Can Smaller Nuclear Plants Be More Economical? Why is There So Much Interest In Small Modular Reactors?
In less than two weeks, I will be attending the Platts Small Modular Reactor meeting being held in Washington, DC on June 28 and 29. Electric Utility Consultants, Inc. (EUCI) is hosting a Small, Modular, & Mini Nuclear Reactor Workshop July 19-20, 2010 in Arlington, VA. I received an invitation yesterday to speak at a conference titled “Building the Value Chain for Commercializing Small Modular Reactors” which is being held during the period from October 13 – 15, 2010 in Washington, DC.
I have also received reports from the American Nuclear Society meeting being held in San Diego telling me that small modular reactor systems are also dominating the conversation there. I thought it might be time to provide a reprint of an article that I published in the May 1996 issue of Atomic Energy Insights, the paper newsletter that preceded the web based Atomic Insights. The article I wrote more than 14 years ago is slightly outdated, but still contains a useful explanation of the technical and economic reasons why smaller reactor power systems might end up being more economical than large ones due to the effects of the experience curve.
(Hat tip to Charles Barton who pointed to Economy of Scale in his recent post titled Fourth Carnival of Nuclear Energy Featuring a Vermont Freak shows. It was nice to see that some people still remember what they read years ago.)
Economy of Scale? Is Bigger Better?
By Rod Adams. Originally published May 1996.
Pick up almost any book about nuclear energy and you will find that the prevailing wisdom is that nuclear plants must be very large in order to be competitive. This notion is widely accepted, but, if its roots are understood, it can be effectively challenged.
When Westinghouse, General Electric and their international competitors first learned that uranium was a incredible source of heat energy, they were huge, well established firms in the business of generating electrical power. Each had made a significant investment in the infrastructure necessary for producing central station electrical power on a massive scale.
Experience had taught them that larger power stations could produce cheaper electricity and that electricity from central power stations could be effectively distributed to a large number of customers whose varying needs allowed the capital investment in the power station to be most effectively shared between all customers.
Their experience was even codified by textbook authors with a rule of thumb that said that the cost of a piece of production machinery would vary by the throughput raised to the 0.6 power. (According to this thumb rule, a pump that could pump 10 times as much fluid as another pump of similar design and function should cost only four times as much as the smaller pump.) They, and their utility customers, understood that it was much cheaper to deliver bulk fuel by pipeline, ships, barges, or rail than to distribute smaller quantities of fuel in trucks to a network of small plants.
Just as individuals make judgements based on their experience of what has worked in the past, so do corporations. It was the collective judgement of the nuclear pioneers that the same rules of thumb that worked for fossil plants would apply to nuclear plants.
There have now been 110 nuclear power plants completed in the United States over a period of almost forty years. Though accurate cost data is difficult to obtain, it is safe to say that there has been no predictable relationship between the size of a nuclear power plant and its cost. Despite the graphs drawn in early nuclear engineering texts-which were based on scanty data from less than ten completed plants-there is not a steadily decreasing cost per kilowatt for larger plants.
It is possible for engineers to make incredibly complex calculations without a single math error that still come up with a wrong answer if they use a model based on incorrect assumptions. That appears to be the case with the bigger is better model used by nuclear plant planners.
For example, one assumption explicitly stated in the economy of scale model is that the cost of auxiliary systems does not increase as rapidly as plant capacity. In at least one key area, that assumption is not true for nuclear plants.
Since the reactor core continues to produce heat after the plant is shutdown, and since a larger, more powerful core releases less of its heat to its immediate surroundings because of a smaller surface to volume ratio, it is more difficult to provide decay heat removal for higher capacity cores. It is also manifestly more difficult, time consuming and expensive to prove that the requirements for heat removal will be met under all postulated conditions without damaging the core. For emergency core cooling systems, overall costs, including regulatory burdens, seem to have increased more rapidly than plant capacity.
Curve of Growth
Though the “economy of scale” did not work for the first nuclear age, there is some evidence that a different economic rule did apply. That rule is what is often referred to as the experience curve. According to several detailed studies, it appears that when similar plants were built by the same organization, the follow-on plants cost less to build. According to a RAND Corporation study, “a doubling in the number of reactors [built by an architect-engineer] results in a 5 percent reduction in both construction time and capital cost.”
This idea is extremely significant. It tells us that nuclear power is no different conceptually than hundreds of other new technologies.
