 600 MWe. The reactor coolant is driven by natural circulation and can be shut down safely with no operator action, no AC or DC power, and no external water supply. NuScale power plants are scalable – additional modules are added as customer demand for electricity increases. NuScale’s technology also is intended for customers who want to supply energy for district heating, desalination, and other applications.

SMR Nuclear Fuel News

Westinghouse to produce SMR fuel in the UK

The US firm announced Jan 7, 2016 that its UK nucler fuel fabrication center is ready to manufacture nuclear fuel assemblies for SMRs. The issues for these fuel assemblies is that they are expected to be in the reactor longer than conventional fuel assemblies for larger reactors. This means they will have a slightly higher level of enrichment, but not more than 5% U235.

According to a press statement, Westinghouse is positioning its UK SMR nuclear fuel plant as a “strategic national asset” for the industry.

NuScale announces fuel manufacturing contract with Areva

NuScale announced on December 2, 2015, that it has signed a contract with Areva for the French state-owned nuclear firm to manufacture fuel assemblies at its Richland, WA, plant for SMRs. Areva will supply the initial cores for NuScale’s 50 MW SMRs as well as fuel reloads.

Areva has designed nuclear fuel assemblies specifically for SMRs. Mechanical and hydraulic testing is underway as part of NuScale’s development of a submission in late 2016 to the NRC for a safety design review.

NuScale to offer 100% MOX fuel option for its SMR

NuScale Power announced the completion of a study commissioned from the UK National Nuclear Laboratory (NNL) supporting the suitability of NuScale’s world-leading Small Modular Reactor technology for the effective disposition of plutonium. It is the second proposal for use of reactor technology to dispose of surplus plutonium in the UK. The first is the GE-Hitachi PRISM reactor which is based on the design of the Argonne West Integral Fast Reactor.

The NNL study in the UK evaluated scenarios with partial and full-core loading of mixed uranium-plutonium oxide (MOX) fuel and confirmed that MOX could be used in the NuScale core with minimal effect on the reactor’s design and operation.

The study also demonstrated that a 12-module NuScale plant with 100% MOX cores could consume a 100 metric-ton stockpile of discharged plutonium in roughly 40 years, during which time it would generate approximately 200 million megawatt-hours of carbon free electricity.

Advanced reactor proposed to burn UK surplus plutonium

The world of advanced reactor development efforts is full of R&D sandboxes, but one proposal stands out. GE-Hitachi (GEH) is developing a 311 MW liquid metal (sodium) cooled reactor based on the Integral Fast Reactor design.

The firm has submitted an unsolicited proposal to the UK Nuclear Decomissioning Authority (NDA) to burn surplus plutonium as a way to dispose of it. The GEH plan calls for two units each with its own turbine.

According to GEH the facility could be built in as little as three years. However, like all other new reactor projects, it would have to pass through the UK Generic Design Review. It is unclear whether the government’s regulators have the means to assess the safety of the new design.

The GEH reactors are intended not only to provide electrical power, but also to solve a major problem for the NDA. It has a large inventory of plutonium from spent fuel and also UK defense sources. Burning it in the PRISM reactors would be a path to safe disposition and would remove the need for a large, permanent geologic repository for it.

GE Hitachi is designing an Advanced Recycling Centre (ARC) which integrates electrometallurgical processing with its PRISM fast reactors. The main feed is used fuel from light water reactors. The three products are fission products, uranium, and transuranics, which become fuel for the fast reactors (with some of the uranium).

A full commercial-scale ARC would comprise an electrometallurgical plant and three power blocks of 622 MWe each (six 311 MWe reactor modules).

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