Economics

Under our current energy paradigm, nuclear power has the reputation of needing enormous up-front capital investments. Once those investments have been made and the plants are complete, the payoff is that they have low recurring fuel costs.

Just the opposite is said of simple cycle natural gas fired combustion turbines. They require a small capital investment that can be paid off even if the plant only operates a few hundred hours per year. They don’t have an optimized fuel efficiency and they burn a fuel that can be quite expensive during the hours when the “peakers” need to run.

Those peakers are responsive and are becoming more interesting to power producers with the continued growth In variable renewable energy sources like wind and solar.

Just thinking out loud here, but what if it was possible to build really simple, much lower cost nuclear plants on the condition that they have a safety case that is built around a fuel design that is several times more pricey than conventional commercial nuclear fuel?

For more than 50 years, scientists and engineers have been working on coated particle fuels where tiny particles of fissile material in various chemical forms is surrounded by tightly adherent and durable layers of material capable of withstanding very high temperatures without releasing fission products.

In the space program, incredibly powerful and energy dense reactors have been designed and tested using coated particle fuels, but for commercial power generation, the usual path is to create large low power density reactors that are considered to be “inherently safe” because they don’t need any active cooling systems to prevent the core temperatures from exceeding the much more generous limits allowed by high temperature fuel.

Unfortunately, the development of reactors using coated particle fuels has been held back by a couple of technical choices. One has been that the reactors have been seen as a modest improvement in conventional reactors that still need to have most of the expensive equipment of a steam plant power conversion system.

Using that heat engine choice, designers must include heat exchangers that are functionally equivalent to the high cost steam generators in pressurized water reactors. Since they need heat exchangers, they naturally look toward high gas pressures in the primary coolant loop in order to increase heat transfer rates.

That path leads to systems with capital costs that are not much different from conventional nuclear plants with the added burden of using fuel that is quite a bit more expensive, especially in the early years before the manufacturing lines become cost efficient.

General Atomics achieved initial marketing success with a line of GW class high temperature reactors (HTRs) in the late 1960s and early 1970s by emphasizing that their systems were somewhat simpler and used more conventional steam turbines than the lower temperature light water reactors. They inked about 10 contracts, but none of the plants were ever built.

X-energy, URENCO and HTR-PM all are pursuing updated versions of similar designs. They are not radically reconsidering the paradigm.

It’s possible to dig back into nuclear history and find that the HTRE (high temperature reactor experiment) used modified jet engines that sucked in atmospheric air, heated it in a modestly high temperature reactor (far lower temps than coated particle fuels enable today) and exhausted that air through a turbine and jet expansion system.

The capital cost of equipment for such an air breathing system today would be quite low, but there would likely be a problem with creating and emitting Ar-41 as well as the possibility that fuel manufacturing defects might allow some small quantity of fission products to be discharged. Regulatory hurdles prevent that path from being developed anytime soon.

With a modest increase in complexity and capital equipment, a mechanically identical system could use nitrogen gas separated from air. Because the gas isn’t air, it would need a closed system where a low pressure, moderate temperature heat exchanger performs the function of returning turbine exhaust back to atmospheric conditions for injection into the compressor.

This ultimately simple Brayton Cycle gas turbine would use fuel that might cost several times more per unit of heavy metal than conventional nuclear plants, but its initial investment should approach the cost of the combustion turbines that would be the heart of the system. Sure, there are costs associated with the piping systems, but those would likely be on a similar order of magnitude as the fossil fuel system pipes that would not be needed.

With dramatically lower capital costs and higher fuel costs, the total system cost allotment would be a complete departure from the conventional nuclear paradigm. No longer would equipment suppliers and financial providers be able to capture 50-75% of the total revenues, with personnel costs capturing 30-40% and the fuel supplier pulling up the rear with 5-20% of the revenue. Instead, financial costs could be far lower. Equipment costs would drop dramatically. Personnel costs per unit of output would fall.

The obvious result is that the fuel suppliers, the people who produce the fuel that is so capable that it is the safety case and safety boundary, would gain the lion’s share of revenue from product sales.

That situation has proven itself in the energy market. Customers and other stakeholders don’t necessarily like the fact that fuels people walk off with most of the money, but it has meant that fuel suppliers have adequate capital to both invest in new technologies and adequate incentives to promote the benefits of high energy use.

There is a massive amount of capital in the hydrocarbon fuel business. There is also a great deal of intellectual capital, some of which is scientific and technical, but some of which is business development and marketing.

In the early days of nuclear energy, the hydrocarbon giants dipped their toes in the business. They couldn’t figure out how to make as much money in nuclear as they were used to making, so they quickly exited.

Perhaps this early Sunday morning essay will help stimulate them to reconsider their decision to abandon the business without figuring out how to make it a fuels business that could answer a lot of their future challenges.

Note: I have more details about the paradigm shift described above, but I think I’ll hold them closely for now.