The principle that Ford discovered is now known as the experience curve. . . It ordains that in any business, in any era, in any capitalist competition, unit costs tend to decline in predictable proportion to accumulated experience: the total number of units sold. Whatever the product (cars or computers, pounds of limestone, thousands of transistors, millions of pounds of nylon, or billions of phone calls) and whatever the performance of companies jumping on and off the curve, unit costs in the industry as a whole, adjusted for inflation, will tend to drop between 20 and 30 percent with every doubling in accumulated output.George Guilder Recapturing the Spirit of Enterprise Updated for the 1990s, ICS Press, San Francisco, CA. p. 195
In applying this idea, however, one must realize that the curve is reset to a new value when a new product is introduced and that there must be competition in order to keep firms focused on lowering unit costs and unit prices. In the nuclear industry, new products in the form of bigger and bigger plants continuously were introduced, and, after the dramatic rise in the cost of fossil fuel during the 1970s, there was little competitive benefit in striving for cost reduction during plant construction.
When picking the proper size of a particular product, the experience curve should lead one to understand that high volume products will eventually cost less per unit output than low volume products and that large products inherently will have a lower volume than significantly smaller products.
In the case of the power industry, it is very difficult to double unit volume if the size of a single unit is so large that it takes a minimum of
5 years to build and if the total market demand is measured in tens or hundreds of units.
Engines vs Power Plants
The Adams Engine philosophy of small unit sizes is based on aggressively climbing onto the experience curve. If a market demand exists for 300 MW of electricity, distributed over a wide geographic area, traditional nuclear plant designers would say that the market is not yet ready for nuclear power, thus they would decide to learn nothing while waiting for the market to expand.
In contrast, atomic engine makers may see an opportunity to manufacture and sell 15 units, each with 20 MW of capacity.
Depending on the distribution of the power customers, there might an opportunity to produce 150 machines, each with 2 MW of capacity. Though 2 MW sounds small to power plant people, 2,000 kilowatts is enough electricity for several hundred average American homes.
Though it sounds incredibly far fetched to people intimately involved with present day constraints regarding fissionable material, that same market might even be supplied with 1500 machines producing 200 kilowatts each. That is enough power to supply a reasonably sized machine shop, farm or apartment building with electricity. It might even be supplied by 15,000 machines producing 20 kilowatts each, or enough for a small group of cooperative neighbors to share. Current gas turbine technology begins at the 20 kilowatt level.
With the completion of each engine, the accumulated experience of design, production and engine operation will increase and provide opportunities for cost reductions.
There is plenty of competition and incentive for this cost reduction since there are dozens of fossil fuel engine makers who currently serve the need for power in smaller markets.
If the producers of Adams Engines are successful at providing the existing market need, the traditional nuclear suppliers may never see a demand build up for 1000 MW, and they may never even start on their own learning curve.
Is a 20 kw plant actually possible? Is it really possible to go this small? I am honestly asking because when I talk about small plants, most people say, can I get one for my house, and I have always said no, because I did not think you could actually scale down that low. Talk about a RADICAL change in power production, wow. Power your own home for 10 years on a Nuclear reactor.
David it is technically possible to make nuclear power plant with as small output as 20 kW or any arbitrary number, but it becomes increasingly uneconomical for very small sizes. There is some minimum mass of fissile U-235 necessary, even when you apply all your tricks to reduce critical mass as much as possible; at some point you are just shrinking the power output, not the size of the reactor. There is some minimum regulatory burden; at some point shrinking the reactor doesn’t save you any paperwork or beaurocrat-hours.
If you’re trying to build a base on the moon, a reactor producing only tens of kilowatts may make a lot of sense; on Earth I doubt it.
I think the exact power level is classified but the reactor in the NR-1 submarine, after housekeeping loads, had the equivalent of a 50 HP outboard for propulsion. This is a demonstration of techological capability – you probably would not want to pay for it.
@David – It is technically possible, though there are enormous political and economic hurdles that would have to be overcome. If done, the system would probably last for something more like 30-50 years than 10 years.
Buy the house and the power for the next 50 years. Yes, I understand the political and economic hurdles, but the concept is staggering. This would be the basis for a truly distributed grid. Factories and office buildings could each have their own power. I can see the worries about proliferation already, but what an idea! I was wondering what a small Nuke could do for steel manufacturing or even Aluminum manufacturing and started to do some calculations. But that type of investment would be really long term thinking for an investor. This means that what Docforsight was looking for in his project is actually possible, though not practically available today. Sorry for rambling, but I just had a stroke of total amazement.
@david — Since I haven’t actually lived in a 3rd World country, I had little reference point for what is needed when no grid exists. Oh, I’ve done some work in Mexico (Baja peninsula) and saw the rudimentary system there but not in an area where nothing exists. At the risk of being annoying, check out the “projects” tab on http://www.self.org — if only to gain a perspective on the monumental task before us.
To many of these people, having ‘A’ (singular) light for a few hours of night use would make a huge difference. Dwell on that a moment. It is a significant leap in every respect to go from nothing to 24×7 electric power — and that leap could easily take decades to reach many remote places or get through corrupt governments. How do we get there? Like eating an elephant – one bite at a time.
