UAMPS stepping forward to serve customers

The established nuclear energy industry has taken a wait-and-see approach to the idea of developing and deploying smaller, simpler fission power stations that can take advantage of the economy of series production. The industry’s trade organization, the Nuclear Energy Institute, has expressed cautious optimism and has engaged in a moderate effort to identify regulatory obstacles and seek rule changes that are justified by the specific risk profile of the smaller, simpler machines.

The long-established nuclear plant vendors have invested some effort in developing smaller reactors, but their concepts have been guided by long established paradigms. The cautious response by existing customers discouraged changes that were too far outside of the comfortable box, and have had the net effect of causing projects to be shelved while waiting for customer demand to materialize.

This is a classic Innovator’s Dilemma situation. Existing customers have asked for moderate improvements in what they have previously purchased, successful businesses that have grown comfortable serving those customers have developed products they thought their customers wanted, and customers have expressed the opinion that the new products are unproven and don’t have sufficient advantages over the products they already own.

By taking such a cautious, financial risk-averse approach to the evolved technology, the established industry has left a void that is being filled by companies with fewer pre-existing notions about the proper size, shape, and operational concept to apply to producing power from the reliable, ultra-low emission process of atomic fission.

A couple of days ago, I published an article about NuScale, a start-up small reactor designer that has taken a more holistic look at the energy market and at the lessons learned during the 60 years of commercial nuclear power plant operations. It has developed a dramatically simpler power module that is a complete unit with an output capacity that is only 5% of the traditional 1000 MWe nuclear plant size.

They have also developed a power station concept that gangs 12 individually complete modules, providing an approach to producing electricity on a commercial scale that is similar to the one used in combustion turbine power stations. Since the established nuclear plant operators have clearly expressed their wait-and-see attitude and claimed that they are cautiously interested in purchasing the second, third or tenth such power plant, NuScale has taken a different path towards finding customers for their first few power stations.

The chosen path recognizes the reluctance at the short term financial performance-focused investor-owned utilities and merchant nuclear plant operators.

Faced with a closed door, NuScale has targeted the public power market, which includes electricity cooperatives and municipal power systems that have a larger view of the importance of electricity. They see it as an enabler of widespread economic development and prosperity.

The public power path is not new, it has just been somewhat forgotten. As atomic history sources explain (example: APR Atomic Journal – ELK RIVER 1) several of the early projects in the development of the US nuclear energy industry were led by public power companies that were motivated by a desire to develop skills in a technology that could better serve their member/customer needs. Several existing plants are still owned by public power entities.

UAMPS (Utah Associated Municipal Power Systems) has decided that it is more than a little interested in being a leader by building and owning a NuScale power station. Though UAMPS has not placed an order for a NuScale plant — mainly because the design and licensing effort is still in progress — it has committed resources to a teaming agreement with NuScale and Energy Northwest.

I contacted the company and asked if they were willing to release more details about their interest and level of commitment than were available on their current web site. Here is what they sent me to share with you.

Future Baseload Supply:
Why UAMPS is Looking at SMR Technology

By Doug Hunter, UAMPS General Manager

Utah Associated Municipal Power Systems, through its SmartEnergy initiative, is constantly assessing and forecasting future electrical energy needs of member utilities. To meet those needs, UAMPS investigates all possible energy sources, including alternative resources such as wind and solar, along with increased conservation and efficiency.

UAMPS currently owns and operates a diverse and balanced energy resource mix, including coal plants, hydro, combined cycle natural gas and wind. UAMPS is also developing a waste heat project, purchases power on the open market and, along with its members, has implemented aggressive conservation and efficiency programs.

Because major baseload projects require years to plan, construct and bring online, decisions must be made today to ensure adequate supplies a decade from now for an energy-hungry society featuring electric vehicles and myriad mobile computing devices.

After much sophisticated resource planning and hard-nosed analysis, UAMPS’ 46 member utilities have concluded it is time to seriously study small modular reactors (SMRs) as a future source of baseload electrical supply. We believe SMR technology has advanced to the point that it may be the cleanest, safest and most cost-effective long-term solution to ensure stable, reliable, well-priced electrical power for UAMPS members over the next several decades.

