NuScale wins second round of DOE SMR funding under FOA

On December 12, 2013, the US Department of Energy (DOE) announced the selection of NuScale as the winner of the second round of funding under the Department of Energy Funding Opportunity Announcement (FOA). That announcement, which had been due since sometime in September, must have been quite welcome to a lot of really talented and dedicated people in Portland and Corvallis, Oregon.

They are a good group of people that have been through some difficult challenges, including a financially stressful period in 2011 when the majority of the team had to be laid off and key designers were working for virtually minimum wage. Despite their detractors and unfortunate financial obstacles, they kept pursing their dream of designing simpler, safer, more economical nuclear power systems. They have received a well-deserved Christmas present.

I’ve been following NuScale since at least 2008 when I interviewed two of the company’s founders, Paul Lorenzini and Jose Reyes, for Atomic Show #100.

I’ve always been impressed by their focus, dedication and creative approach to designing a truly safe and simple light water reactor. For reasons that some of my readers will understand, I’ve always liked water reactors that use natural circulation to move the primary coolant into the steam generator. That design choice makes a “loss of all A/C” almost a non-event since the natural circulation flow simply continues to remove decay heat as long as necessary.

Of course, reactors that use natural circulation in all phases of operation have a lower limit on power density than reactors that use forced convection cooling using electrically powered pumps. That means that there is a lower power capability per reactor unit in reactors that are purposely sized to fit within the constraints of rail transportation systems. One can get a pretty good feel for the magnitude of the difference by comparing NuScale’s 45 MWe modules to the B&W mPowerTM reactor’s 180 MWe modules.

The economic comparison between the two is not simple; there are a number of variables and reliability assumptions that need to be included. There is a substantial cost associated with the decision to include eight electrically driven pumps using in the mPower design. Adding them to the system involves far more than just buying pumps and motors. Of course, the factor of 4 difference in unit output is quite seductive; there are some very smart people who have determined that it is worth the extra cost to achieve the additional revenue that can be generated by selling four times as much power from a similar sized pressure vessel.

The safety case difference between the two is also more complicated than is apparent from a cursory look. Though NuScale uses natural circulation for the primary coolant under all phases of operation, the mPower reactor is designed to allow natural circulation of the primary coolant under a long term loss of electrical power. The pumps can no longer be run, but the coolant flow required to remove decay heat is a lot lower than the flow required to produce power from steam generation. Of course, the mPower system has to prove that it can handle the transition from forced to natural circulation in a timely fashion; the NuScale case is a little less complicated.

In fact, in April of 2013, NuScale was able to make a dramatic announcement about the modeled safety of their complete system.

…the company has reached a major technological breakthrough whereby the NuScale Module does not require any electrical power—alternate current (AC) or direct current (DC)—to be able to achieve safe cooldown should the need arise. Additionally, NuScale’s technology does not require any on-going operator action nor additional water to achieve safe cooldown.

It looks like the DOE’s evaluators are not certain which group of smart people has made the right call, so they are providing some support to both concepts to allow them to conduct more detailed engineering and licensing work. Perhaps the modest investment by the government will also enable both NuScale and mPower to attract sufficient funding to build demonstration systems sooner rather than later.

Under the DOE’s FOA program, NuScale will get a portion of the $452 million that Congress has authorized the DOE to invest in supporting Small Modular Reactor engineering and licensing. Congress plans to spend money during a five or six year period that started in FY2013 in up to two cost-share programs where the recipient must invest at least half of the cost. The DOE announcement avoided mentioning a specific dollar amount, indicating that negotiations are still in progress. The NuScale press release indicates that the company will receive up to $226 million.

Though the DOE award was good news for NuScale, I am skeptical about the DOE’s SMR program for a couple of reasons. 1) The amount of money involved is minuscule in the context of the energy industry. 2) The funding has been authorized, not appropriated. It must still be included in each of five budgets and is always under threat of being sliced by the appropriations committee. It is also at risk of being delayed, reduced, or eliminated by the DOE or by the Office of Management and Budget.

Here is how Secretary Moniz described the program in the DOE’s announcement.

Small modular reactors represent a new generation of safe, reliable, low-carbon nuclear energy technology and provide a strong opportunity for America to lead this emerging global industry. The Energy Department is committed to strengthening nuclear energy’s continuing important role in America’s low carbon future, and new technologies like small modular reactors will help ensure our continued leadership in the safe, secure and efficient use of nuclear power worldwide.

In mid November, I attended a conference that included a talk by Secretary Moniz via live video feed. (The conference was in California, the Secretary had work to do in Washington.) Here is what he said then about the DOE’s SMR program in the context of describing the administration’s efforts to support nuclear energy.

Our second major commitment is the advanced technology regime and here, probably the centerpiece is the small modular reactor technical licensing program. We have $452 million available over six years to advance small modular reactors to design/design certification stage.

We think these technologies, and there are a multiplicity of them, as you know, are very, very, very promising. Very interesting features, passive safety features, nice security features, underground siting, factory production, hopefully driving down costs, more flexibility, including flexibility in financing inherent to the scale, but of course we won’t really know about the cost performance until we get small modular reactors out there.

We’ve given out one award so far, that’s to mPower, with the idea that there could be a reactor operating early in the next decade. We have a second procurement outstanding which we are working to finalize.
(Emphasis added.)
(Note: The above is a direct transcription of an audio file recorded during the talk.)

After Secretary Moniz had finished his talk, he allowed time for a short question and answer period before getting back to more pressing business. Here is the question I asked with his response.

Adams: Good morning Dr. Moniz. This is Rod Adams and I am the owner and publisher of Atomic Insights. I’m interested to pursue a little bit your description of the small modular reactor program as a flagship program funded at $452 million six years. That’s roughly one percent of the amount of money that we are spending on the production tax credit for wind in 2013. Will you comment on that, please sir?

Moniz: (Dismissively) Yes. We’re spending 450 million dollars (laughter) to assist two designs, at least two designs to move forward to design certification. I don’t believe these kinds of comparisons are particularly helpful.

(Note: The above is a direct transcript from an audio file recorded during the event.)