I have been in those villages and slept in those houses and I have many friends who have done the same. I like Solar PV. I have been following it for years and it has a much better potential than wind power for long term use in remote areas. Prices are coming down. http://www.solarbuzz.com/Moduleprices.htm However, on one island I have been to they installed Solar PV in several villages. After a couple of years the systems were down due to lack of maintenance. I spent some time talking to the man who sold PV systems in that area and it seems that there were several basic problems. First, an understanding of electricity and how to use it and how not to. Second, available parts for replacement when the systems broke. And then the cash flow to actually purchase the parts needed to repair. The fishing villages usually don’t have cash flow, everything is barter. I don’t know exactly the configuration they were using so I can’t comment on the durability of the installed system. I noticed that in the Solomon Islands they spent time training the people on how to repair the system. But there is no record of how things are going today. The Indonesia model seems to be working and continuing.
Lights are huge help in many ways and so is communication. I had been studying various power generation sources, wave, solar, wind and geothermal trying to understand what would be a real substantial help where I live. Electric here costs about 23 cents / kwh. It was when I ran across the MIT study on Modular Pebble bed reactors that I began to appreciate the amazing potential of nuclear. Until that point it was very fuzzy in my mind and I really did not have enough knowledge to have an opinion. The most remote villages will need solar PV. But for concentrated populations, even those remote ones, small nukes would be THE answer. At least in my opinion. Wish it were here today.
@david –Thank you so much for your responses and sharing your experiences. My interest in nuclear was piqued by reading about the Toshiba 4S proposal for Galena, Alaska about 18 months ago. Followed links and found several excellent blogs, such as this.
Training and maintenance will be critical for long-term success. If the villagers own the system and take an active role with it, they ought to be more responsible with it. One would hope! And I agree with you regarding concentrated populations and nuclear power plants – especially if they are modular and can be ‘ganged’ to expand with demand and grid capacity. Priority will be given to large populations while the villages will remain an afterthought for years, if not decades.
I look at our type of system or concept as a ‘bridge until’ rather than a ‘replacement for’.
Rod: ‘Pick up almost any book about nuclear energy and you will find that the prevailing wisdom is that nuclear plants must be very large in order to be competitive. This notion is widely accepted ….’
There is probably a place for small reactors, but … I think the current prevailing wisdom is that large plants have to be absurdly expensive. I suspect that is not true. The modern design and construction techniques being used for the AP1000 are expected to lead to great reductions in cost — this is going to be demonstrated in China, if it is in fact true (with the added kicker that the Chinese ‘variant’ being planned will be a 1400 MW reactor). Designs being discussed for small reactors (sodium-cooled, or LFTR, or … ) can also be scaled to build large reactors. I’m just speculating, but I was reading the ‘white paper’ from Advanced Reactor Concepts and at the top was a lot of negative stuff about the problems with large reactors, but it seemed to me like many of those issues were self-inflicted.
At the moment large plants offer an economy of scale that will guarantee that they will continue to be built for electric power markets on the larger grids. However there are smaller markets in the Far North, on isolated islands and the African and South American interior where small reactors make sense, and these are the places that will see initial deployment of these designs. There may come a time where small reactors become competitive in areas with a high population density, that are currently served by power grids, but that will be sometime coming.
Nevertheless the potential markets that are available are not insignificant, particularly when applications like district heat, and desalination are factored in. Power for irrigation, even if desal is not a factor, could make a huge difference in the quality of life in many backward Third-World communities. The availability of a simple thing like an electric stove for each home in some regions would have a significant impact on deforestation, and so on. These are the initial areas that mini-reactors can have a real and positive impact, particularly those ‘nuclear battery’ type systems that would require limited supervision in the field.
When the price of propane in our area raised to the point where a 10 kilo tank cost 3 to 4 days wages everyone turned back to burning charcoal and the trees began to come down again. I see bare hillsides everywhere. People will cook to eat and if it cost’s too much to purchase power or fuel they will burn the stuff they see. So, yes, in a very direct way a ‘nuclear battery’ system will save forests.
I have a personal adage that says that there are only two types of problem in the world: those that can be solved with access to an unlimited source of energy, and those that cannot be solved at all.
Rod, I’ve been reading your blog for a couple of years now. Thank you for what you
Bernie – thank you for the thoughtful comments. I suppose we will simply have to agree to disagree. I may very well be proven to be wrong, but I remember a day when similar words as yours could be written about computers. I have also had the experience of operating a reactor on a 24 x 7 basis with only 40 people. The support staffs that you mention were shared resources. The costs of the detectors, pumps, valves, heat exchangers, etc. were based on order quantity, partially because the paperwork and quality controls were identical on series produced devices.