Our coal properties have been baseload workhorses for decades. But they are reaching the end of their life cycles, and stringent carbon and environmental regulations will make them impossible to operate within 10 to 15 years.

We also own and operate a 145-megawatt combined cycle natural gas-fired generating facility, and will consider building more. But we can’t rely on natural gas for long-term baseload supply because of price volatility that will occur as natural gas becomes a global commodity. And while cleaner than coal, natural gas still produces carbon and emits pollutants and will face ever more stringent regulations.

We strongly support clean energy sources, including wind, solar, micro-hydro, waste heat, biomass and geothermal. We are aggressively promoting efficiency and conservation – the cheapest way to keep energy costs low.

Still, our careful projections indicate that we will need more stable baseload supply to keep the economy humming and meet the needs of energy-intensive manufacturing plants, computer server farms, and the electrification of the auto industry.

Nuclear energy has long been attractive because it emits no carbon or pollutants and produces massive amounts of reliable, stable energy, decade after decade. But the promise of a “nuclear renaissance” was dramatically interrupted by the March, 2011, catastrophic failure at the Fukushima, Japan, nuclear plant.

Today, however, a new generation of small, modular reactors promises a new phase of the nuclear renaissance. We believe the technology being developed by NuScale Power, of Oregon, will produce small reactors that are safe, cost-effective, and simple. SMRs are as different from the enormous large-reactor plants built in the 1960s as a Tesla electric supercar is to a1960s-era Cadillac with its enormous fins and terrible gas mileage.

UAMPS has entered into a Teaming Agreement with NuScale and Energy Northwest outlining the parties’ intent to investigate developing a Small Modular Reactor project, possibly at DOE’s Idaho Laboratory (INL) near Idaho Falls. It could be the first SMR project in the world. INL, whose mission is the development and deployment of advanced nuclear technologies, has immense reactor experience, sufficient water resources, access to transmission lines, environmental data needed in the DOE permitting process, and strong local political support.

Our project could consist of up to twelve 50 MW SMRs (600 MW total). Each reactor sits within a containment vessel measuring 76 feet tall x 15 feet in diameter. Each reactor and containment vessel operates independently of the other reactors inside a water-filled 8-million gallon water pool that is built below grade.

The reactor operates using the principles of natural circulation; hence, no pumps are needed to circulate water through the reactor. The system uses the natural physics convection process, providing the ability to safely shut down and self-cool, indefinitely, with no operator action, AC or DC power, and no additional water. The design simplicity allows the NuScale Power Module to be factory-built, and transported to the site on trucks. The design makes the plants faster to construct, and less expensive to operate. The footprint of a 600 MW plant is small, only 44 acres. NuScale recently won a $217 million DOE grant to develop the SMR and apply for NRC design certification approval.

No final decision regarding an SMR plant should be expected before 2017. But the UAMPS Board of Directors has directed management and staff to carefully investigate the possibilities and to monitor the certification and licensing process. A plant would likely not be operational before the end of 2023, when UAMPS coal plants will likely need to be retired.

Publicly-owned utilities like UAMPS are under tremendous pressure to provide cleaner energy and reduce reliance on carbon-based fuels. UAMPS believes it is prudent and wise to carefully investigate SMR nuclear energy options as possible safe, clean, emission-free, reliable, baseload supply.

Prospective customers lining up at NuScale

UAMPS plans to own. Energy NW plans to operate

UAMPS plans to own. Energy NW plans to operate

A few days ago, Dan Yurman at Neutron Bytes published a blog post that is now titled Flash: NuScale executive says firm may build SMRs at Idaho lab. It was a follow-up to an earlier post in which Dan speculated about the Idaho National Lab’s potential as a good site for a new nuclear power plant.

One statement that Dan made in that original post, titled New life for Idaho test reactor, are SMR’s next?, stimulated Mike McGough, NuScale’s Chief Commercial Officer, to provide a gently worded correction.

Hey Dan. I read your post and you may not have seen that NuScale has long-ago announced that UAMPS will be the owner and ENW the operator of our first plant in Idaho and that we are in site selection activities as we speak. While we do not yet know exactly where the best site will reside, we do know that the DOE INL site has been well-characterized and that we expect to find possible choices there, once the screening of the state is competed.

