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Be Careful About Rose-Colored Glasses When Viewing the Future of SMRs

Dan Yurman's picture
Editor & Publisher NeutronBytes, a blog about nuclear energy

Publisher of NeutronBytes, a blog about nuclear energy online since 2007.  Consultant and project manager for technology innovation processes and new product / program development for commercial...

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  • Mar 3, 2015
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smr and nuclear

  • 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 “rebootting” 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, who’s 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.

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,” Jeferies said.

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 a developer 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.

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.”

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. Meanwhile, B&W lacks a customer and, understandably, is reluctant to invest more of its own money in SMRs without one.

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 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 years 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 quality, but is pursuing its technology development efforts with private money.

Photo Credit: SMRs and the Future of Nuclear/shutterstock

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Nathan Wilson's picture
Nathan Wilson on Mar 4, 2015

This article reports that South Korea is moving forward with their SMR, the 100 MWe SMART reactor, and is seeing some interest from Saudi Arabia.  I guess it is targeted at areas of small demand and little long-distance grid interconnection, as even the Korean’s are admitting that it will make electricity for about double the cost from larger reactors (see here).  Not a mainstream product, but a foot-in-the-door starting point for markets which are new to nuclear.

Engineer- Poet's picture
Engineer- Poet on Mar 4, 2015

Markets which are new to nuclear, and the competition is something like petroleum which can be sold much more profitably to other customers.

That may be the Tesla Motors approach to nuclear:  instead of aiming at well-served commodity markets, go for specialty niches where customers are willing to pay much more.

Mark Heslep's picture
Mark Heslep on Mar 11, 2015

DoE had SMR cost per Watt at only 20% higher than large nuclear (here, slide 4).  This becomes possible though only with i) factory construction of multiple SMR units and ii) short site build times to reduce the time to first power.  Otherwise SMR looses badly to large nuclear’s cost of scale. 

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