That Q&A session was one of the first events of the three day conference. People were still talking about it with me on the last day; they thought it was a good question with a rather revealing response that says something about the difference between announcements and actions and about the way that resource allocation reveals true priorities.

It is important for nuclear advocates to put pressure on the government to not only follow through on its stated commitments to support nuclear energy, but to also recognize that the resources do not come close to matching the scale of the problem. As Moniz pointed out, completing engineering and licensing work does nothing to demonstrate the economics of the small modular reactor. The assumption that manufacturing nuclear plants will reduce cost only works if there is a sufficient order book to support the investments in production equipment required. If SMRs are built at a low rate, there is no way they will be able to compete with larger plants or with fossil fuel plants that are built at a much higher rate.

Nuclear advocates need to understand that the forces that have opposed nuclear energy development successfully for many decades are gunning for the SMR program and working hard to keep it small and focused far into the future.

PS: After asking Secretary Moniz my question, I did some additional searching to find out that, in my effort to be concise and provocative in my question, I had made some errors. My statement that 452 million over a six year period is about 1 percent of the amount of money spent on the Production Tax Credit in 2013 was not correct. The truth is that the annual SMR expenditure of roughly $75 million is about 1% of the estimated $6.1 billion that the Joint Committee on Taxation has estimated that the one-year 2013 extension of the PTC will cost over the ten years that the facilities receive the PTC.

There are several features of the extension legislation and the tax rules that have been drafted to implement that legislation lead me to believe that the $6.1 billion is an underestimate that will be paid out more quickly than over the scheduled ten years. First of all, unlike previous PTC extensions, the 2013 version applies to any project that starts construction, which the IRS has defined as at spending least 5% of project construction cost, before the end of the year. Though installation completions in 2013 have been a little slow, I expect that there have been a lot of construction crews busily digging foundations in the past month. That flurry of activity will continue up until the end of the year.

Secondly, the 2013 PTC extension gives developers the option of taking an immediate 30% project cost tax credit in lieu of the PTC. That is because the legislation specifically allows projects to qualify under section 1603 of the American Recovery and Reinvestment Act. The option of taking an Investment Tax Credit (ITC) in lieu of Production Tax Credit (PTC) has been wildly popular. That’s no surprise. Investors understand the time value of money and favor the certainty of receiving a federal payment of 30% of the project cost almost immediately over the vagaries and accounting effort required to collect generation-related subsidies over a ten year period.

We have a federal government that is spending many billions to pay enormous companies to build large numbers of wind turbines while investing tens of millions to engineer and license a couple of small nuclear energy evolutionary designs that will not start producing power until the next decade. That says something very important about priorities and about the well-heeled interest groups that are dominating decisions about the expenditure of our tax money.

It’s time to make some noise. Will you join me?


I apologize for the recent quiet period. I have been working hard on that longer form material I promised.

Disclosure: I was employed by B&W mPower, Inc. until the end of September 2013 when I decided to become a full time blogger, writer and pronuclear advocate. We parted on excellent terms.

About Rod Adams

72 Responses to “NuScale wins second round of DOE SMR funding under FOA”

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  1. James Greenidge says:

    Seasons Greetings:

    To me, the rock-bottom proof-of-the-pudding of the depth of the DOE’s commitment and faith in SMR (or nuclear in general) technology and its “seriousness” regarding committing global warming is how much they’re willing slam on the table for SMRs as opposed “green” startups which have miserably (and many by corruption) failed with far far more investment input. Sorry, but to me so far it’s just token window dressing to cluck that nuclear’s part of the “mix”, “mix” as defined by being a razor sliver of the pie. Why the hell aren’t atomic workers unions and nuclear professional organizations publicly bitching a storm about this and instead leaving it for blogs to do??

    James Greenidge
    Queens NY

  2. donb says:

    If nuclear power were as politically correct as wind power, we would see production tax credits for new nuclear technology.

    While there is new technology being deployed for wind generation, I would argue that the magnitude of innovation surrounding SMRs is much greater than with wind. We would get a lot more “bang for the buck” supporting the development of new nuclear than we currently get from wind.

    • donb says:

      A little more energy-related web surfing brought up this blog article:

      http://energyoutlook.blogspot.com/2013/12/is-wind-energy-tax-credit-about-to.html

      A number of interesting points, including the fact that the wind power production tax credit has been adjusted upwards over the years for inflation, and is now at 2.3¢ per kilowatt-hour. This is enough to more than cover the operating and maintence cost of most wind turbine installations.

      Wind has been especially favored. The subsidy for other renewables have had either no adjustment at all, or have been reduced to reflect the decreasing cost due to technology improvements.

    • Smiling Joe Fission says:

      The libertarian in me dislikes the idea that government is in the business of picking and choosing industries to subsidize. I would much rather see private companies making these investments, it would give me much more confidence in the industry.

      But, the way the nuclear industry has been irrationally regulated to something close to death, no private industry is going to risk their money here (and I do not blame them). And thus, to survive, we need these DOE subsidies. Cue Starvinglion with some ignorant comment on nuclear scientists being welfare queens who are useless, etc. etc. without even appreciating the fact that the government has caused a large share of the necessity for government handouts.

      But the whole thing always reminds me of this quote by Harry Browne: “Government is good at only one thing. It knows how to break your legs, hand you a crutch, and say, ‘See if it weren’t for the government, you couldn’t walk.'”

      • Brian Mays says:

        But the whole thing always reminds me of this quote by Harry Browne: “Government is good at only one thing. It knows how to break your legs, hand you a crutch, and say, ‘See if it weren’t for the government, you couldn’t walk.'”

        Except that when it comes to regulation by the NRC or EPA, Government is also sure to point out how much “safer” you are that way.

        • Paul W Primavera says:

          Brian Mays and Smiling Joe Fission are both correct. That said, I am glad NuScale got the DOE funding. But in reality, the right thing to do is to stop all govt subsidies and level the regulatory playing field. If fossil energy had to sequester its waste as the nuclear industry does, I doubt any fossil power plant could be economically run. And if wind and solar didn’t get the massive govt subsidies that they currently get, then they would wither up and die.

