Designers of advanced nuclear reactors seek to bridge the gap between concept and prototype. While it is early for investors and potential customers to easily pick winners from an increasingly crowded field of advanced reactor projects, new patterns of investment, including public/private partnerships, are creating opportunities for entrepreneurial developers.
Note to readers: This blog post originally appeared in a slightly different form in the May 2016 issue of World Energy Focus, the flagship online magazine of the World Energy Council. Readers can also download a PDF file of the long version posted on this blog.
In the U.S. and Canada more than three dozen firms, representing about $1.3 billion in impatient investor money, are currently pursuing technological innovations in nuclear energy. These firms include large, big-name projects, with deep pockets, like TerraPower, and small startups like Terrestrial Energy with Series A funding.
All of them are placing their chips on a comeback for nuclear energy driven by the need to decarbonize the generation of electricity needed to power the global economy.
While large, light water reactors will continue to be significant players in the mix, the bet is that there will also be market opportunities for reactors based on new, unproven technologies, and sooner rather than later.
· Development of roadmaps by independent developers to achieve commercial success of advanced nuclear reactors are the primary objectives as compared to the past where R&D milestones met by scientists inside government funded national labs were what counted.
· Start-up models adapted from Silicon Valley are being used to organize the efforts with venture capital funding in the mix.
· There are significant differences in the time lines and prospects for success between developers of small modular reactors (SMRs) based on conventional light water reactor technologies (sooner), and those efforts that are based on fast neutron reactors that don’t use water as a moderator or coolant (later).
· Public/private partnerships with government agencies, labs, private firms, and non-profit R&D centers are the key to access to test facilities, advanced computing capabilities, and support for development of advanced materials and new types of nuclear fuels.
· Creating a “culture of innovation” globally will be necessary to create the “ecosystems” of capabilities and resources needed for these new nuclear technologies to achieve market acceptance and to have on impact on decarbonizing electrical generation.
· Some reactor design efforts will stop at the stage where intellectual property can be licensed by a developer to a deep pocket reactor vendor or state-owned corporation.
· The problem for a Chief Nuclear Officer at a major electric utility is that there is no center or cohesion to this collection of innovation efforts. The many different types of technologies, each with their respective technical and economic drivers, remain to be proven through testing and the rite of passage of safety review by regulatory agencies.
· Eventually, to achieve success, the design effort must cross a gap between media hype and prototype to get on the road to completing a unit that can be sold to customers.
A New Paradigm for Nuclear Technology Development
What’s different this time is that there is a profound shift taking place from government-led, and funded, nuclear R&D to private sector-led efforts by people with strong entrepreneurial goals linked to a social purpose. These developers want to make money from their inventions.
They also want to see nuclear energy used in place of fossil fuel power stations to curb the growth of CO2 in the earth’s atmosphere.
Writing in the New York Times last November, venture capitalist Peter Thiel explains that their vision to succeed commercially with the technology is driven by a desire to save the planet, and the place of the human species on it. In 2015 Thiel backed a Cambridge, MA, startup called Transatomic Power with $2.5 million.
For quite some time most of the global spending internationally on advanced nuclear R&D has been taking place under the umbrella of the GEN IV program which centers on six advanced reactor types. However, most of this work has been housed at various national laboratories functioning as sandboxes for scientists.
The business model the new developers have adopted comes out of the silicon valley model of development of innovative computer hardware and software. The idea is to pull together a small team of world class experts to create new technological advances that can find acceptance in the market.
Unlike the silicon valley model, developing a new nuclear reactor design is not a one-to-two year rush similar to creating a new computer chip, mobile device, or platform for software as a service.
To use a cooking metaphor, if the time frame for the silicon valley concept is near instant gratification symbolized by the cooking directions of “add water and microwave,” the model for creating a new nuclear reactor is add the ingredients slowly and bake ideas for ten-to-15 years.
Impatient venture capital money has always gravitated to the first model. It is still a question of how much patience these or other investors will have for a much longer time to market.
Many experts in the nuclear field agree that the time to market for a new reactor design, even one like NuScale’s 50 MW small modular reactor, based on mature light water reactor technology, is in the range of a 10-15 years.
Because of the differences in time frames for entrepreneurial models, it is not clear that all of the aspirations of the new class of nuclear design teams are sustainable in the near term unless there are changes in how their designs can be tested, certified as safe, and brought to market.
