Reactions to Bob Metcalfe's Editorial Suggesting A New Look At Licensing And Manufacturing Small Nuclear Reactors

The Wall Street Journal has published several letter responses to Bob Metcalfe’s June 24, 2009 opinion piece titled The New Nuclear Revolution: Safe fission power is our future — if regulators allow it. You can find them under the title of It’s Time to Take Another Look at Nuclear Energy.

I liked the first two letters, which were generally supportive of the idea that it is time to take a new look at the way that the US licenses nuclear reactors. They agree that this new look should take into account the very different physical characteristics of reactors producing anywhere from 10-900 MW of thermal power compared to our existing “standard” plants that produce on the order of 4000-5000 MW of thermal power.

The final letter in the trio, however, came from a predictable source of misinformation, Edwin Lyman of the UCS (Union of Concerned Scientists). That is an organization with few scientists specializing in energy production related fields of study but lots of lawyers who are dedicated to slowing down the development of nuclear energy as an alternative to fossil fuel. Not surprisingly, Lyman claims that the process for approving new reactors needs to be slowed down, not speeded up, that energy efficiency and traditional renewables can do the job and that there is no market for small reactors so the NRC should not waste its resources even considering them.

Here is my response to his missive:

Edwin Lyman, a man who has made a career out of criticizing nuclear energy, offers up energy alternatives that are not competitive with any form of reliable, controllable energy. Energy efficiency does nothing to bring power to the powerless while renewable energy in the form of capturing natural flows like the wind, the sun and growing plants is already widely available to people in the developing world. Those “natural” sources have been proven time and again to be insufficient for development. That is why places that have been inhabited for millennia, but without access to affordable supplies of reliable energy are still classified as “developing”.

The idea that “there is no market” for small, simple reactors is absurd. For the past dozen years, I have been running a tiny, no advertisement web site describing a conceptual design for scalable reactor power plants.

Adams Atomic Engines, Inc. has received hundreds of inquiries, many of which were from serious, qualified investor and development groups who would love to place an order for a plant. The obstacle to closing any deal is when we tell them that we cannot obtain permission to even build a demonstration unit without paying the US government at least $50 million ($250,000 initially plus $250 for every bureaucrat hour billed to the process – with NO CAP) and going through a process of legal and regulatory reviews that will take a minimum of 42 months.

Even that duration estimate is suspect since regulators have publicly stated that they believe it will take longer than that already challenging (from an investor point of view) 42 months since our technology is not as familiar to them as the technology used in established extra large light water reactors. They ignore the documented history of projects like AVR, Peach Bottom 1, and the currently operating HTR-10 in China that provide the technical lineage of our concept.

OF COURSE the interested market disappears when that obstacle is introduced into the negotiation. The people who have contacted Adams Atomic Engines, Inc. are hard-nosed business people who understand that there is a need for government oversight and permitting processes, but they also quickly recognize that such an unpredictable, open ended, unlimited cost process with a reluctant regulator makes any investment exceedingly risky. In many cases, they need power already and cannot afford to commit resources in the hope that our system will eventually get a license. In at least a half a dozen cases, the investors/developers have let us know that they have purchased large diesel engines or combustion gas turbines and are still interested whenever we have a product they can purchase with a dependable time and cost schedule.

As Bob Metcalfe pointed out, a new paradigm and new process for regulation needs to be introduced in the USA, otherwise the small, modular designs like the one we have been developing since 1991 will be introduced and developed elsewhere. That is already happening, but it is not too late for the US to get into the game.

Americans have an advantage over all other competitors. We have safely operated a large fleet of modular, mobile reactors under a different kind of regulatory regime for more than 50 years and have trained tens of thousands of well qualified operators, supervisors and technicians. I would not recommend adopting the Navy model without change, but it does demonstrate that it is possible to build small reactors in the US and operate them safely almost anywhere in the world. There are few places that have not had an operating reactor pass by and few major ports that have not hosted one.

