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Why DOE Should Back SMR Development

Marv Fertel
The following guest post was written by NEI's President and CEO, Marv Fertel.

Nuclear energy is an essential source of base-load electricity and 64 percent of the United States’ greenhouse gas-free electricity production.  Without it, the United States cannot meet either its energy requirements or the goals established in the President’s Climate Action Plan.

In the decades to come, we predict that the country’s nuclear fleet will evolve to include not only large, advanced light water reactors like those operating today and under construction in Georgia, Tennessee, and South Carolina, but also a complementary set of smaller, modular reactors.

Those reactors are under development today by companies like Babcock &Wilcox (B&W), NuScale and others that have spent hundreds of millions of dollars to develop next-generation reactor concepts.  Those companies have innovative designs and are prepared to absorb the lion’s share of design and development costs, but the federal government should also play a significant role given the enormous promise of small modular reactor technology for commercial and other purposes.  Most important, partnerships between government and the private sector will enable the full promise of this technology to be available in time to ensure U.S. leadership in energy, the environment, and the global nuclear market.

The Department of Energy’s Small Modular Reactor (SMR) program is built on the successful Nuclear Power 2010 program that supported design certification of the Westinghouse AP-1000 and General Electric ESBWR designs.  Today, Southern Co. and South Carolina Electric & Gas are building four AP-1000s for which they submitted license applications to the Nuclear Regulatory Commission in 1998.  Ten years earlier, in the early years of the Nuclear Power 2010 program, it was clear that there would be a market for the AP-1000 and ESBWR in the United States and overseas, but it would have been impossible to predict which companies would build the first ones, or where they would be built, and it was even more difficult to predict the robust international market for that technology.

The SMR program is off to a promising start.  To date, B&W’s Generation mPower joint venture has invested $400 million in developing its mPower design; NuScale approximately $200 million in its design.  Those companies have made those investments knowing they will not see revenue for approximately 10 years.  That is laudable for a private company, but, in order to prepare SMRs for early deployment in the United States and to ensure U.S. leadership worldwide, investment by the federal government as a cost-sharing partner is both necessary and prudent.

Some have expressed concern about the potential market and customers for SMR technology given Babcock & Wilcox’s recent announcement that it will reduce its level of investment in the mPower technology, and thus the pace of development.  This decision reflects B&W’s revised market assessment, particularly the slower-than-expected growth in electricity demand in the United States following the recession.  But that demand will eventually occur, and the American people are best-served – in terms of cost and reliability of service – when the electric power industry maintains a diverse portfolio of electricity generating technologies.

The industry will need new, low-carbon electricity options like SMRs because America’s electric generating technology options are becoming more challenging.  For example:
  • While coal-fired generation is a significant part of our base-load generation, coal-fired generation faces increasing environmental restrictions, including the likelihood of controls on carbon and uncertainty over the commercial feasibility of carbon capture and sequestration.  The U.S. has about 300,000 MW of coal-fired capacity, and the consensus is that about one-fifth of that will shut down by 2020 because of environmental requirements.  In addition, development of coal-fired projects has stalled:  Less than 1,000 megawatts of new coal-fired capacity is under construction.
  • Natural gas-fired generation is a growing and important component of our generation portfolio and will continue to do so given our abundant natural gas resources.  However, prudence requires that we do not become overly dependent on any given energy source particularly in order to maintain long-term stable pricing as natural gas demand grows in the industrial sector and for LNG exports.
  • Renewables will play an increasingly large role but, as intermittent sources, cannot displace the need for large-scale, 24/7 power options.
Given this challenging environment, the electric industry needs as many electric generating options as possible, particularly zero-carbon options.  Even at less-than-one-percent annual growth in electricity demand, the Energy Information Administration forecasts a need for 28 percent more power by 2040.  That’s the equivalent of 300 one-thousand-megawatt power plants.

America’s 100 nuclear plants will begin to reach 60 years of operation toward the end of the next decade.  In the five years between 2029 and 2034, over 29,000 megawatts of nuclear generating capacity will reach 60 years.  Unless those licenses are extended for a second 20-year period, that capacity must be replaced. If the United States hopes to contain carbon emissions from the electric sector, it must be replaced with new nuclear capacity.