Another problem for the innovators may be that there are too many designs chasing a dream. With multiple designs in play, the market simply isn’t able to decide at this early stage which one(s) to back. It could take some time, perhaps several years, for a clear set of winners to emerge.
An ecosystem for innovation
The “ecosystem” of capabilities and services needed to support developers of a new reactor type and bring it to market is very significant in size, complexity, and geographic scope. All this innovation work to build new types of reactors needs help, including but not limited to;
· Engage public/private partnerships to establish patient, long-term funding and support for the life cycle of the project from conceptual design to first sale to a customer.
· Hire highly skilled nuclear engineers, materials scientists, and fuel experts.
· Obtain access to computational power and test facilities, and especially leverage new types of digital sensors and controls.
· Develop reactor-specific fuels and fabrication of fuel elements,
· Complete designs reviews with nuclear safety regulatory agencies,
· Create a roadmap to move from stick built to factory built fabrication of major system components and establish an NQA-1 certified component supply chain,
· Gain utility acceptance of the new designs.
A big problem for these developers of advanced nuclear technologies is crafting the public/ private partnerships that will give them access to the expertise, including high powered computers and simulation software, to solve difficult engineering design problems.
National laboratories, and other R&D organizations, have started to move in this direction, but they still have a way to go. Another issue is that the costs of getting regulatory approval for new advanced reactor designs could bankrupt a start-up’s investors without government support.
In the meantime, mature light water reactor designs, scaled down to SMRs, are far more likely to make headway in the market because they can leverage all the existing resources that are out there for the conventional 1000 MW units.
SMRs v. Advanced Reactors
David Hess, an analyst for the World Nuclear Association, says that of the advanced nuclear concepts being developed, “it is fair to say that the small modular reactors (SMRs) look likely to be commercialized first.”
SMRs are generally 300 MWe equivalent or less and are expected to be built using modular factory fabrication techniques. This approach to SMRs is expected to result in economies of scale in terms of production and offer significantly shorter construction times than the larger (gigawatt scale) established nuclear technologies.
Hess emphasizes that SMRs also have an advantage in that they “introduce a greater degree of flexibility into nuclear technology.”
He lists their advantages as being transportable by rail or even mountable on a ship. This means the SMR can be delivered to operate in places where the large units are not feasible or practical.
“SMRs should present lower barriers to entry nuclear for developing or emerging countries. The small size of SMRs also makes them suitable for use in smaller networks or places where demand is flat or growing slowly. They could also be used for the incremental replacement of smaller fossil units.”
SMRs will be easier to finance even if the cost per kilowatt isn’t much different than larger light water units. At 50 MWe, a unit might cost $200 million assuming a cost of $4,000/kW.
The first unit can pay for a second with its revenue and so on. As demand increases, the installed based can increase on a pay-as-you-go basis avoiding the huge debt and finance costs associated with a 1000 MW unit.
The other major arm of advanced reactor research continues to focus on developing more efficient technologies. Fast reactors, high temperature gas cooled reactors and designs based on alternative fuel cycles (notably thorium) are all examples of this activity.
For a few countries like Russia and China, fast reactors are central to these countries’ long-term nuclear energy plans. Hess cites the advantages of theses designs in terms of sustainability, in particular how they use nuclear fuel. Examples include MOX from reprocessing of spent fuel from commercial reactors and depleted uranium from enrichment plants. By putting the material back into useful nuclear fuel, it reduces the volume of material that has to be sent to be managed at the reactor or in an interim storage facility.
“These advanced designs can dramatically increase the useful nuclear fuel resource and offer a way to reduce the existing volumes of used fuel, including depleted uranium from enrichment plants , which might otherwise be disposed of as radioactive waste.”
According to a World Nuclear Association report on the organization’s website, fast neutron reactors are more than just concepts. Many countries have built and operated fast reactors in the past with mixed degrees of success.
Hess notes that, “Russia connected a new 790 MWe fast reactor to the grid late last year. There are a huge number of potential configurations to a fast reactor.”
Hess feels there are “reasons to be confident that one or more will be found which overcome the technical problems of earlier designs and offers economics comparable to non-fast reactor alternatives.”
So far the emphasis has been with state-owned corporations like those in China with their work on high temperature gas cooled reactors (HTGR) that use pebble bed fuel with helium coolant, and Russia with its work on the sodium cooled BN-600 and 800 fast reactors, have committed the money to take these design concepts, and the fuel to burn in them, to the working prototype stage.