Companies like Hyperion, NuScale, Toshiba and now Babcock and Wilcox (with their mPower that is founded on experience gained as a supplier to the US Navy) have obviously recognized the same thirst for reliable, distributed power systems that we have found. They are investing large sums of money into simplified designs that rely on passive safety measures to reduce complexity and technical risk. Their machines are based on 50 years worth of development and demonstration projects with reams of technical papers plus real operational experience in power producing units. Lyman’s comments should be taken for what they are – the defensive words of a man whose livelihood depends on saying NO when billions of people need a YES to more clean, safe, affordable power, not less.

Rod Adams
Publisher, Atomic Insights
Host and producer, The Atomic Show Podcast
Founder, Adams Atomic Engines, Inc.

Variable Annual Fee Structure Update

In related news, I spent some time last night taking a look at the posted responses to the NRC’s request for comments regarding a proposed new rulemaking on the annual fees charged to nuclear reactor licensees. Once again, I was not at all surprised to see that counselors (lawyers) from Exelon, Duke Energy and the NEI provided opinions that saw no reason to change the current, simplified license fee structure. They acknowledged that the current structure benefits extra large power reactors by charging the same annual fee no matter how large the reactor is. Since they represent the establishment that operates the current generation of “cash cows” they have strong motives for maintaining the status quo. They also suggested that the NRC needs to be careful to make sure that the fees that the established reactor operators are paying do not subsidize new types of reactors.

Aside: The commenters from the established nuclear industry who are worried about subsidizing interlopers ignore the fact that NONE of the currently operating reactors had to pay any NRC license application fees when they were built. The concept of charging regulated industries a fee for the service of being regulated was introduced in the 1980s by the Reagan Administration. (Thank you, David Stockman.) All operating reactors got their initial construction licenses well before that. Most of them had already obtained their operating licenses before regulatory fees were imposed. End Aside

There were, however, a number of supportive comments that provided good technical justification for the need for a restructured system that takes into account the regulatory costs that may very we
ll be different for small, passively safe reactors compared to large central station systems that depend on engineered safety systems, multiple back-up power supplies and a trained force of hundreds of plant operators.

It was a bit amusing to read comments from the establishment talking about the lack of data to be used as the basis for determining a differential cost of regulation. Here is an excerpt from Duke Energy’s response:

The NRC should not establish a variable fee structure at this time. As already established in final fee rule 51 FR 33224 on September 18, 1986, Duke is in agreement with the NRC’s previous determination that there is “no necessary relationship or predictive trend between the thermal megawatt rating of a reactor and the NRC regulatory costs.”

If smaller sized reactors are proposed and licensed in the future, then the analysis and rule change should occur at that time when the magnitude and impact to the fees for all stakeholders is better understood. The financial predictability of imposed fees is very important for proper forecasting and planning of licensee budgets, which will be lessened with variable annual fee structure. The nature of a new variable fee structure itself will require reanalysis annually to determine its costs and sufficiency.

As a guy who has produced several versions of a business plan for building and deploying small reactors and who has pitched that plan to a number of potential investors, I acknowledge that Duke Energy is correct in some ways. Predictability is an important part of budgeting, you have to have a pretty good feel for future costs in order to make good financial decisions.

However, if you can predict with reasonable certainty that a cost is a deal killer, you have a different view of the importance of predictability. Under current law, a 10 MWe power reactor designed to provide all of the electricity and heat needed for small Alaskan fishing villages with local populations of 5,000-20,000 people would have to pay a $4 million annual fee, just like a 1600 MWe EPR built outside of Washington, DC. Since the individual plant for remote villages has to supply both peaks and valleys in power demand, it might operate at an annual capacity factor of 50% (with an availability factor closer to 100% due to the 20 year refueling cycle) to account for the load following. At that CF, the license fee would be about 9-10 cents per kilowatt hour.

That is why small power plant developers need to get this issue on the table now, otherwise there will not be a small reactor industry developed in the United States. I cannot tell you how many times in the past 15 years I have been told that I needed to go somewhere else to develop my ideas for small, safe, affordable, modular atomic power power plants. I have adamantly rejected the suggestion. I have a deep pride in being American, I love what this country can do, and I want to repay what has been given to me through having been lucky enough to be born here and to serve here.