          PS, it’s the Democratic Party that is perpetuating this situation by ingratiation with anti-nuclear activists and appointing people to the NRC who are anti-nuclear. The hypocritical RINOs are almost as bad, however.

          Funny how the party for the small man turns out to be worse for exacerbating corporate socialism than the big grey elephant called the GOP.

          • Rod Adams says:

            @Paul W Primavera

            You realize, of course, that “the free market” is pretty much a fiction created by the elites to reduce the effective power of government by the people and for the people. You may not remember, and I don’t have a personal memory either, but things were pretty good back in the late 1940s and throughout the 1950s and 1960s when government did a lot of good things, like build interstate highways, subsidize the construction of numerous nuclear power plants, figure out how to go to the moon, and build lots of airports, ports, and other infrastructure projects.

            Both of our current parties are parties of the elite, not parties of the people.

          • SteveK9 says:

            Rod,

            Here is one of my favorite articles addressing this. Does not involve nuclear, but Alcoa’s 50,000 ton forging press. Which along with other machines like it was developed by the government in the 1950’s.

            http://www.theatlantic.com/magazine/archive/2012/03/iron-giant/308886/

            ‘TECHNOLOGY MARCH 2012
            Iron Giant
            One of America’s great machines comes back to life.
            TIM HEFFERNAN FEB 6 2012, 11:27 AM ET

            APPROACHING ALCOA’S 50,000-TON forging press feels a bit like approaching an alp: it starts out incomprehensibly huge and keeps getting incomprehensibly huger. From a distance, the thing dominates the horizon of the hangar-like Cleveland Works facility; as you get nearer, catching glimpses through forests of girders and around cliffs of firebrick, it begins to dominate the air above. But even as you stand at its foot, being told that the eight steel bolts anchoring it are 40 inches thick, calculating in your head that that makes them 10 feet around—even then it’s still a bit out of reach. Only when you climb it, peer down from its sixth-floor summit, and realize that the puny machine next to it is, in fact, its 35,000-ton brother—well, then you finally appreciate the size of the thing. It’s big.

          • EL says:

            And if wind and solar didn’t get the massive govt subsidies that they currently get, then they would wither up and die.

            Cost of energy has fallen 30% for wind over last 3 years. Turbine prices have fallen 26% since 2009.

            Power from coal costs about $78.30 a megawatt-hour to produce and gas costs $69.71, compared with $82.61 for onshore wind farms, according to data compiled by Bloomberg.

            AWEA suggests a world without subsidies would benefit wind …

            “If Congress were to remove all the subsidies from every energy source, the wind industry can compete on its own,” Kiernan said at a press conference at a Siemens factory in Fort Madison, Iowa, yesterday, when the order was announced.

          • Rod Adams says:

            @EL

            I have a big red button on my desk that I would press if you were here to hear it.

            Wind energy may still be competitive in excellent locations, but there is no doubt that industry is going to get a lot smaller when PTC/ITC disappears.

            Nuclear has been doing without direct subsidies since about 1990. Before you disagree, my standard is a check or a tax credit that someone can spend to pay a worker or buy a valve.

          • EL says:

            Nuclear has been doing without direct subsidies since about 1990.

            @Rod Adams

            According to CBO … tax provisions for nuclear amounted to $1.1 billion in a permanent provision (“Special tax rate for nuclear decommissioning reserve funds”) and wind received $1.4 billion in tax credits for 2013 (pg. 5), up for renewal every year.

            http://science.house.gov/sites/republicans.science.house.gov/files/documents/HHRG-113-SY20-WState-TDinan-20130313.pdf

            In 2013, you’ll find direct investments from DOE in energy technologies on pg. 9: $700 million to nuclear, and $1.7 billion to “energy efficiency and renewable energy.”

          • Rod Adams says:

            @EL

            Let’s get this straight – companies that operate nuclear reactors have been required since 1954 to put aside funds that are sufficient to fully and safely decommission the facilities that they operate. They are required to isolate those funds from their normal investments and to undergo audits on a periodic basis to make sure that they are still considered to be sufficient as markets and technologies change. They are limited in the vehicles that they are allowed to invest in because the funds need to be available a long time from now, so losing them in high risk investments is NOT fair to future generations. Because of those strict limitations on those decommissioning funds, nuclear plant operators have been able to successfully convince their legislative representatives, in a democratic process, that it makes no sense for future generations to tax the income that those funds generate at the same rate as income from operations.

            It is very similar to the special way that our government taxes the income inside of retirement accounts and pension plans. Does that really sound like a “subsidy” to you? Do you think that maybe the CBO was overreaching a bit when it labeled that as a subsidy that is even remotely comparable to the immediate income subsidy represented by the PTC or the ITC?

            With regard to direct investments in DOE in “energy technologies” related to nuclear energy, you need to dig a little deeper into the details of the projects that are actually being funded. Few, if any, of them have any relationship to commercial nuclear energy, do anything at all to reward innovation aimed at reducing the cost of commercial nuclear energy generation, or provide any incentives to develop improved commercially viable nuclear energy generation systems. There are some basic science and materials studies in the pot that would never be done by an individual company because they would have no way of protecting what they learned from copying by competitors. Those are legitimate government expenses because they are for the common good and for knowledge development.

          • EL says:

            It is very similar to the special way that our government taxes the income inside of retirement accounts and pension plans. Does that really sound like a “subsidy” to you?

            @Rod Adams

            I do consider income from investments as regular income, and thus subject to taxation. Provisions that repeal, defer, or otherwise reduce these taxes are special interest tax loopholes and could be said to “subsidize” these interest groups. We have a progressive tax structure that is intended to reflect fairness and “ability to pay.” If you are retired, you typically fall pretty low on “ability to pay” spectrum and merit a lower tax rate.

            Are you suggesting nuclear operators have a low ability to pay, and merit special interest tax breaks and loopholes (similar to a person who is retired and no longer earning a wage from productive labor)?

          • Rod Adams says:

            @EL

            Income generated inside the boundaries of Warren Buffett’s 401K or Roth IRA would receive similar tax treatment.

          • EL says:

            Income generated inside the boundaries of Warren Buffett’s 401K or Roth IRA would receive similar tax treatment.

