Why did the Carbon Free Power Project get cancelled? What does that mean for NuScale?
I’ll start with a disclosure. I’m still long on NuScale in my personal portfolio and have no intention of changing that position in the near future. I believe that the company has a good product and excellent potential for growth. The image above with Jose Reyes and me is from a visit I paid to the NuScale test loop in October 2014.
Yesterday (Nov 8, 2023), an expected shoe dropped. NuScale and UAMPS (Utah Association of Municipal Power Systems) announced that they had decided to abandon their Carbon Free Power Project. The press release stated, “Despite significant efforts by both parties to advance the CFPP, it appears unlikely that the project will have enough subscription to continue toward deployment.”
A chorus of commentary has erupted on social media. Some are cheers from the usual suspects who have never met a nuclear reactor that they like. Others are from people who ardently support different designs that range from different water reactors to gas-cooled, molten salt or liquid metal reactors that don’t use water cooling and moderation.
Some believe that the decision proves that NuScale Power Modules are hopelessly uneconomic and that the CFPP cancellation proves that NuScale is on shaky grounds as a company. Self-admitted short sellers are doing everything they can to undermine investor confidence so that the company stock price falls quickly and profitably for those betting on that behavior.
My conclusions from the project cancellation are different. There is no doubt that a smooth first-of-a-kind demonstration of a 6-12 unit NuScale power plant would have been better for the company’s prospects in the short term. That result would have also helped to increase interest in new nuclear power projects and would have increased investor FOMO (fear of missing out.)
As a venture capitalist helping to manage a fund that is focused on advanced nuclear energy as a major, undervalued tool for the energy transition from high carbon fossil fuel combustion to ultra low carbon energy sources, that result would have been a welcome reinforcement of our investment thesis.
Competitive headwinds fighting Carbon Free Power Project
During the past few years, however, the prospects for success for the CFPP have repeatedly dimmed to the point where its cancellation was readily foreseeable. The initial 12-unit power plant was scaled down to a 6-unit facility. Individual members of the UAMPS association pulled out as it became ever clearer that a new, first of a kind nuclear plant built in the remote Idaho desert would produce power that was measurably more expensive than the low priced mix of coal, natural gas, hydro and wind they were used to.
That cost disadvantage only grew as it became less and less likely that there would ever be a price on carbon in the states UAMPS serves. Rising interest rates also reduced the economic viability of capital-intensive power plants compared to established, depreciated plants burning cheap local coal, low capital cost plants burning natural gas from nearby places like North Dakota or onshore wind located in sparsely-populated windy plains near mountain ranges.
As coal demand falls throughout the US as a result of changing air pollution regulations, increased production from natural gas, solar and wind and continued excellent performance by existing nuclear plants, coal prices soften. The long term prospect is that they will remain affordable and perhaps decline considerably, especially in places that are close to established mines. UAMPS member power systems have ready access to local coal sources.
The UAMPS-served areas are close to productive oil shale formations that contain substantial quantities of associated natural gas. Sometimes North Dakota gas is almost given away – even in the dead of winter – because it is an annoying byproduct of oil production. Associated gas is still flared – burned without serving any customers – for safety reasons. Regulators are increasingly enacting rules that discourage the practice. There are also financial incentive programs that encourage operators to find customers that will pay something.
UAMPS members also benefit from their favorable wind locations. They have wide open spaces and good wind associated with nearby mountains. On-shore wind turbines are well proven and numerous developers have cost effective processes and experienced installation teams. The Inflation Reduction Act provides long term certainty for clean energy subsidies, ensuring that the power prices are consumer friendly. It also opens new avenues for non profit utilities to directly benefit from tax credit programs. A nuclear power project like the CFPP would be eligible for the same subsidy level as other clean energy sources but the tax credit programs in the IRA start paying real money only after projects are completed. A wind project can be finished in just a year or two in places where there isn’t much opposition. Earlier monetary flows are more valuable than later flows.
Even if they are led by people who would like to decarbonize, municipal power systems have a mandate to provide the most cost-effective power possible within the given constraints. They have access to relatively low cost, tax exempt debt, but bond issues needed to access that debt capability are often tenaciously debated, political choices. The interest rates paid may be lower than commercial rates, but rates for new debt are still linked to those paid in the rest of the borrowing market. Rising rates affect all borrowers.