I have been a manufacturer and have seen the economy of unit volume at work as we made more and more of the same part.
Rod what lead to me to the idea of small reactors was the idea of massive global deployment of nuclear power over the next 40 years. “How could so many reactors be built so quickly,” I asked myself, The answer, I realized, was provided by the industrial system. If you want to build a lot of anything, you mass produce them in factories. But how do you mass produce reactors in factories, how do you move them to their destination? The answer was, build them small enough to be transported by truck, barge, or rail. So then I started looking at small reactors.
Most small reactor critics, don’t understand that they are a solution the mass reactor deployment problem.
I take an intermediate position. Charles Barton (and others) have done a lot of writing on the economy of small reactors, in Charle’s case, the LFTR many of us are familiar with and big supporters of.
For small grids and underdeveloped countries, where the entire national load maybe, say, 5 GWs but with a population of, say, 50 million (this proportion is about what Nigeria has, for example) the building of grids around smaller plants makes sense at *every* level. One can build a grid around several “nucplexes” and eventually tie them together, first for voltage control, then for load wheeling. Small plants allow this and allow for the limited grid development. It *also* allows for eventual scaling up to plants over 700MWs.
I wrote to John Holmes (I think it was him) about the idea of powering a true high speed electric rail system in the U.S. by using small 20 to 60MW LFTRs spaced out about every 75 miles of such system with appropriate surpluses available to power development around each such small power plant, making them centers for trade, commerce and development based on these mini-nucplexes. But….
In my mind there will always be a very large market for both large and small reactors as they can compliment each other well, especially for MSR style reactors that are so scalable they can even use interchangeable parts, salt inventory, etc.
The issue I have is the advocacy of smaller plants in *substitution* for larger ones, that is, say, 12 100MW LFTRs instead of, say, one 1200 MW LFTR. There are, generally, way too many assumptions made by small-only advocates about the ability to ‘mass produce’ smaller reactors that per unit of energy output (UEO) it will somehow be cheaper, based solely on the idea of manufacturing core components. I think this is naive. There is FAR more that goes into a reactor/turbine/generator where smaller mass produced components are somehow more economical.
For example, most metering would be *exactly* the same for a large plant vs a larger number of smaller ones. Take the watt-meter off the generator or what we call the “low side of the main bank transformers”. You need only 1 for each phase (A-B-C). They are all the same, mostly, reading the terminal voltage of the generator (or wattage for the wattmeters)l That’s it. 3 of ’em in total. Same meters for a large generator or 12 smaller ones. Want to guess which is more expensive to purchase, install and maintain? Temperature, radiation and host of other metering and controls could well be *cheaper* on a big unit simply because one wouldn’t need as *many*.
I’m not arguing that this is a game-ender for any such discussion. I merely ask everyone to think what “economy of scale” actually means? Most of us have no idea how things are actually produced. For “N-Stamp” quality, much of these components are *hand made* to exacting standards that have no place in true mass production. Many smaller components, for example, like lube oil pumps, are hand made in that there is little real automation in their assembly. The stamping and miling of their impellers may well be automated but that’s about it. The ones in a “small nuclear plant” would be the *exact same* size and design as in larger plant. This is true if you build 5,000 or 200. None of it is truly ‘mass production’ which is only a reality in the mass consumer based industries such as cars, TVs, etc. When you get to bigger items, such components are not so cheap, as in the case of most industrial equipment.
There many, many facets to this and they all have to be weighed against each other is the “many smaller vs fewer bigger” discussion.
@David – that is a reasonable approach and one that I share, with some modifications.
There is certainly a market for large scale machines in the 1-2 GW range. That is obvious since there are quite a few of those machines in economical operation today. However, the market narrows rather considerably if you try to go much larger. Even at those sizes, there is some economy of unit volume that has led some customers and vendors to assert that three 1100 MWe plants can be more economical than 2 1600 MWe plants.
When I talk about series production economies, I am not talking about “mass production”. There is a significant cost reduction available in moving from one of a kind hand made devices to a production run of five or ten units. Even with the meters that you mention – the price per meter will be lower if you buy 30 than if you buy just 3. Of course, I will agree that the price for the total order will be higher for thirty than for 3 but there are other advantages to having some redundancy that cannot always be measured on the first order analysis.
My bottom line – I am not proposing that one should consider trying to bid 50 machines at 20 MWe each against a single 1000 MWe machine if the customer is operating in a grid that already needs 1000 MWe of new capacity. The large machine would win in that case. However, I do think that a customer needing 1000 MWe in 10 years because his loads are growing at about 100 MWe each year MIGHT consider adding one mPower sized unit each year to a site large enough to host eight to ten of them if licensed mPower reactors were available and could be installed on a one per year basis with some predictability.
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