            And how much do you think he has contributed to his IRA over the years? Maximum annual contribution is currently $5,500 (or $6,500 if you are over the age of 50). And if he rolled over his previous accounts to a Roth, he did pay deferred taxes for that year.

            I would hazard to guess Warren probably gets a better return on some of his preferred stock options than he does on an S&P index fund in an IRA account.

          • Rod Adams says:

            @EL

            You’re being dense, as in impenetrable. Buffett probably does not contribute to a Roth; if he did, his contributions would be limited by law; and he could probably could find better returns outside it than inside.

            Those same statements might apply to most nuclear operator decommissioning funds. They are set aside for a specific, tightly defined purpose. They are not a place where operators can hide an unlimited amount of investment capital. They can only be invested in specific types of instruments, many of which pay lower returns (with lower risk) than other alternative investments.

            It is perfectly legitimate for elected representatives to recognize that applying “ability to pay” logic and imposing normal corporate tax rates on the income generated in those funds would be self defeating and might impose a burden on future generations when the decommissioning funds are needed for their legally mandated purpose.

            You’re exposing serious antinuclear bias by attempting to portray the moderate tax treatment of decommissioning fund investment income as a cash subsidy designed to encourage the use of nuclear energy or reward an entity for owning a nuclear plant.

          • Brian Mays says:

            @EL … You re being dense, as in impenetrable.

            Dense … kind of like a wall … eh? That’s what you’re talking to. Yeah, some of us noticed that a long time ago. Welcome to the club!

            You’re exposing serious antinuclear bias …

            When did this person ever not expose a serious antinuclear bias?!

            Just one example? Is that too much to ask for?

            This is someone who is too “dense” to realize that it’s best to start paying off the mortgage on your new house while it’s being built, even if you can’t live in it yet. Have fun talking to the wall.

          • EL says:

            You’re exposing serious antinuclear bias …

            @Rod Adams.

            No … I’m simply being accurate (not dense). It’s a subsidy. And a small one as you point out. You don’t have to be pro nuclear or anti nuclear to see it as such. If anti-nuclear means being correct, and pro-nuclear means distorting the truth, I guess I’m guilty as charged.

            These are general fund income tax expenditures, and are listed as a liability in the Federal Budget. It’s really that simple.

            “Many tax expenditures are the equivalent of a governmental subsidy in which the foregone tax revenue is essentially a direct budget outlay to specific groups of taxpayers” (here and here).

            If you disagree with me, that is fine. But you also disagree with most people on these things: CBO, Congressional Tax and Budget Committees, nuclear industry (who lobbies for this tax break), Grover Norquist (among others), historians, economists, energy analysts, and many others.

          • Rod Adams says:

            @EL

            I will concede that the CBO and the DOE have classified the tax treatment of decommissioning funds as a subsidy. It is, by all measures, a small bit of favorable treatment in a very large industry.

            As part of my research to respond to another commenter, I came across this comment from you from March 2011. It seems like something quite negative has happened to change your attitude about nuclear energy in comparison to its available alternatives in the period since that time. Can you explain what has caused the shift? If your participation on Atomic Insights has been somewhat responsible, I (we) must be doing something wrong.

            http://atomicinsights.com/shaken-flooded-stressed-by-power-outages-fukushima-daiichi-moves-into-second-place/#comment-7099

          • EL says:

            @Rod Adams

            Yes. I still believe this. I’m a critic of business as usual, and think there is a great deal of upside potential for industries that embrace newer market, finance, investment, sustainable, safety, employment, and environmental market trends (many of which are being driven at the moment by pragmatic national economic interests and domestic consumer tastes and values). This includes nuclear. I have always seen my contributions on the site as constructive, and advocating a position that is add odds with many of the site (but not antithetical to nuclear in principle). The challenges for nuclear (for any energy resource) are significant. Particularly in an environment of rapidly declining costs for alternatives, advances in newer power management and grid development opportunities, and broader participation from a variety of stakeholders in changing and evolving energy markets. My position on nuclear has been relatively clear (see below). And yes, I find some of the talk on the site to be non-productive, particularly as it concerns lowering environmental and regulatory standards (and mischaracterizing disruptive trends in energy markets, and costs and benefits of available technologies).

            The path forward for nuclear is very clear to me [emphasis in original]: 1) build plants on time and on budget, 2) address long standing legacy costs pertaining to decommissioning and waste management, 3) retire old plants that no longer have the confidence of the public and build new plants that adhere to the most stringent of industry best practices and standards for safety and reliability, 4) advocate for rational and cost-effective climate policy and carbon caps that place all energy resources on a level playing field (including renewables), 5) give some thought to system integration and how nuclear can contribute to broader energy conservation and efficiency goals, 6) pursue productive partnerships and allies outside of military contracting and the nuclear establishment (since nobody does anything alone), 7) provide better assurances and security to investors that properly minimize their risk (likely involving such things as PTC, Price-Anderson, government leverage over siting and licensing, constructive working relationships with a fully independent NRC), 8) better international frameworks and cooperation, and 9) fully account for total costs, and lower them vis a vis other perfectly viable and commercially competitive alternatives.

          • Brian Mays says:

            I have always seen my contributions on the site as constructive, …

            EL – Congratulations. You are in a very exclusive group.

          • EL says:

            @Brian Mays

            You must have had a wonderful time celebrating the holidays I see … so much good cheer and thoughtfulness to spread around as usual.

      • Mitch says:

        Smiling you saying that a company can’t make money on nuclear reactors if the rules imposed nuclear went for oil and gas and coal too? As for nuclear scientists being welfare queens, talk to farmers first before putting mouth in gear.

        • Smiling Joe Fission says:

          Let’s level the playing field by imposing ridiculous regulations on coal/gas? Why? Should we not facilitate cheaper nuclear power rather than force more expensive coal/gas to compete with an over-regulated nuclear industry? Personally, I would rather pay less per kWh than more.

