New cost challenges for US Small Modular Reactor Project

Nuclear power for Australia’s electricity grid has been back on the public agenda with the Federal Opposition in particular advocating its adoption as a means to reduce carbon emissions and provide baseload generation.

The focus has been on newer small modular reactors (SMRs) as a potential source of emissions-free baseload power.  SMRs are generally considered to be reactors of 300MW or less developed as modules which can also be combined to form larger plants. 

Apart from the legal, regulatory and political impediments, cost has always been considered a major hurdle for nuclear in comparison to other forms of generation with the CSIRO’s GenCosts reports showing the technology to have the highest levelized cost of energy (LCoE).  Some of this stems from the SMRs being next generation, first-of-a-kind plants, as well as the stringent safety requirements and often lengthy regulatory approval processes leading to long build times.

Considered one of the more advanced of the new SMRs, NuScale’s Carbon Free Power Project (CFPP) which is being developed in conjunction with the Utah Associated Municipal Power System (UAMPS), highlights the challenges in getting the new nuclear plants to commercial development.  UAMPS serves 50 members, mostly municipalities in US states including Wyoming, Utah, Arizona, California, Idaho, Nevada and New Mexico. An image of NuScale’s reactor design is shown below.

Source: NuScale

In good news for the NuScale technology, the US Nuclear Regulatory Commission (NRC) issued its final rule in the Federal Register to certify its small modular reactor. It is the first SMR design certified by the NRC and the seventh reactor design cleared for use in the US.

The CFPP was announced in 2015 and was originally planned to provide 600-720MW (with 12 modules), but was scaled back in July 2021 to 462MW (6 X 77MW modules).  The project is being developed at the Idaho National Laboratory and is designed to provide UAMPS with the flexibility to ramp up and down to follow load and complement renewable generation. The first module is targeted to be online in 2029.

The project total costs are estimated to be US$9.3 billion and it has received US$4.2billion in support from the US Government, including a US$1.35 billion contribution from the Department of Energy. The project also recieved support via the US Inflation Reduction Act, which was introduced with an objective to help boost clean energy projects. 

The target price for power for delivered power was originally set at US$55/MWh, and this was increased to US$58/MWh when the project scale was reduced. A new project cost estimate has led to a new target price of US$89/MWh (around $123/MWh), a 53 per cent increase. Known as a Class 3 Project Cost Estimate (PCE) this refined the costs and reflected “the changing landscape for the development of energy projects nationwide and is primarily influenced by external factors, not by the project’s development or by a change in the cost competitiveness of NuScale’s scope of the project”[i].

Figure 1: Changes in NuScale target price

According to CFPP notes the cost of the project “the costs were primarily influenced by external impacts, not by the project’s development. Price increases have occurred due to inflationary pressures on the energy supply chain that have not been seen for more than 40 years.”

According to the new cost estimate, the producer price index for commodities such as carbon steel piping and fabricated steel plates has increased dramatically over the past two years. It notes:

• Fabricated Steel Plate is up 54 per cent
• Carbon Steel Piping increased 106 per cent
• Electrical Equipment up 25 per cent
• Fabricated Structural Steel increased 70 per cent
• Copper Wire and Cable up 32 per cent.

While the CFPP paper notes inflationary pressures are increasing the costs for all power generation and infrastructure projects, the change in costs for the NuScale project means  participant governing bodies need to review and approve the budget and financial plan and confirm their ongoing status in the project. The UAMPS can withdraw from the project and be reimbursed for most of its out-of-pocket expenses and a new cost estimate requires a revised Budget & Plan of Finance (BPF), effective 1 March 2023.  The revised BPF gives each of the individual participants the option to withdraw from the project or reduce their share in the project. One of the participants, the Idaho Falls Power Board, has noted that the cost increases have been “shocking” to NuScale and Fluor, NuScales largest investor and engineering, procurement and construction provider.

Despite these cost increases the project remains on schedule with the CFPP reporting that the combined construction operation license application is expected to be submitted to the US Nuclear Regulatory Commission due in January next year, with much of the work already in train.

Proponents argue that given UAMPS members will need “large amounts of clean, reliable and affordable energy early in the 2030s, the CFPP remains, by far, the most attractive option”.

One challenge in confirming the actual likely costs of SMRs currently is the fact that global commercial deployment is extremely limited. The International Atomic Energy Agency (IAEA) reported there are two SMRs in operation internationally in 2022.  These were the Russian Federation’s Akademik Lomonosov floating power unit (FPU) which was connected to the grid in 2019 and started commercial operation in May 2020. The FPU, has two KLT‑40S reactors with an installed capacity of 70 MW and has been used to generate electricity and provide heat for local communities.

The other is the 210MW HTR‑PM located in Shandong province in China. This is an industrial demonstration plant of a high temperature gas cooled reactor (HTGR) which was connected to the grid in December 2021.

Given these limitations the CSIRO notes in its GenCosts report the difficult of finding good evidence for costs for SMRs and notes that “vendors seeking to encourage the uptake of a new technology have proposed theoretical cost estimates, but these cannot be verified until proven through a deployed project”.

Cost will remain a major challenge for SMRs (not withstanding the lack of a social licence in Australia). Proponents of SMRs argue they can benefit from efficiencies associated with the repeated manufacture of a standard design and from carrying out much of the inspection, testing and interaction with regulators at the manufacturing site.

The hurdles to nuclear in Australia remain immense. There is competition for project funding, the lack of a social licence based on concerns about nuclear safety issues amongst the public and need to change to its legal status, as well as the availability of mature, lower cost alternatives that can be more quickly deployed. Those alternative technologies also have the advantage of political patronage and public support.

[i] https://www.world-nuclear-news.org/Articles/NuScale-updates-project-partners-on-US-SMR-plant-c