Munis have no access to capital markets where investors have more understanding and appetite for a certain amount of financial risk. It is highly unlikely that they could convince their customers to pay catalytic prices for power from new technology with significant room for growth.
in summary, economic conditions for the Carbon Free Power Project have been deteriorating for several years. The total expenditures associated with that project have not been publicly released, but the amount spent is nowhere near the amount of money that was earmarked. UAMPS only submitted an application for “Limited Work Authorization” to the NRC in August of 2023 and it has only been a few weeks since the NRC accepted that application for review. No dirt has been moved at the site, other than that needed to conduct environmental impact studies.
Update (added Feb 3, 2024): A November 2023 communication with a DOE spokesperson provided the following background information about the government costs for the Carbon Free Power Project.
The award for the Carbon Free Power Project is with CFPP, LLC (a single-purpose non-profit entity wholly owned by UAMPS), not with NuScale directly. That award provided a federal cost-share of $1.355 billion over 10 years to deploy and commercially operate a NuScale small modular reactor. Of the $1.355 billion, DOE has obligated only $232.8 million so far. Some of those funds are not yet spent, as they are reserved for expenses related to closing out the project. However, with this early termination of the CFPP award, DOE’s investment will be reduced from the current $232.8 million to approximately $50 million, primarily through transfer of valuable project assets to DOE’s ownership.
Separate from the award for the CFPP, DOE has provided a total of $579.7 million to NuScale for the development of their SMR technology. The determination by UAMPS and NuScale to terminate their agreement related to the CFPP does not impact DOE’s separate award with NuScale.
DOE spokesperson email to Rod Adams dated Nov 15, 2023
End Update
Where does NuScale go from here?
This commentary is not supported by any direct communication with NuScale. It is based on publicly available news and announcements.
The CFPP was an important project for NuScale, but it is not the only sale that the company is working on. UAMPS is not the only customer attracted by a passively cooled, light water reactor using established fuel forms, materials and chemistry refined through many decades of operation in large fleets of nuclear power plants.
NuScale’s power modules have been issued a design certification at a time when none of the alternative choices have submitted an application for review. Submission is needed to start a regulatory calendar that moves at an excruciatingly slow pace. Though we hope the next review will be quicker, it took more than six years from the time NuScale submitted its Design Certification Application until the 5-member commission issued the final document. (Dec 31, 2016 – Feb 21, 2023)
According to Fluor, which still holds its large stake in NuScale, 18 active and signed Memorandums of Understanding from 11 different countries were in effect at the end of 2021.
Though none have yet achieved the status of a signed contract, there have been public announcements of serious interest in Romania and other Eastern European countries. NuScale is one of the six finalists selected for the Great Britain Nuclear light water reactor SMR program. Standard Power announced its interest in using NuScale power plants for two data centers, one in Ohio and one in Pennsylvania.
In March, 2023, an early stage start up company named Blue Energy visited Houston, TX – arguably the energy capital of the United States – for CERAWeek. The founders gave a presentation on their concept for offshore power plants that combine NuScale power modules with proven technology from offshore oil and offshore wind. They shared some startling numbers about the cost reduction potential available for NuScale power modules when using the ocean for the ultimate heat sink instead of a giant man-made pool that must be protected from aircraft impact.
Blue Energy is “productizing” nuclear fission by manufacturing pre-certified light water small modular reactors in shipyards as fully-completed, transportable nuclear power plants that are leased to industrial facilities and countries seeking energy security, price stability, and turnkey decarbonization. We leverage existing oil & gas platform manufacturing infrastructure and a simplified plant design to shrink the construction schedule from 10 years to 24 months and the overnight capital cost from greater than $6,000/kW to less than $2,500/kW while putting nuclear on a learning curve down to $1/W.
CERAWeek presentation “Blue Energy | Offshore Nuclear Power” Mar 7, 2023
The news of the demise of the CFPP should not discourage nuclear energy advocates for very long. It’s not good news, but no one should expect 100% good news with new nuclear development. CFPP’s demise should not – but certainly will – provide PR fodder for those who have never met a nuclear project that they like. It should not – but certainly will – provide a reason for “I told you so” commentary among nuclear energy cheerleaders who are rooting for a different kind of nuclear power system.
I am neither a registered investment advisor nor a broker-dealer and I do not provide stock market recommendations. As a managing partner of Nucleation Capital, I invest solely in private equity. My personal public market portfolio, however, includes some SMR (NuScale’s NYSE ticker symbol) stock that I have no intention of selling.