          Companies don’t have strong incentives to participate in the nuclear industry currently because the risk on their investment is far too high. The NRC is likely to change a key regulation late in development adding massive additional costs to the project, if the project can even get the green light at the end of the very expensive licensing period. Once building of the reactor begins, the success of the build is almost completely at the whim of the NRC and partisan politicians who can, and likely will, find some reason to delay the project at key junctions in construction. And we have even seen a full reactor built and then forced to be mothballed before producing any power (Shoreham).

          Regarding the welfare queen remark, I was referring to the arguments Starvinglion regularly makes about nuclear engineers/scientists.

          • Rod Adams says:

            @Smiling Joe Fission

            I’m with you. I think the safety and environmental effects of most oil and gas production (not sold on hydraulic fracturing) is acceptable. That is the standard I think needs to apply for nuclear, not the other way around.

            For some unknown reason, most nukes hate the idea of lowering standards, but I’d rather earn bonuses by winning market share competing on price and improved service to customers than be awarded bonuses by pleasing inspectors from INPO or the NRC.

      • Dave says:

        The tale of peaceful nuclear energy in the US is the tale of perhaps the worst and most systemic government failure of modernity, turning a technology with great potential to a basket case completely hobbled and occasionally strangled by unfriendly politicians, bureaucrats, and activists. Disproportionate regulation in comparison to other technologies, entry barriers in the hundreds of millions just for paperwork, radiation policy based on a speculation without supporting evidence at low levels, occasionally outright hostile regulators, a complete failure of the government re spent nuclear fuel, etc.

        It makes this liberal sympathetic with libertarian options in the nuclear field.

  3. George C says:

    Op-Ed Contributor
    Saudi Arabia Will Go It Alone
    By MOHAMMED BIN NAWAF BIN ABDULAZIZ AL SAUD
    Published: December 17, 2013
    “We have global responsibilities — economic and political — as the world’s de facto central banker for energy.”
    http://www.nytimes.com/2013/12/18/opinion/saudi-arabia-will-go-it-alone.html?_r=1&

    Nuclear power = end of petro-dollar = end of current Trans-Atlantic financial system.
    It is not simply a discussion of one energy source verses another.
    They will fight like cornered animals to protect their system.

    • Ed Leaver says:

      I think you might be reading more into Mr.Al Saud’s piece than he intended. Serious concerns about HEU capability are not uite the same as fearing Iran’s civilian nuclear power industry per se, which was doing quite well thank-you long before she acquired centrifuge technology apparently intended for her weapons program.

      I’m as much in favor of commercial nuclear power as the next guy, but equally opposed to proliferation of nuclear weaponry. These should be two very distinct issues, about which Iran has done a commendable job of muddying the water. I do hope US, EU, Russia, China, IAEA, Saudi Arabia, Israel, other interested parties, and Iran can come to a mutually acceptable solution to this crises.

      It is a crises. Iran has produced substantial quantities of 19.5% MEU, for which it has no use outside its weapons program. Commercial LWR’s typically run 2% – 5% U-235, 19.5% is 90% of the way (on an energy basis) to weapons grade (85+%) uranium, and is probably suitable as-is as fuel for Iran’s plutonium breeder reactor for weapons-grade plutonium. Iran has now agreed in principle to dilute its MEU back down to something suitable for power reactor fuel. We’ll see.

      Trust but verify. Please read WNA’s Nuclear Power in Iran. Thanks!

  4. Paul Wick says:

    Is it possible that NuScale, MPower, Holtec &/or Westinghouse could find a willing country to allow them to prototype their design before the NRC gets finished chewing on it forever? Apparently this was done with the Westinghouse AP1000 in China. Perhaps Indonesia would do so, as it consists of thousands of islands, many of which are suited for SMRs but certainly not for large nuclear plants. Knowledge is acquired in a never-ending dialectic of theory tested and modified in practice. The NRC’s requirements are an attempt to stop the implementation of theory into practice, and they are quite good at it. Of course, I’m rooting for Argentina, Russia, Korea and Chinese SMRs (light water and otherwise) in the face of the opposition of the fossil fuel monopolies in the USA; monopolies that control Congress and dictate the procedures of the NRC. This benefits the world’s people, including the American people. Another path toward smashing the obstacles of the NRC would be if the US Navy pulls its head from a dark place and decides to go all nuclear. Of course the diesel boys try to block this, and have succeeded so far.

    • Rod Adams says:

      @Paul Wick

      I have a better idea. The DOE owns several secure tracks of land in South Carolina, Idaho and Washington. The towns outside those tracks of land are full of talented Americans who know a thing or two about nuclear technology and about building reliable facilities. The DOE has the right to build nuclear plants without NRC licenses, but the NRC also has a licensing path called a class 104 license for demonstration plants that has never been used for large plants due to the enormous risk of building a large facility without the immediate ability to make it “commercial” once it is complete.

      SMR vendors should be pressing forward — once their designs are firm enough — to build and test versus spending another half a decade moving paper.

      • Paul Wick says:

        “vice”, i.e. versus.

        So, you have perhaps not one, but two better ideas than seeking out another country in which to build a prototype. (Implicitly, you obviously agree with my views on epistemology, i.e. theory/practice relationship.) My concern is that “better ideas” don’t necessarily win out, due to fossil fuel blockages (much of which I’m learning about on this very blogsite). Also, do you think that a prototype plant of a SMR would be more economically possible to build via either of these pathways, not just because of the lesser investment involved than prototyping a 1 gigawatt-size reactor, but also because the electricity so-generated could be used locally once the prototype is built?

        • Rod Adams says:

          @Paul Wick

          A demonstration that might cost $1 billion is a lot easier to finance than one that costs $10 billion. In addition, those relatively small towns outside of the national labs can effective consume the output of a NuScale and perhaps the output of an mPower while they would have a lot of difficulty consuming the output of a 1000 MWe power plant.

          There are limitations on the commercial use of a plant licensed under part 104, but they could be excellent training facilities. The Navy has always made good use of its prototypes for both training and for testing cores and other materials/systems before sending them to sea.

        • Rod Adams says:

          @Paul Wick

          Yes, we completely agree on the need to eventually put down the pencils and actually build and test in order to keep learning. (I am not sure I’ve ever heard that called “epistemology” before. However, I always told my sailors that you can learn something new every day if you pay attention.)

