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No Time to Waste: An Unprecedented Opportunity to BUILD Advanced Nuclear

Posted to ScottMadden, Inc. in the Generation Professionals Group
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Sean Lawrie's picture
Partner ScottMadden
  • Member since 2007
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  • Dec 2, 2022
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This piece was co-authored by Sean Lawrie and Paul Quinlan

 

The only constant in life – and the energy sector – is change.

Solar and wind recently passed natural gas as the primary source of new annual generation capacity.  This follows natural gas overtaking conventional nuclear, which supplanted coal in previous decades.

With a focus on rapid decarbonization, can yet another wave of new technologies grow at a similarly rapid pace as renewable resources?  Advanced nuclear reactors are one promising technology.  Recent events open a window of opportunity for the nascent advanced nuclear industry.

But stakeholders must act quickly to ensure the establishment and long-term growth of a robust and vibrant advanced nuclear industry.

Moving Closer to First-of-a-Kind Deployment

Utility interest in advanced nuclear technologies is growing.  Integrated resource plans are increasingly including the technology in their modeling.  Original equipment manufacturers (OEMs) are establishing partnerships with utilities. For example:

  • NuScale is partnering with Utah Associated Municipal Power Systems on a first-of-a-kind commercial reactor.
  • GE-Hitachi Nuclear Energy is collaborating with Tennessee Valley Authority (TVA) and Ontario Public Power.
  • TerraPower and PacifiCorp are planning a demonstration project at a retiring coal plant.
  • Constellation (formally Exelon Generation) invested in Rolls Royce SMR

Advanced nuclear projects and technologies are also making progress with regulators.  In 2019, the Nuclear Regulatory Commission (NRC) approved an early site permit for TVA’s Clinch River site near Oak Ridge, Tennessee. The permit allows for an advanced nuclear facility up to 800 MWe.  The NRC also approved a NuScale standard design in 2022.  This is the first standard design approved for an advanced nuclear reactor.

A Window of Opportunity Opens

Technology and regulatory advancements coincide with an unprecedented window of opportunity.  Advanced nuclear technology benefits from new policy support and favorable market conditions.

One of the biggest drivers is the passage of the Inflation Reduction Act of 2022 (IRA).  A key feature of the IRA is the expansion of clean energy tax credits to include nuclear generation.  This means advanced nuclear will have access to the same tax credits currently offered to solar and wind power.

Solar and wind projects are expecting strong growth following passage of IRA.  However, congested interconnection queues remain a challenge.  Even if ongoing reforms resolve these challenges, renewables will need new long-distance transmission.  The permitting of new long-distance transmission may prove a limiting factor to the expansion and utilization of renewable generation in some regions.

Advanced nuclear reactors can sidestep interconnection and transmission challenges. Advanced nuclear sited at retired coal plants can access existing switchyard and transmission equipment.  The ability to repurpose existing infrastructure and workforce is a key strategic advantage advanced nuclear has over renewables.

Time to B.U.I.L.D. an Advanced Nuclear Industry

This window of opportunity is not indefinite.  Hybrid projects combining renewables and storage are becoming commonplace.  Permitting reform could spur transmission development.

Establishing a competitive advanced nuclear industry requires maximizing the opportunities available today. The acronym BUILD provides a framework the advanced nuclear industry can use to focus efforts and resources in the coming months and years.  Key near-term priorities should include:

Build a compelling vision
Unleash standardization and sequencing
Introduce advanced nuclear regulations
Leverage the Inflation Reduction Act
Distinguish advanced nuclear from conventional nuclear

Focusing on these priority actions will strengthen the advanced nuclear industry.

Build a compelling vision.  Recent industry efforts focus on reactor designs, operational capabilities, and enhanced safety.  While these are critical issues, the industry must present a much broader vision.

The vision could outline local community benefits and regional economic development opportunities. It could also show alignment with national interests.  Key issues to focus on include energy independence and climate change. 

A compelling vision would include insight into the following:

  • Local economic benefits – How can the advanced nuclear industry help to revitalize energy communities? What are the contributions to the local tax base?  What existing energy jobs can transition into an advanced nuclear facility?  (See ScottMadden’s Gone with the Steam for a detailed discussion of coal-to-nuclear employment opportunities)
  • Supply chain requirements: How many assembly and component facilities are needed?  How will spent fuel be managed?
  • Employment opportunities: How many jobs does the supply chain support?  How many full-time equivalent jobs will be needed during construction?  How many full-time jobs will be needed during operations?
  • Ambitious industry target – How much advanced nuclear capacity could be online in 2035?

The wind and solar industries provided compelling visions during their growth stage.  For advanced nuclear, industry groups and OEMs could drive a similar effort.

Unleash standardization and sequencing.  Advanced nuclear needs to reduce the technology’s installed costs to become competitive with other dispatchable resources.  Offering standardized plant design and sequencing the construction of early plants will be key.