NuScale is a product of sheer will (DOE will), not a more economical solution. So, now we have 7 licensed designs to build anytime we have that cosmic realignment of values in our society that earnestly supports middle class jobs, reliable power, and low CO2 production. A society grows great when old men build nuke plants in whose power they will never use. We have a banking and finance problem. I’ll vote for anybody that gets 4 units under construction in the next 5 years.
Nuclear is off the wrong start for many reasons.
One of the biggest is that they are attempting to start this all wrong.
Far better ways to do it.
While I am opposed to 3rd gen and esp. thermal reactors, it is sad to see this one fail when with a few modifications they could have made it work economically.
Looks like time to buy more SMR stock. Unsolicited advice for NuScale. Focus on markets that need reliable power more than the cost of the electricity. Trying to build a 12 pack is not the best place to start. Once you actually have some units built and producing, money will flow and costs should drop.
If Nuclear can’t compete on cost it will not make any difference in the world. Last Energy has the best business case I’ve seen. I sure hope they succeed in building truly small modular construction reactors using existing tech.
“Last Energy has the best business case…”
This assertion is absurd. Here we have NuScale, a billion dollar certified design, far enough along in the detailed design to be honest about overnight costs, being compared to a building rendering on Brett Kugelmass’ website. You show either naivete about or affiliation with the effort – either way it lowers the quality of this discussion.
If NuScale can build 12, they can build 6, 4 or 1. The problems are that each NS reactor: 1) represents a revenue stream of just $47M/year at zealous European prices, 2) requires the same licensed staffing of a 1.2GWe unit, 3) the federal interest rate is 5.5% today, etc…
“… each NS reactor:… 2) requires the same licensed staffing of a 1.2GWe unit…”
The licensed staffing of just 1 NS reactor is sufficient for licensed staffing for up to a four-pack unit. No additional licensed staffing is required, under the currently approved process.
https://www.nrc.gov/docs/ML2022/ML20224A521.pdf
I see 6 licenses in the control room for 1 to 12 units making as little as 77 MWe, as much as 924 MWe. The ruling would have required 6 licenses in the UAMPS control room for 6 units making at best 462 MWe.
4 licenses in the control room for a single large LWR typically making at least 1GWe,
5 licenses in the control room for a dual large LWR typically making at least 2GWe.
The NuScale business case is full of over-unity multipliers like this…. all over the balance sheet. More licenses, less power, more steam plants, less power, more turbines, less power, more condensers, less power. As they age, they’ll undoubtedly require more maintenance. There will be 1 unit of 12 in refueling at any given moment so the 924 MWe becomes 847 MWe. Despite the NuScale rebuttal to MacFarlane and Krall, the NuScale reactor will indeed use 110 tons of Uranium across 12 reactors to generate less power than an 88 ton 4-looper makes, and discharge the fuel with significantly less burn… These numbers may be backed out of the NuScale DCA.
I don’t doubt they’ll build a few, but NuScale doesn’t improve the economics – it won’t catch on.
Michael
Subsequent to the design certification document that you referenced, the NRC approved NuScale’s Topical Report titled “NuScale Control Room Staffing Plan.” (TR-0420-69456)
https://www.nrc.gov/docs/ML2035/ML20352A473.pdf
That report lays out an alternative, task analysis based methodology to determine minimum staffing levels. According to the approved topical report the “analysis employed an alternative approach to control room staffing in lieu of 10 CFR 50.54(m), that was conducted in accordance with the applicable NRC guidance contained in NUREG-0800, Chapter 18; NUREG-0711; NUREG-1791; SECY-11-0098; and NUREG/CR- 6838.”
It’s a detailed document, but the final result is that NuScale has been approved to operate up to 12 modules from a single control room with a
single senior reactor and two licensed operators2 senior reactor operators and 1 reactor operator with NO STA.“This topical report provides the technical justification for an NPP to be operated with a minimum operating crew of three licensed operators and no shift technical advisor (STA). Two of those operators perform the roles of reactor operator 1 and reactor operator 2. The third operator performs the role of shift manager and control room supervisor. NUREG-0737 (Reference 8.1.6) states “the need for the STA position may be eliminated when the qualification of the shift supervisors and senior operators have been upgraded and the man-machine interface in the control room has been acceptably upgraded.” These conditions have been met in the NPP, and the minimum operating crew of three operators does not include the STA role (see Table 6-1).