          Models can never be perfect.

        • Jim Baerg says:

          Re: Fossil Fuel Blockages

          It was a fact I recently learned here that pushed me over into knowing that the anti-nuclear movement was definitely started as a conscious fraud with no possibility of an honest mistake.

          That fact is the source of the start up money for “Friends of the Earth”
          See http://en.wikipedia.org/wiki/Friends_of_the_Earth & click on the name of the money provider & see where he got his income.

      • donb says:

        Seems to me that several years ago the DOE proposed building several small reactors at their South Carolina site without using the licensing process. But the NRC said “over our dead body”, and the whole idea seemed to have died at that point.

        I think the DOE should call their bluff. Let the NRC be involved, but set some clear maximum limits for time and regulatory requirements. If the NRC exceeds them, say “Thank you for your efforts,” and just go ahead with the build.

        • Rod Adams says:

          @donb

          Your memory of the history is lacking a few pertinent details. It was not “the NRC” but Greg Jaczko who made a fuss. The agency’s position was never expressed. I suspect that the current NRC would be a little less dismissive, especially since there is abundant guidance in law that allows the process to proceed as I have outlined.

          In addition, I have talked to people in NRC New Reactor Licensing branch about the class 104 demonstration plant licensing path. They agree that I have properly read the regulations and agree that the path is open, but they have also told me that none of the vendors have asked to use it.

          I proposed the idea to my former employer; they were not willing or able, within their financial constraints, to pursue it. Perhaps the investors that buy Generation mPower (it is for sale, by the way) will feel differently. I will continue to freely offer the advice. For a small fee, I might even produce a paper outlining the regulatory path that I think can result in rapid construction and full power operation before the end of 2018.

  5. John Tucker says:

    Lots of info and issues in your post rod.

    Here are the things im having a think with now on wind and the tax credit/subsidies. ( Assuming wind has some environmental benefit )

    1. More wind creates an illusion that we are making real progress on the climate front and that it can replace nuclear power.
    2. Drives up energy prices substantially.
    3. Doesn’t work all that well and has many infrastructure cost and environmental issues.
    4. It doesn’t necessarily mandate the elimination of coal/biofuels. It can even do the opposite when cost mitigation is attempted.

    5. All the above also contributes to a possible large coming public fatigue factor regarding environmentalism in energy.

    Of course I am still always looking for articles on the real fuel cost of using wind power. (as “free” was never really correct)

    But do these above numbered issues outweigh the environmental benefit of wind? Im starting to think so but I dont want to make an uninformed decision and pretend its the environmentally correct one. (like every green seems to enjoy doing) .

    In a newer wind assessment of emissions and integration theres a blurb in the power point for conditions of the model runs that is perhaps telling:

    “Renewable resources were curtailed when dispatch will impact nuclear operation” ( http://www.pjm.com/sitecore%20modules/web/~/media/committees-groups/committees/mic/20131028-impacts/20131028-pjm-renewable-integration-study.ashx )

    [BTW : that GE consulting/grid market investor/operator report is called a major “independent” study by the pro winders]

    For if nothing else in all the recent nuclear shutdowns the greens seem to revel in, they each provide a glimpse of the tremendous costs in rising emissions that are being realized despite all the new solar, wind, biofuels and huge energy conservation programs enacted recently.

    Across the science, media and board(s) that is something we are seeing again and again.

    • John Tucker says:

      BTW I found that study while reading the blog : Knowledge Problem ( http://knowledgeproblem.com/ ) which some of you more economically technical types might find interesting.

    • Engineer-Poet says:

      Along the same lines, my analysis of a recent Argonne study shows very rapidly diminishing returns from wind power in their study of Illinois (and this can be extended to solar PV):

      http://ergosphere.blogspot.com/2013/12/the-false-promise-of-renewables-1-wind.html

      • John Tucker says:

        Enjoying that post EP. Thanks for the link. You sure went beyond what I was grasping to more concrete insights and Im glad you were thinking about it.

        what the words giveth, the graphic taketh away” – magnificent.

    • EL says:

      In a newer wind assessment of emissions and integration theres a blurb in the power point for conditions of the model runs that is perhaps telling:

      “Renewable resources were curtailed when dispatch will impact nuclear operation”

      @John T. Tucker

      Ugh … yes, this was an “assumption” made in their model. Did you read the findings section of their study?

      Key findings: “minimal renewable energy curtailment” (p. 17).

      • Rod Adams says:

        @EL

        Define “minimal”. How does it affect levelized cost of electricity? I’ve done the calculations; I know how important run time is for all capital intensive, low or no fuel cost resources (including nuclear).

        • EL says:

          Define “minimal”.

          @Rod Adams.

          At 30% contribution from wind (as I read it), PJM model analysis appears to define “minimum” as not a concern.

          Benefits are clearly stated in key findings:

          - Lower Coal and CCGT generation under all scenarios
          – Lower emissions of criteria pollutants and greenhouse gases
          – No loss of load and minimal renewable energy curtailment
          – Lower system-wide production costs
          – Lower generator gross revenues
          – Lower average LMP and zonal prices

          Wind also gets a capacity credit of 21 – 29% in their analysis. What’s not to like?

          • Ed Leaver says:

            @John Tucker: What’s not to like is the implementation of our current wind PTC, which encourages precisely the opposite of “Renewable resources were curtailed when dispatch will impact nuclear operation”. Wind presently receives a 2.3 cent/kWh before-tax PTC, effectively 3.3 cents. Since 2005 nuclear has received 1.8 cent. The problem with this picture is that in unregulated merchant markets wind farmers can (and do, on windy days) bid negative prices for their wares, i.e., since their marginal cost of production is effectively zero they can pay the grid operator 3 cent/kWh to take their wind energy and still turn a profit. (Not on the energy, but off you and me.)