The runway to replace that capacity is approximately 10 years long, so decisions to replace that capacity with either large, advanced light-water reactors or SMRs  must be taken starting in 2019 and 2020 – approximately the time that the first SMR designs should be certified by the Nuclear Regulatory Commission.

The electricity markets are in a period of profound change. New energy sources are becoming available, new fossil, renewable, demand-side and nuclear technologies are preparing to enter the market. The very structure of the markets themselves is changing. Nuclear energy, because it runs 24/7 without producing greenhouse gas, will play an important part in that market. SMR technology, in particular, needs to be developed sooner rather than later. That way, in about 10 years, we can answer the questions about which companies will build those plants and where.


Rod Adams said…
I would like to add one more discussion topic to Mr. Fertel's post.

People who oppose the use of nuclear energy and those who support nuclear energy but oppose the involvement and expenditure of government funds will team up to fight his suggestions as currently framed.

It should be pointed out that a substantial portion of the cost associated with bringing a new nuclear plant design to market are the fees that are charged by the government for the service of providing regulatory oversight. The Nuclear Regulatory Commission rightly encourages nuclear plant designers who plan to seek permission to build in the US to get the regulator involved early and often in the planning process.

However, that involvement does not come for free. After the first meeting with a proposed licensee, the NRC opens a docket and begins tracking billable hours that are then charged to the applicant at the current rate of $272 per professional staff hour.

Though the money being provided under the DOE SMR assistance program is not specifically directed to paying the NRC fees, the total amount of money being provided is just about enough to cover that line item in an design certification application budget. All of the other costs of design must come from corporate funds. For those unlucky applicants who did not get DOE funding, all costs are born by the applicant, including the government regulatory review fees.

That information need to be repeated so that the people who adamantly oppose government spending understand that the industry is not asking for a handout, just a hand up in overcoming the barriers that have been erected over the years that slow new design development.

Rod Adams
Publisher, Atomic Insights
We're not going to stop rising sea levels, the acidification of the oceans, and the disastrous economic and social effects of climate change by pumping more greenhouse gases into the atmosphere through natural gas-- no matter what the international oil companies say!

There's enough room at existing nuclear sites in America to easily accommodate enough SMRs to completely replace the use of fossil fuels for base-load electricity production in America.

Fossil fuels are not the answer to rising sea levels, ocean acidification, and climate change-- they're the cause.

And nuclear power is the best solution to stop this problem! Its that simple!


Anonymous said…
When are Americans going to get it? The Federal Government is BROKE! We need a balanced budget to stop digging the debt hole. Then we need to start paying down the debit owed. No more subsidies. You can't have capitalism, free markets, freedom, and government subsidies. Regulatory oversight is essential a part of the cost of doing business. Look at the history of the nuclear industry and you will see that utilities highest goals were minimum regulatory standards. I have worked on both sides of the fence and know this to be true. Why do you think we have NQA-1, Appendix R and other requirements? To provide assurance that events that have happened in the past do not recur. Regulatory fees are determined by a auditable process and cover not only salaries and benefits but also travel, meals and other sundries. Of all the regulatory organizations, the NRC is the most competent of them. They do not MAKE money, they recover some costs. If they don't cover cost form the industry then the money comes from taxes. We pay enough of those. Try comparing nuclear consulting fees and you will see it is a good deal.
Roger Sowell said…
Mr. Fertel, there is no market for expensive nuclear reactors at any size. The large, 1000 MWe plants cannot compete, even though they have economy of scale in their favor. Smaller reactors, even modular ones as you advocate, must overcome the reverse economy of scale issue. See why there are no benefits from smaller, modular nuclear reactors at:

The linked article is but one of nine articles on nuclear power that are published to date. The series will likely have approximately 30 articles giving sound reasons and facts why nuclear power should be shut down, and never built.

Roger E. Sowell, Esq.
Energy Attorney
Energy Northwest is a Washington state, not-for-profit joint operating agency that comprises 27 public power member utilities from across the state serving more than 1.5 million ratepayers. Public utilities in the Northwest and elsewhere are looking for a carbon or fossil fuel hedge. Nuclear generation provides that hedge, and SMR technologies incorporate lessons learned over several decades of operating similar sized U.S. Navy reactors as well as traditional sized commercial reactors. In fact, the American Public Power Association (APPA) recently passed a resolution calling for the federal government to accelerate SMR development and commercialization.