Standardization within approved plant designs is an important element to the long-term success of advanced nuclear.  Adhering to standard plant designs avoids each plant becoming a one-of-a-kind operation.  The industry will also rely on skilled trade labor during construction. The sequenced construction of early plants will ensure efficient use of limited resources and application of lessons learned.

These efforts, which could be driven by OEMs and industry groups, will be key to driving down costs and securing long-term success.

Introduce advanced nuclear regulations.  Advanced nuclear reactors maintain a risk and operational profile different than conventional large-scale nuclear generating units. In particular, advanced nuclear units have passive safety features that improve upon the already safe large-scale nuclear units.  The regulatory framework that governs advanced nuclear reactors will need to reflect these unique design features.

One major difference is the coping period; this is the amount of time a facility can safely operate without power. Conventional nuclear requires redundant, on-site backup generation to operate safety systems. Advanced nuclear reactors have extended or even unlimited coping periods. These facilities can self-cool during a loss of power.

The current regulatory framework for advanced reactors adapts and modifies the industry approach to conventional nuclear.  This is a reasonable approach for the licensing of new designs. However, long-term success requires regulations tailored for the operation of advanced nuclear reactors.  Achieving this outcome requires collaboration among regulators, OEMs, owners, operators, and industry groups.

Leverage the Inflation Reduction Act (IRA).  Previous climate change legislation relied on policy “sticks” such as cap-and-trade programs.  As an alternative, the IRA offers policy “carrots” in the form of tax credits and investments.

In 2025, advanced nuclear reactors will qualify for the Clean Electricity Investment Tax Credit (ITC).  The tax credit will provide a 50% tax credit for strategically sited facilities.  The Department of Energy also has a new loan guarantee program.  More specifically, advanced nuclear reactors placed at retired coal plants qualify for the Energy Infrastructure Reinvestment Program.

Despite the enormity of the IRA funding, the advanced nuclear industry must move fast. Appropriations for the Energy Infrastructure Reinvestment Program expire September 30, 2026. Industry groups, OEMs, owners, and operators need to develop a strategy to maximize IRA incentives.

Distinguish advanced nuclear from conventional nuclear.  As an emerging technology, advanced nuclear needs to define its identity. This identity needs to be separate and distinct from conventional nuclear power generation.

Some characteristics overlap, such as safety, reliability, and zero-carbon emissions.  However, advanced nuclear has additional favorable characteristics.  These include passive safety features, ramping capabilities, small geographic footprints, and an ability to use serial, factory-based production of reactor modules.

OEMs and industry groups should highlight these key differences.  They also need to track and report technology cost declines over time.

There is no time to waste.  Advanced nuclear is a key resource to rapid decarbonization. Prioritizing near-term actions will provide the industry an opportunity to become a leading source of new generation in the future.

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ScottMadden, Inc.
ScottMadden is a management consulting firm focused on Transmission & Distribution, the Grid Edge, Generation, Energy Markets, Rates & Regulation, Enterprise Sustainability, and Corporate Services. We have served hundreds of utilities, large and small.
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Michael Keller's picture
Michael Keller on Dec 6, 2022

Advanced does not necessarily mean economic or practical.

Many of the proposed designs suffer from major shortcomings in the fundamental reason for deploying the technologies. For instance, fast reactors rely on highly energetic neutrons. This approach is based on making more fuel than the reactor uses, but expensive fuel reprocessing is required. The actual time frame to increase the fuel is measured in decades. Operational and safety issues are exceptionally vexing. The actual economics of the technology are dismal.

The DOE selection process is based more on novel reactor concepts with little thought on practical economics. The marketplace will ultimately sort this out, but billions of dollars (and time) will have been squandered on impractical machines.

Mark Silverstone's picture
Mark Silverstone on Dec 9, 2022

NuScale’s project in Utah may already be unravelling:

Plans to build an innovative new nuclear power plant—and thus revitalize the struggling U.S. nuclear industry—have taken a hit as in recent weeks: Eight of the 36 public utilities that had signed on to help build the plant have backed out of the deal. The withdrawals come just months after the Utah Associated Municipal Power Systems (UAMPS), which intends to buy the plant containing 12 small modular reactors from NuScale Power, announced that completion of the project would be delayed by 3 years to 2030. It also estimates the cost would climb from $4.2 billion to $6.1 billion.

This is not an auspicious start to the next chapter of the nuclear generation saga.

Julian Jackson's picture
Julian Jackson on Dec 15, 2022

These reactors are in the development stage, as far as I know. It seems there is an energy gap, as fossil fuels are decommissioned and wind/solar/storage does not completely fill the gap. This could be helped by SMRs, if they can be developed to commercial scale in time. That seems to be a big ask, given the long time scales and regulatory hurdles that all nuclear has to surmount.

Sean Lawrie's picture
Thank Sean for the Post!
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