            This is not true for a thermal plant, be it fossil or nuclear. I won’t bemoan fossils’ loss, but even though nuclear plants’ marginal cost of production is very low, they lose big-time if they can’t generate at all. Even a load-following thermal plant must maintain about 25% load floor or else shutdown, and restart is time-consuming and costly. Except for gas. Wind has no problem if there’s no market for its power, just feather some vanes. On a really windy day you gotta do that anyway. But our PTC pays wind farmers to underbid everybody else, forcing nuclear operators to pay out-of-pocket to undercut wind just so they can keep their own lights on and charge more on a calm day. This is the situation — a totally contrived situation — that forever weds unreliables to natural gas and/or pulverized coal. In this regard ITC is far preferable to PTC.

            Since the rest of you are so generous with worthwhile links, I’ll reciprocate with
            Negative Electricity Prices And the Production Tax Credit
            . Thanks.

          • Rod Adams says:

            @Ed Leaver

            Since 2005 nuclear has received 1.8 cent.

            Please do not make the mistake of believing that. Not a single dime has been paid to any nuclear plant operator for the Production Tax Credit.

            The Energy Policy Act of 2005 promises payments in the future for production from new plants whose design started after a certain date, specifically chosen to make sure that no completion project like Watts Bar II would qualify.

            There are limitations associated with that promise that effectively reduces the payout to about 1.2 cents per kilowatt hour with no adjustment for inflation.

          • John Tucker says:

            And forces prices ever upwards.

            tks ed, realize you were responding to EL but like your link and still reading that too – I didnt realize the extent of its scope, or that it had been around in some form since 1992.

  6. Eino says:

    Congratulations to the folks at NuScale!

    Is the possibility of putting one of these baby nukes on an Indian Reservation ever been looked at? It seems like this could be an economic asset for a tribe. Cheap power for 20 years could be a good thing. I think Toshiba was trying to put one in Alaska a few years back. Electric power to some of the people up there is by diesel. Diesel is expensive.

    I think it would be good publicity if one was built for Arco, Idaho. A picture of the original reactor could be placed next to an SMR with the banner, “New and Improved.”

    How are these going to be marketed? Maybe, one could be put on one of those remote Islands with the Palm trees with the logo, “It’s 5:00 o’clock Here Now and the Beer is Cold!” These could really help resorts on some remote isolated islands.

    If someone got a few built with reasonable cost, I could see these really catching on. this may spawn a new nuke industry.

  7. Nicholas Thompson says:

    Rod,
    From what I’ve heard, Assistant Secretary Pete Lyons has to fight very hard each year to keep the SMR funding in the budget. The budget request for DOE-NE for 2014 has a $118 million cut from the 2012 budget level, with big cuts in Reactor Concepts Research, Fuel Cycle Research, Nuclear Energy Enabling Technologies, and of course, the Integrated University Program. Some of these cuts are partially “offset” by increasing the budget for certain INL programs.

    It seems there is also an interesting loophole where the NEUP, which is supposed to be 20% of the research and development budget, is also significantly cut due to cuts in the Fuel Cycle Research and NE Enabling technologies. However, the R&D funding that INL gets is apparently not subject to the NEUP 20%, which will lead to an almost $20 million cut to NEUP, from $63 million in 2013 to $43 million.

    The only programs that got more funding than last year in the proposed budget are the SMR program and INL.

    I’m wondering if concessions were made to OMB to cut other parts of the budget in order to keep the SMR funding intact…

    http://energy.gov/cfo/downloads/fy-2014-budget-justification

    • Rod Adams says:

      @Nicholas Thomson

      I talked with Pete Lyons several times during the most recent ANS meeting. With all due respect to the man, he would have never survived a day of plebe summer. He is a nervous bureaucrat who seems to be afraid of his own shadow.

      I’ve heard through the grapevine that he somehow owes his job to Harry Reid.

      I don’t know how someone gets to his age but is still at a point in his career when he is fearful of losing his job. Savings and debt avoidance is my advice to all younger people. Build independence as soon as you can you have the ability to tell your boss to take a hike if necessary.

  8. starvinglion says:

    So basically Rod Adams wants the taxpayer to pay for plonking down a huge number of SMR’s in remote locations to freeloaders when no actual demand exists. What does that taxpayer sucker get for being fleeced? Why, a big hug from the founders of this gov subsidized joke of a company and three cheers for “reduced emissions”. Of course, the inevitable *rapid* decommissioning of these little unreliable honey’s will actually incur enormous increased emissions but who cares, the gangsters will have left the scene and are on the islands sipping pina coladas

    But hey, this is the nuclear “industry”…

    • Rod Adams says:

      @starvinglion

      Not exactly. I think the taxpayers might help defray the cost. However, what I really want taxpayers to do is to offer a service using land we already own, fences that already exist, and security teams that are going to be patrolling anyway.

      The payoff will be proven sources of clean, reliable, electricity and heat that can be more rapidly deployed to displace fossil fuels that can be put to higher and better use.

      It is a poor assumption on your part that the plants will be unreliable; we have a great deal of experience in the US in building light water reactors that have a lot of similarities with the NuScale and the mPower in terms of fuels, structural materials and working fluids.

      I am unapologetic about my rejection of “the free market”. There are things that are good for society that are perfectly acceptable places for government investment. I do not think the taxpayers should support this without understanding what they are buying; that is part of the challenge I am attempting to address every day.

      I’d like to do more; perhaps if some of you decide to subscribe, there will be resources available to place some ads in well chosen locations and publications.

  9. John Howes says:

    Excellent article. Your point about the level of DOE commitment to SMRs vs renewables is well taken. But, I think it’s remarkable that NuScale and mPower have been able to gain any recognition at all from the US government.

  10. Eino says:

    Rod Adams quote:

    “I am unapologetic about my rejection of “the free market”. There are things that are good for society that are perfectly acceptable places for government investment. I do not think the taxpayers should support this without understanding what they are buying; that is part of the challenge I am attempting to address every day.”

    Today you constantly hear these people speaking of smaller government. I’ll admit that government today isn’t what it should be. However, the free market on it’s own would never have built some the United State’s great assets such as our remaining nuclear plants, our interstate highway system, the dams of the TVA, the dams on the Columbia,etc. Today, you rarely hear the phrase, “the common good.” This was used frequently when I was young.