We know that all credible analyses of carbon reduction issues – by the U.S. Environmental Protection Agency, the Energy Information Administration and independent international institutions like the Intergovernmental Panel on Climate Change and the International Energy Agency – have demonstrated unequivocally that the United States and the world cannot achieve meaningful reductions in carbon emissions without preservation of our existing nuclear energy assets and construction of new nuclear generation, including SMRs. An additional benefit of SMR technology is to integrate intermittent renewable sources into the grid more smoothly.

It is expected to take $1 billion to complete NRC design certification. Energy Northwest was pleased that the Department of Energy selected the Nuscale Power design for innovative technology funding (matching funds). It is also good to recognize that Fluor Corp., the majority owner of NuScale Power, has the money and commitment to see the design certification process through to completion – but this is a lengthy and expensive process, and, like most innovative technologies, requires investment by partners with shared interests in that technology’s benefits and uses. It should be noted that a substantial portion of the DOE matching funds are expected to be consumed by NRC review fees alone.

Nuclear energy can – and according to all credible experts, must – play a major role in any serious strategy to reduce carbon emissions. As policymakers invest in innovative energy technologies that promise to create job opportunities and new job sectors and reduce carbon emissions, maintaining funding for the promising small modular reactor designs is key to our shared clean energy future.

Energy Northwest has joined a teaming partnership with NuScale Power and the Utah Associated Municipal Power Services under which Energy Northwest would have first right of offer to operate a NuScale SMR. We remain very positive about the potential of SMRs to contribute to the low-carbon energy mix in the Pacific Northwest. We are looking at the 2023 time frame, realistically, for generating electricity from an SMR.

Dale Atkinson
Vice President
Energy Services and Development
Energy Northwest
Anonymous said…
Investment cost is proportional to the surface (materials), power is proportional to the volume of the core. But the same rule is applicable to the passive cooling efficiency:

Cost_B = Cost_A x (Size_B / Size_A)^n
PCE_B = PCE_A x (Size_B / Size_A)^n

PCE - Passive cooling efficiency
n = 0.5 - 0.7

300 MW nuclear power station is more costly than 1200 MW, but smaller reactor is safer. Deterministic safety is achievable for all small enough reactors. Alvin Weinberg pointed out already 50 years ago that probabilistic safety is nice, but deterministic safety is a real safety. Moreover playing with probabilistic safety the reactors are getting safer and safer but they are more and more expensive, they have more and more safety systems.

It is high time to come back to small reactors and deterministic safety concepts.
kellermfk said…
Seems to me both Westinghouse and now B&W have encountered a fundamental problem. Their products cost too much relative to the competition. I suspect NUSCALE will face the same problem; no customers.

Mike Keller
LP said…
@kellermfk, one sentence from NRC: "The radius of Emergency Planning Zone (EPZ) required for the SMR is equal to1000 ft " will change the game and you will see customers for SMR. Today 10 miles EPZ is required for LLWR what means that there is a risk, small risk to the public. 1000 ft EPZ for SMR means no risk to the public.

But such a decision from NRC is not easy: (1) This is a challenge for SMR providers (2) This short sentence will result in additional troubles for new LLWR projects (3) so LLWR industry must be against small, 1000 ft, EPZ for SMR.
Concluding, to start SMR business the additional risk must be put on LLWR industry. Is it feasible?
The SMR market is just emerging. We see it as an essential technology for future base load generation. Greenhouse gas reduction goals cannot be met with renewables alone. In order to achieve the goals, as well as maintain the integrity of the reliable grid we so enjoy in our country, the nuclear option is paramount. Over the next decade, the country needs to internalize the need for SMRs through regulation reform targeted at a streamlined operation that provides for and compliments the enhanced safety the SMR technology offers. Much of the present-day thinking of potential safety issues needs a paradigm shift given that many of the theoretical accidents are simply not credible for SMRs. Additionally, applying the lessons from recent and historical events through ground-up design features assures a safe, reliable and diverse energy option. Utilities should prepare their staff’s intellectual capital, engage in the development of designs and engage in regulatory reform. The US government needs to lead in this reform and share the economic risks of getting the first wave of SMRs in operation. There will be a time in the next decade that we will wish we did.
Greg Halnon, Director Regulatory Affairs, FirstEnergy Corp.

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