To validate the staffing plan, NuScale conducted high-workload, performance-based, staffing plan validation tests to provide assurance that the licensed operator control room staff complement is sufficient to safely operate an NPP with up to 12 modules.”
Table 1 of the referenced document has 2 SRO and 1 RO licensed operators.
mjd
I stand corrected.
Rod quotes – “NuScale has been approved to operate up to 12 modules from a single control room with a single senior reactor (operator) and two licensed operators”. Good news! Presumably, those operators would always have remote access to experienced seniors elsewhere in the NuScale world.
Being allowed to operate with only three nuclear-qualified staff on deck, considerably simplifies the personnel requirements for SMRs. Although the rate of production of SMRs can potentially be rapidly ramped up, the prospect of exponential expansion of installations worldwide has been limited by the corresponding need for specialist training of enough personnel.
In particular, developing nations can now look to SMRs such as NuScale’s as a practical start for their own contribution to global decarbonisation.
Yep, Last Energy has the best business case. I guess I am just naive. No affiliation. I am doing my best to lower the quality of the conversation.
1. A billion dollar certified design – well not really needed. saved that billion. Is there any real value added by the NRC? It does a great job of protecting the jobs of people testing minor amounts of radiation. Also the jobs of people who get to imagine ways that a NPP could fail that have NO physical basis in reality. Much else? A working design is much more valuable than a certified one. Especially if you get to start building that design and making money from it in a few months rather than 10 years.
2. The detailed design – Ok, he decided not to share all the details – he has shared that he is purchasing off the shelf components. Is it really that hard to fit them all together in a way that works ok? In the 1960’s we had several non-nuclear companies build NPP’s. After 15 years of reading designs, I am convinced that the hard part is not the design. The hard part is finding a way to build them that makes money, right from the start.
SOO your last point is the right one.
“If NuScale can build 12, they can build 6, 4 or 1. The problems are that each NS reactor: 1) represents a revenue stream of just $47M/year at zealous European prices, 2) requires the same licensed staffing of a 1.2GWe unit, 3) the federal interest rate is 5.5% today, etc…”
If Brent can build a 20 MW plant for the $100 million he claims. He will have a money printing machine.
1) A gross revenue stream of at least $20M / year at $.15 / KWH which is the delivered cost in Poland. By using close sites the plant can charge more than typical distant ones since the delivery is not expensive.
2) A MUCH smaller staff. There is NO reason a 20 or 75MW plant requires the same licensed staffing as a 1.2 GWe plant. (Why thank you NRC). Natural Gas plants require about 25 employees. Is there any reason for more in a NPP? Yes a staff of 200 will eat up everything for a small plant A staff of 800 will eat up nearly everything for a large one. Why is terrorism a larger threat at a NPP compared to a Natural Gas plant? Only one can go boom with a huge fireball. The other goes sort of pop (when a president refuses to allow it to vent on time). (Yes, yes I know, we have to exaggerate the radiation dangers so people can keep their high paying jobs running around with meters).
3) NuScale is not borrowing at this point – they are raising funds through stock sales. Brent is not borrowing but using venture capital and power purchase agreements. Yes 5.5% is higher than it has been, but not really high for short term loans on smaller amounts.
4) I am invested in NuScale. I keep buying when I have available funds. I really believe they will do well in the next 10 years. I think Brent has a better business case. I wish I could invest.
David:
Atomic Insights doesn’t have a “like” button, so I guess I need to make a bit of a supporting comment.
You and I agree on almost all of your points. I’ll summarize my position – nuclear professionals that are steeped in “nuclear safety culture” often fail to recognize that they are victims of “nuclear exceptionalism.”
All manufacturers of pressure vessels and high pressure components operate using the same basic codes and standards from ASME. That includes nuclear pressure vessel manufactures, but those have also accepted a deeply layered set of additional requirements that add very little to the resilience of the vessels and their probability of failure. (In some cases, the N-stamp holders have tacitly or overtly added to the layering as a means of protecting the value of their investment in obtaining and maintaining their N-Stamp.)
Last Energy is focusing on the right challenge; figuring out how to efficiently manufacture and assemble the rather simple systems needed to produce and control fission heat so that it can be converted into steam that can spin a turbine to reliably and safely produce a valuable product.
AAE had the same philosophy, but we wanted to add heat to an inert gas so it could be the working fluid for simple Brayton cycle machinery.
