Correction appended.
Widespread revulsion over Russia’s attack on Ukraine has European officials looking for alternatives to Russian energy — including small modular nuclear reactors, the chief executive of the leading U.S. developer said.
Oregon-based NuScale Power LLC, the only company with a Nuclear Regulatory Commission-approved design for small reactors, is pursuing projects with partners in Poland and Romania.
With the Biden administration’s support, it is exploring options in Bulgaria and elsewhere in Europe, NuScale CEO John Hopkins told E&E News. Ukraine and NuScale leaders had discussed a project there before Russian President Vladimir Putin’s assault began in February.
“People want to get off Russian gas. They want to get off coal,” Hopkins said in an interview. “We’re getting a lot of strong interest” in Europe.
NuScale’s top priority is launching its small modular reactors, or SMRs, in the United States as a source of around-the-clock clean energy. That begins with a six-unit plant built for the Utah Associated Municipal Power Systems, a power provider for community-owned systems in Utah and six other Western states. The plant is scheduled to come online in 2029 at the isolated Idaho National Laboratory site 45 miles west of Idaho Falls.
NuScale’s core challenge remains the same in the United States, Europe and Asia, Hopkins acknowledges — to prove it can deliver its factory-built, 77-megawatt reactor modules on time and on budget.
The company got a vote of confidence in December from an investment group that proposes to add $373 million in funding for the NuScale reactor project. Since then, South Korea’s Samsung C&T Corp. has added $30 million to its part of the merger investment, bringing the potential total to NuScale to $443 million before fees. NuScale expects the transaction to close in the second quarter of this year, calling it a key to its strategy.
However, its Carbon Free Power Project won’t get built in Utah unless its costs are on track to deliver power at an average cost of $58 per megawatt-hour, Hopkins said. The initial reactor’s projected power costs will be recalculated as work progresses, and if estimates go above the target price, the Utah municipal power group can walk away, according to LaVarr Webb, a spokesperson.
“We believe it’s going to be below that [figure],” Hopkins said, but it is battling nuclear power’s credibility issue. “In this industry, you oversell and underperform, historically. You can’t do that anymore. We need to do what we say we can do.”
NuScale’s target price is comparable to power from natural gas plants at today’s gas prices, inflated by the sanctions on Russian energy, Hopkins said this month. But it would not be competitive with typical U.S. electricity prices from gas plants before the crisis, nor with the average price of $36 per MWh for onshore U.S. wind power at the end of last year, according to a LevelTen Energy price survey.
What’s an SMR worth?
Such price comparisons raise a critical question about the future of new nuclear power technologies in a future of clean energy in the United States, experts said. What is SMR power worth?
Unlike wind and solar power, reactors run 24/7 unless they are being refueled, making them a source of “firm” zero-carbon fuel. Some such firm clean energy will be essential if the U.S. grid becomes dependent on wind and solar for a majority of its electricity, to cover the hours when sunshine and wind aren’t there, or periods of a week or more when wind and solar power output is poor.
“There is a near consensus that we’re going to need significant amounts of firm zero-carbon power that will enable wind and solar generation in order to have a reliable and resilient grid,” former Energy Secretary Ernest Moniz said in an interview with E&E News.
Detailed computer studies of future grid conditions, including extreme weather scenarios, back up the conclusion, the study authors conclude.
Jeff Dagle, chief electrical engineer at DOE’s Pacific Northwest National Laboratory and an expert on grid security and resilience, said firm power with zero-carbon emissions will be essential when very high levels of renewable power are reached.
It’s particularly evident in the Pacific Northwest, when stationary high-pressure systems arrive and stay for multiple days, smothering wind power, he said. Today’s utility batteries cannot cover such a lengthy loss affordably.
New nuclear reactors will compete with geothermal energy, natural gas plants whose carbon emissions can be captured and kept from escaping into the atmosphere, and long-duration storage solutions that don’t yet exist, Dagle noted. A much larger long-distance transmission grid could be part of the solution, as well.
It is too early in the race to know which firm clean energy options will prove most affordable, reliable and efficient, Dagle said. Whether Congress will enact additional tax incentives for clean energy, including SMR nuclear power, remains unsettled.
“I am a big fan of an all-of-the-above strategy,” Dagle said in an interview with E&E News. “But they all have to compete,” he added. “The cost is going to be a key driver.”
A NuScale reactor isn’t just for backing up wind and solar. It must run full time to meet budgets, according to NuScale.