In the U.S. the Next Generation Nuclear Plant Alliance (NGNP), a business consortium, selected a conceptual design developed by Areva for a high temperature gas cooled reactor. The alliance estimates that its first prototype could be built in the mid-2020s at a cost of $2.3 billion.
The Alliance says the plant would be competitive with $6 to $10/MMBtu natural gas for process heat and electricity. It would support manufacture of synthetic transportation fuels competitive with oil at ~$70 to $140/bbl.
Advanced Reactors in North America
A report of new innovative nuclear reactor designs published in June 2015 by the Third Way, a Washington, D.C., think tank, lists five major reactor design types of advanced with several variations for each of them.
The projects listed in the Third Way report include small modular reactors of the light water type, more advanced types such as molten salt, liquid-cooled metal (sodium, lead-bismuth), high temperature gas-cooled reactors using helium, and thorium-fueled reactors.
A likely path to market for some of these advanced reactor projects will be to develop just enough intellectual property in terms of design details to license it to a major nuclear vendor or state-owned nuclear corporation. This strategy will meet the demands of their venture capital investors for a cash out strategy within five years. This timeline is at least a decade short of actually building a working prototype.
However, it has the practical objective of handing off the design work to entities which have the deep pockets to build, test, and commercialize these designs.
Two firms that are deeply committed to bridging the gap from media hype to prototype for advanced reactors are profiled here.
· In terms of small start-ups, Terrestrial Energy is developing a proprietary Integral Molten Salt Reactor (IMSR) in Canada. The key design feature is the that coolant is also the fuel so the reactor cannot melt down. The firm says the design will be ready for commercial customers within the next decade. The firm has two small Series A type funding events which taken together represent less than 10% of the money needed to complete the design work, much less to build and test a first unit. The firm has no deep pocket partners. Its CEO is irate about subsidies provided to solar and wind projects to the neglect of nuclear work like that being done by his firm.
· On the other side of the innovation spectrum, in terms of size, TerraPower, supported by Bill Gates, is developing a 1150 MW “Traveling Wave” reactor which will rely on depleted uranium as fuel after being “lit” like a cigar with 12% U235 fuel. It uses liquid sodium coolant like the Integral Fast Reactor developed and built at the Argonne West site in Idaho. In September 2015 the firm inked a deal with China National Nuclear Corporation (CNNC) to build a half-size first-of-a-kind unit in China and then manufacture and export a full-scale version.
Terrestrial Energy’s IMSR is a small, modular design, but comes in three models from 29MWe to 290MWe. The firm claims the units are suitable for industrial operations, and can support on-and-off-the-grid power and process heat applications.
According to CEO Simon Irish, the IMSR represents a completely new paradigm for civilian nuclear energy. He calls it a “cost-competitive, scalable, grid-independent energy source” and touts its innovations in terms of safety and proliferation resistance.
Customers could include remote communities, such as those in the far northern provinces of Canada or island nations in the vast Pacific ocean. Other potential customers include factories for ammonia, fertilizer and hydrogen production, mining operations, petroleum refining, and desalinization to name a few.
So far the firm has start-up funding commitments for $10 million and another for $5 million. Given that success to complete the design will require a great deal more money, CEO Irish says that what keeps him awake at night are disturbances in the policy environment among governments for support of innovative nuclear technologies.
“The biggest challenge we all face is that today’s market and policy realities disadvantage all baseload technologies. Ten times more tax-payer’s dollars in 2015 flowed into support renewables compared to nuclear. By comparison, nuclear energy provides two-thirds of current clean power. History clearly shows it can provide close to 100%.”
Irish does have praise for the Canadian Nuclear Safety Commission which he notes “uses a graduated risk assessment model.”
“It creates less work for use, Irish said, and he added, “it helps us address a lot of the realities of meeting regulatory requirements in the shortest possible time.”
On the other side of the innovation spectrum, U.S. company TerraPower, supported by the Bill Gates as a private investor, has developed the traveling wave reactor (TWR) with 1150 MWe of power. It uses liquid metal sodium as a coolant and depleted uranium as a fuel. Like the IMSR, the reactor’s fuel cannot be used to make materials for atomic bombs.
In September 2015 TerraPower inked a deal with the China National Nuclear Corporation (CNNC) to build a half-size, first-of-a-kind unit in China. Once testing of the prototype is complete, the two firms will collaborate to build and export full-size units for customers worldwide.