    The development of a small nuclear reactor should be viewed in the context of “the common good.” Certainly, some worthy community may receive cheap electricity. So what! The small investment to do it won’t affect your tax bill. As Rod Also said:

    “The payoff will be proven sources of clean, reliable, electricity and heat that can be more rapidly deployed to displace fossil fuels that can be put to higher and better use.”

    There is not enough thinking of the future of the United States as there was in the 1960s. They did great things back then. I think the main difference between today and then is as simple as attitude. People need to think of the future and get of this “Taxed Enough Already,” mantra that is paralyzing this country!

    Whew! Now I feel better.

    • George C says:

      To me, what you’re describing is actually what built this Republic. American System Economics as reflected by Alexander Hamilton, Mathew Carey, Friedrich List, and the world’s leading Nineteenth-Century economist, Henry C. Carey.
      The so called “free market” is the philosophy of the East India Company (The Wealth of Nations), the corporatist (aka Fascist) controller of England.
      Energy planning for a nation needs to be in 40 year segments. That, by definition, excludes catering to quarterly profits and dividends that move stock prices wildly one way or another in a Wall Street gambling casino.

  11. SteveK9 says:

    Meanwhile in the rest of the world.

    Russia investing $2.4B in the growth of its nuclear industry:

    http://www.world-nuclear-news.org/C_Russia_invests_in_nuclear_2012131.html

    Consortium established to build lead-cooled fast reactor in Romania:

    http://www.world-nuclear-news.org/NN-Consortium-established-to-build-Alfred-2012134.htm

    This also involves Italy. Would be a nice way to give the finger to the Germans and their crazy infatuation with wind/solar. The Germans are now trying to block UK construction of reactors as an unfair subsidy (I know it is the EC, but that is de-facto the Germans), if you can believe it, after they have poured $300B into wind/solar to date.

  12. Eino says:

    SteveK9 wrote:

    “Meanwhile in the rest of the world.

    Russia investing $2.4B in the growth of its nuclear industry:’

    This got me interested in whether they were doing the wind and solar thing. Not Much.

    href=””http://en.wikipedia.org/wiki/Renewable_energy_in_Russia””

    “Solar energy is virtually nonexistent in Russia, despite its large potential in the country.”

    “In 2006, Russia had a total installed wind capacity of 15 MW.[30] Current Russian wind energy projects have a combined capacity of over 1,700 MW.”

    Their politics must be vastly different. This is the country that gave us Chernobyl in the Ukraine and yet they are undeterred from the nuclear direction. One would think that Russia would not be the country that is doing this construction.

    Special interest groups such as Russia’s version of the Sierra Club and Greenpeace may not have the influence which they do in other countries.

    They have a huge country with a widely distributed population. Perhaps they could be the market for SMRs.

  13. cyril r. says:

    Many of us in the blog/forum-sphere don’t understand how NuScale can get high power density core with natural circulation without phase change. We determined that the drive for natural circulation in this reactor is under 2 psi. Typical PWR cores have many times that pressure drop between the steam generators and core.

    • Rod Adams says:

      @Cyril R

      The core does not have high power density. It is roughly the same physical size as the core being proposed for the B&W mPowerTM reactor, but produces just 1/4 as much heat energy.

      The steam generators are not U-tube, but instead are specifically designed to minimize the pressure drop. The vessel has no piping bends.

      I can assure you that the designers at NuScale are well versed in natural circulation computations and have thoroughly tested their concepts in test facility (http://www.nuscalepower.com/testfacilities.aspx) that has been available at Oregon State University since 2000 (http://www.nuscalepower.com/history.aspx).

      • cyril r. says:

        Rod, of course we understand all that. We’re not stupid. We can run numbers and check other peoples numbers.

        Here is information on pressure drops for nuscale:

        http://www.iaea.org/NuclearPower/Downlo … BOWSER.pdf

        Core: 8 kPa
        Riser cone: 4.5 kPa
        SG: < 0.1 kPa (????!!!).

        So basically it barely works with NuScale's numbers, but note the other simulations/groups get very different results, very wide spreads. If those are correct the design simply won't work at the advertised power level of NuScale. The SG pressure drop graph is clearly incorrectly labeled, but it seems to suggest 0.1 kPa which isn't plausible at all (even with very short SG tubing).

        Sounds like a pretty big financial risk. If those 45 MWe modules turn out to be 20 MWe modules, NuScale is financially dead.

        • Rod Adams says:

          @cyril r

          Why do you believe that NuScale’s numbers are not correct? What makes you think that people who do not have access to the test facility have more believable models? Do you believe that the reviewers of the FOA submission or those who will review their license application are not competent?

          Why do you think that the numbers should be public? The only assistance that the government has promised to provide amounts to some moderate assistance with paying NRC license application fees.

          • cyril r. says:

            I do not believe a figure of 0.1 kPa for a steam generator pressure drop. Other than that, I make no statement as to the credibility of the other numbers. Merely pointing out that there is a lot of spread in the models.

            In terms of credibility, NuScale is obviously not impartial. They have a product to design and then sell. They won’t low-ball natural circulation figures. They have an integral testing facility, but it is never possible to infer everything from this (certain volumes and ratios will be different in the real world size reactors). It’s not as if the other independent modellers aren’t credible (universities etc.). In the real world there are always surprises, some not good. In case of the SONGS steam generators, a lot of clever people were involved in designing the things, with very sophisticated models, yet the vibration damage was many times greater than anticipated. Smart people can still forget certain things. They can also make certain assumptions, even Einstein did that with the Cosmic Constant (which later turned out to be nonsense). We know all models are wrong, and that some are useful. I incidentally work with finite element modelling. You’d be surprised what kind of nonsense the programs sometimes produce. Infinite stresses in corners and such. It takes skill in building models and correctly interpreting things that do not reflect reality.

            I’m not accusing anyone of anything, mind you. Digging into details is part of my day job professionally and privately just fun.

          • cyril r. says:

            A good example of modelling going wrong is the recent case of the incorrect modelling of the steam generators/seperators in the ESBWR. A lot of clever people involved. Yet a big mistake in the finite element modelling was only discovered at the very end of the design licensing process. (any updates on the ESBWR certification Rod?)