Its design seeks cost reductions by using reactor modules small enough for factory construction and shipment to sites by truck or barge rather than the on-site construction of giant reactors like two new units on the way at Plant Vogtle in Georgia. The units will each have a capacity of more than 1,000 MW, but the project has seen delays, and costs have ballooned by billions of dollars.
Hopkins said NuScale is counting on its manufacturing partners to achieve the efficiency it is promising, including Japan’s IHI Corp. and U.S.-based Fluor Corp., both billion-dollar global businesses.
“These little modules can be built in a factory. They don’t care where they go,” Hopkins said. “So that’s 30 percent of the cost.”
The rest of the cost is concrete, steel and a hole in the ground, he said. The modules can be combined in four-, six-, and 12-unit assemblies, and the first module can be running and earning revenue when the next one is under construction, he said.
The design cuts more costs with a “passive” safety system that submerges the reactor in a below-ground reservoir, eliminating the need for pumps, pipes and emergency power sources that are costly features of current commercial U.S. reactors, NuScale said.
While the unique design of the NuScale reactor and its emergency cooling system were approved by NRC in a final safety evaluation report, certain specific “inspections, tests, analyses and acceptance criteria” will still have to be met before the plant is authorized to operate by NRC, commission spokesman Scott Burnell said, responding to an E&E News query.
NuScale acknowledges that nuclear power faces a level of public opposition that competing zero-carbon energy sources don’t.
“If accidents similar to the Fukushima disaster or other events, such as terrorist attacks involving nuclear facilities, occur, public opposition to nuclear power may increase,” NuScale said in a regulatory filing.
‘Significant losses’
Skeptics and opponents also focus on the project’s possible price tag.
“You have to question the credibility of their predictions on operating costs, construction costs and construction time,” said David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis, which has advocated for renewables.
IEEFA issued a critique of NuScale’s reactor last month. “New designs always have problems,” Schlissel said in an interview, adding that he had raised the same cost issues when Plant Vogtle was being debated. “I warned them.”
In response, NuScale points to the support from DOE and private investors who believe it can deliver.
NuScale has been on a winning streak recently, including a $1.36-billion matching construction grant from the Department of Energy in October 2020. Last November, it agreed with a Romanian utility to pursue development of a six-module plant by 2028.
Last month, a major Polish copper and silver producer said it will work with NuScale on building an SMR there for industrial and utility power. NuScale said it has 10 other “highly interested” potential customers in seven countries.
Also last month, NuScale announced it will explore a project with Dairyland Power Cooperative, a La Crosse, Wis.-based power provider for 52 cooperatives and municipal utilities in four Midwest states.
And this month, Utah Associated Municipal Power Systems and a division of Minneapolis-based Xcel Energy Inc. said they were working toward agreement for Xcel to operate the Carbon Free Power Project.
But as a startup with a track record still to write, NuScale operates close to the edge financially, according to statements accompanying a merger agreement with a Texas-based investment fund, Spring Valley Acquisition Corp., announced in December.
Spring Valley, a Cayman Island-registered corporation formed to seek out a clean energy company it could merge with, raised $230 million in November 2020 and went looking for a match.
Its chief executive, Christopher Sorrells, has experience in the nuclear industry. Its board includes Patrick Wood III, a former chair of the Federal Energy Regulatory Commission and the Public Utility Commission of Texas.
NuScale was also seeking a partner. It has been developing its SMR design since 2007, incurring high research and regulatory filing costs. In 2020, it recorded an $88.4 million net loss despite about $71 million from an earlier DOE grant, according to a statement filed with the Securities and Exchange Commission.
“We have incurred significant losses since our inception well beyond the support we have received through cost-sharing awards from the DOE,” NuScale said, as part of Spring Valley’s SEC registration statement for the transaction.
In the filing, the company said it expected significant expenses and negative cash flows until at least 2024, with the expectation that final NRC approvals will be in hand in 2025.
In its complex agreement with NuScale, Spring Valley seeks SEC approval for the merger in order to bring the new cash to the SMR venture. NuScale’s management has “substantial doubt” about the company’s ability “to continue as a going concern through December if the [Spring Valley] transactions are not completed,” the filing disclosed.
In its competition with state-backed SMR projects from China and Russia, NuScale is following a typical U.S. new model: starting with academic research at Oregon State University; picked up and advanced by entrepreneurs and investors who went into a financial hole over more than a decade of development; and backed by the Energy Department in pursuing costly regulatory approvals.
The NuScale reactor project must hit a cost target without receiving compensation — at this point — for the societal value of its carbon-free power.
“If we’re not cost-competitive, it’s not going to go anywhere,” Hopkins said.
Reporter Miranda Willson contributed.
Correction: This story has been updated to include additional investment information.