The timeline is that the prototype will be completed between 2018 and 2023 and the commercial units come to market within the next 15 years. It is plausible that some U.S. firms could be part of the supply chain for the exported reactors.
In addition to the partnership with CNNC, some of the intial funding came from the Gates Foundation. Gates is now involved as a private investor. Some $35 million in second round private venture funding is also in the mix.
According to John Gilleland, Chief Technical Officer of Terrapower, when the firm first got started about ten years ago, its founders were not sure that the technical concepts they were investing in could be taken the distance to a complete design much less a prototype.
To achieve its objectives the company worked with Department of Energy national laboratories and several dozen other commercial and research centers. The firm has invested heavily in computer modeling and simulation. It’s ability to leverage public/private partnerships is a key to access to these capabilities. Without them the project would have stalled out at the talking stage.
Gilleland says that the supercomputers, and their in-house developed software applications, are “critical enablers” of the firm’s design work.
“The supercomputers, and the code we wrote for them, allow us to solve in a few hours might what have taken weeks or months to address with desktop engineering tools.”
TerraPower now uses the models as the point of departure for engineering design work, CAD drawings, development of lists of components and their specifications, etc. CNNC teams work with the tools as well.
Examples of key partnerships in the U.S. include work at the Los Alamos National Laboratory on advanced materials that will stand up to being inside the reactor for at least 60 years. Fuel fabrication work is being carried out at the Idaho National Laboratory.
Third Way Seeks a Culture of Innovation
While firms like Terrestrial Energy and TerraPower are developing their roadmaps to success, the Third Way, a think tank in Washington, D.C., with an interest in energy policy, has made deep investments of its own to help the U.S. support innovative nuclear technologies.
Todd Allen, , the former deputy director of the Idaho National Laboratory, and now a senior visiting fellow at the Third Way offices in the nation’s capital, says the key to success for the new breed of nuclear energy entrepreneurs is to engage with public/private partnerships.
There are different types or arrangements that run the gamut from cost sharing funding from the U.S. Department of Energy (DOE) to cooperative R&D agreements with national laboratories, universities, major nuclear reactor vendors, and not-for-profit technology labs and think tanks.
In a white paper recently posted on the Third Way web site, Allen and his colleagues write that the nuclear energy industry “must adapt” to create a “culture of innovation” which will accommodate a new “range of new nuclear technologies of varying size and purpose.”
The federal government needs to share the road, so to speak, with nuclear innovators because it is no longer the only source of new ideas. Allen writes,
“Today technology is developed through competition of ideas from many companies and institutions.”
Allen says dozens firms working on new ideas for new reactors, “the federal government needs to catch up.”
Public/private partnerships, and the creation of federally funded “innovation centers,” are especially effective, Allen says, as a way to do this because they help get access to materials testing facilities, and in developing and testing new nuclear fuels for innovative reactors.
He cites the recent site permit granted by DOE to a consortium of utilities in the western U.S., and to NuScale, to build up to twelve 50 MWe small modular reactors on the site of the Idaho National Laboratory.
While neither NuScale, nor its customer UAMPS, have formally committed to using the site, the permit is a clear signal from the government to the nuclear innovation community that it is changing its ways to make a difference for developers of new nuclear technologies.
Allen says the government’s efforts are moving in the right direction. A new initiative, called the Gateway for Accelerated Innovation In Nuclear (GAIN) was announced at a Third Way sponsored nuclear summit held in Washington, D.C., in January.
It’s primary objectives are to provide nuclear innovators with technical, regulatory, and financial support necessary to move new nuclear reactor designs towards commercialization. GAIN is intended to provide a single point of access to a broad range of capabilities in these areas include the expertise of nuclear scientists and engineers at DOE labs, the agency’s supercomputers like the facility at Oak Ridge, and use of secure sites with established infrastructure to build and test their designs.
Led by the Idaho National Laboratory, in partnership with the Argonne National Laboratory and Oak Ridge National Laboratory, GAIN will work to integrate and facilitate efforts by private industry, universities, and national labs to develop, test, and demonstrate innovative nuclear technologies and to accelerate the licensing and commercialization of these systems.
Additionally, the Obama administration has also opened a $12.5 billion loan guarantee solicitation for advanced nuclear technology projects including covering the costs of design certification by the U.S. Nuclear Regulatory Commission (NRC).
A key element of the advancement of GAIN, Allen says, is that it will conduct outreach to nuclear technology innovation firms to learn more about how public/private partnerships can meet their needs.
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