That comment stimulated some additional discussion and clarification. Here is the sentence that attracted McGough’s response.

However, despite obvious speculation that emerges from time-to-time in Idaho Falls, none of the vendors has said so much as “boo” about these prospects, and at least so far none of the chatter would cause an investor to open publically (sic) their checkbook.

Over the past year or so, I have seen and heard McGough speak at conferences in Idaho, North Carolina and Northern Virginia. I travel far less frequently than he does; I think he lives out of a suitcase. It was not surprising to me that McGough would respond to someone saying that his company has not said “boo” about its project development efforts; he’s spent a lot of time giving talks all over the world to the kinds of audiences that can and will make things happen. I have no doubt that there are many developments that have not been announced yet, but even those that have been made public amount to more than mere hints.

For example, on July 1, 2013, NuScale issued a press release titled NuScale Power’s Small Modular Reactor Chosen as Preferred Technology by Western Initiative for Nuclear which provided a reasonably detailed description of a well resourced program of regional development. It mentioned a demonstration project and additional interest in follow-on units. It included quotes from three governors of states that are interested in reliable, carbon-free generation and statements by two public utilities interested in deploying and operating NuScale power plants.

Each orange circle represents a potential NuScale power plant

Each orange circle represents a potential NuScale power plant

As I reread that press release, the date jumped out at me. I contacted Mike McGough and confirmed my suspicions. That press release was purposely issued on the day the submission window closed for the second round of funding under the Department of Energy’s small modular reactor program. NuScale obviously knew the details of its strong support earlier than that and included evidence of that support to reinforce the strength of its submission package.

NuScale, even though it is a startup, is apparently led by people who were wise enough to protect that critical information until after its competitors for the funding opportunity could not respond or attempt to steal its potential business partners.

When I spoke to McGough, he was in Paris at the World Nuclear Exhibition. After telling me that I had no reason to be jealous because he rarely gets a chance to do any sightseeing when he attends such events, McGough told me how busy his company’s phones have been with contacts from interested potential customers and suppliers. He attributed the recent increased rate of calls to recognition of the substantial advantages of his company’s product, the DOE selection of NuScale as the sole recipient in the second round of SMR funding, and the virtual disappearance of B&W mPower, Inc. as a strong competitor.

McGough shared the presentation that he was scheduled to give in Paris and gave me permission to use some of the material since it was being provided in a public forum. One of the new items to me was a bullet that said that NuScale now has a “line of sight” to its first 12 power plants, each of which would include 12 NuScale power modules for a total of 144 modules. Several months ago, I heard a NuScale presentation claiming that the company reaches ‘N’, as in the “Nth of a kind” economics after it has produced between 19-20 modules.

The demonstration project will be known as UAMPS Carbon-Free Power Project (CFPP). It will be owned by UAMPS (Utah Associated Municipal Power Systems), a consortium of 45 member utilities located in six states including UT, AZ, NM, ID, CA, and WY and operated by Energy Northwest, an experienced nuclear plant operator.

The plant will include 12 modules each rated at 50 MWe (gross) and 47.8 MWe (net) for a total plant output of 574 MWe when all modules are operating. (Note: NuScale used to state that its modules would produce 45 MWe each, but has recently refined its estimates. The new number does not represent any design changes, but does show that nuclear engineers tend towards conservatism and “underpromising.”)

There is obviously a major hurdle that must be overcome between now and firm contracts for actual construction. NuScale has not yet submitted its design certification application and there is no guarantees for how long it will take the NRC to review and approve that document. There are not even any guarantees that the NRC will accept the application as complete when it is first submitted or that it will eventually grant the license.

However, I believe the risk of non-approval has been carefully addressed and that the review period after submission should be reasonably close to the predicted 38-42 months. Jose Reyes, NuScale’s Chief Technology Officer, was an NRC regulator early in his career and several other leading engineers at the company are experienced regulators. I have little doubt that the company will submit a high quality application and will be able to provide excellent answers in response to Requests for Additional Information (RAIs).

Once the company achieves its design certification, there will be a line of customers that may not be as impressively long as those outside an Apple store when a new iPhone is released. However, each entity in that line would represent a possible $2-$3 billion sale. There is no reason for complacency or early celebrations, but cautious optimism is not unwarranted.

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