June 19, 2022

Outside the United States, nuclear is entering a golden era, especially in China.  There is a record building boom in current and announced plants, including more than 225 plants in China alone.  Costs are being driven down to exceptionally affordable levels.  Best practice current nuclear plants deliver costs of $0.05/kwh versus the average U.S. electric bill of $0.14/kwh.   Most impressively, technology is rapidly evolving to safe, low-waste fourth-generation technology, or GEN IV, expected to be commercialized by 2030. 

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According to the U.S. Department of Energy, GEN IV high-temperature, low-pressure plants “offer impressive safety features and can be easy to construct and affordable to maintain.”  High temperature means GEN IV nuclear plants can generate electricity, which accounts for some 20% of world energy demand, and, for the first time, replace fossil fuels in process industries that rely on heat. 

This opens a new world to nuclear and will, according to the U.S. Department of Energy, in addition to all-important electric generation, power “hydrogen production, desalination, district heating, petroleum refining and ammonia production.”  As process energy is the second largest source of energy, powered by fossil fuels, the coming dual electric and process heat output of GEN IV nuclear is of huge significance.

Despite all this positive, yet virtually unreported news, nuclear energy in the U.S. has in essence been abandoned, with two exceptions.  Utility operators working through supplemental license renewals (SLRs) are seeking to extend the useful lives of the existing nuclear fleet, but this is a mere stopgap effort and now subject to a freeze by the Nuclear Regulatory Commission.  Prospectively, tech entrepreneurs, supported by generous Department of Energy subsidies, aim to commercialize experimental reactors scaled down to small size, known as small modular reactors or SMRs.

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The resulting outlook for nuclear is brutal.  In the past twenty-five years, the U.S. has put exactly two plants in service (Watts Bar 2 in Tennessee and Vogtle [2022] in Georgia), and no new plants are slated to be constructed, excluding two demonstration SMRs.  On present course due to retirements, nuclear power generation in the U.S. is expected to decline by 40% in 2050, from 20% of electric generation to 12%, according to the U.S. Energy Information Administration.

Are SMRs the Answer?

The concept animating SMRs is quite simple.  Break down nuclear technology into bite-sized 60-MW components that can be strung together as needed.  Absolute cost per module is low, reducing sticker shock for utilities.  Delivery of small units can be made using conventional truck and rail.  Sites can be located on small plots, including existing brownfield former coal plants.  Add innovation in design and safety and firms led by pioneering entrepreneurs, such as Bill Gates’s TerraForm Power, and you have the ostensible blueprint for an exciting new nuclear future.

The reality of SMRs to date can be summarized as over-hyped and under-delivered.  Developed as a concept in the 1990s, thirty-years later, there is yet to be a working commercial unit, with the soonest one now promised for 2027.  Of the two demonstration plants in the U.S., NuScale in Utah and TerraForm in Wyoming, NuScale has to date received the most funding, including a recent life-saving $1.4-billion grant from the U.S. Department of Energy, following a long series of delays and cost overruns. 

Cost estimates for the 720-MW plant (i.e., twelve 60-unit modules) now total $6.1 billion and counting.  At a per-unit cost of more than $8,000/mwh, the NuScale plant is uncompetitive but argued as forgivable for a first-of-its-kind operation.  While NuScale claims that it will ultimately deliver sustainable costs, critics allege that SMR construction costs and cost per kilowatt-hour will miss forecasts by a wide margin. 

Over the years, SMRs, and the NuScale project in particular, have developed a loyal following and devoted enemies.  Most prominent among the supporters, SMRs are the poster child of the Biden administration, as articulated by U.S. Secretary of Energy Jennifer Granholm, “[W]e are very bullish on these advanced nuclear reactors.”  The enthusiasm has spread to the broader press.