How to converse with this?
“If Brent can build a 20 MW plant for the $100 million he claims…”
How do I reply to “internet drone guy can build nuke plant because the internet…”?
Of course I’m not surprised that Rod is bullish across the board – that is just situation normal.
Michael,
You have a great deal of practical knowledge about the Nuclear industry.
Is it physically possible to use off the shelf parts to assemble a working 20MW system? Could a system be built that only needs a staff of about 25 people to manage it?
How about costing out the parts he has shown in his design? Are the base costs for the type of system he is proposing within a possible $100 million? Is he missing some critical factor in the costs?
What is the cost of the fuel rods?
What is the cost of the control rods?
What is the cost of the pressure vessel?
What is the cost of supporting piping?
What is the cost of an air-cooling system similar to his photos?
My total amateur, back of the envelope calculations show him profiting about 5 million per reactor per year even paying back investors a 10% return on their capital investment. Now, my estimates have a staffing level of 40 persons per reactor, I estimate 10% of his gross for annual maintenance. He will totally replace his core every 6 years, I estimate a core cost of about $2 million. In all of this I am guessing. You know much more than I do. What is wrong with my guesses?
Large reactors are theoretically more cost effective. It was not long ago that the average cost of electricity from our Nuclear fleet was just over 2 cents a KWH. Today? Is the cost lower? If the improvements in safety were actual improvements the cost should be lower.
You have specifically criticized NuScale. I both understand and agree with most of your points. Yep, its expensive electricity. But way more affordable than “renewables” plus natural gas and all the involved system costs.
“Last Energy is focusing on the right challenge; figuring out how to efficiently manufacture and assemble the rather simple systems needed to produce and control fission heat so that it can be converted into steam that can spin a turbine to reliably and safely produce a valuable product.
”
The problem is that all of these will build a SINGLE POWER plant i.e. a plant that depends on 1 form of energy. It is a huge mistake.
Instead, terrapower’s natrium ALMOST has it right. They are going into old power plants that have grid hookups, cooling, generators, etc. Then they want to add reactors. It is off by just a slight amount.
A utility needs to have that power plant up nearly 100% of the time for it to be considered decent.
When these new nuclear SMRs are built, they WILL not even be close to 90% uptime since it will take time to stabilize. In addition, the utility may lose $ as they will have built the back-end FIRST and then wait for the front-end to get started.
Instead, Natrium, and others should build out the back-end, but add a NAT GAS BOILER that provides the energy until the reactor is up and going, but also for when the reactor is shut down. It is cheap to add that, esp. when you have a thermal exchanger. For example, Natrium plans to dump their heat into a large thermal storage tank. They will likely have a thermal exchange with a piping system running through it. If they do 2 different thermal exchangers into the tank, one can be provided from the nat gas, and the other from the reactor.
This would also allow the back-end to be FULLY tested before the reactor is added and comes on-line. Some of you will say that it is overkill, but simply look up the history of Colorado’s only reactor, Ft. St. Vrain Nuclear power plant. Not only thorium powered, but also He cooled. It was ahead of its time. Sadly, the sensors on the back-end would detect water in the He and the reactor would be shut down.
Had GA actually used someone else’s sensor, Ft. St. Vrain would STILL be going strong.
@windborne
Interesting suggestion. Though not often talked about, reactor power plants often have such external heat sources available during construction and testing activities. But they are not sized or designed to be able to produce full power for extended periods of time. It’s worth considering if they should be. Availability of high capacity gas pipelines in areas where coal plants dominate might be a significant consideration.
Responding directly to your comment about Ft. St. Vrain, I’m pretty sure you have been misled. There really was water in the He primary cooling loop. It came from a malfunctioning water-cooled bearing in the main circulator. Getting the water out of the system was very difficult because the designers never expected it to be there so they did not make any provisions for low point drainage. Gaining access to the necessary points in the system was difficult.
There were some other FOAK issues, like core movement that was solved by adding some support structures, that limited the plant’s operating time. The team was making good, if slow, progress addressing the issues, but the 10 follow-on orders for new, larger plants were cancelled for a variety of reasons. Without new orders, the investments made in fixing the demonstration unit had insufficient return so the vendor and the owners made the decision to shut down the reactor and convert the power plant to a natural gas power plant, reusing the existing steam system.
This sensor story is new to me. I was under the impression the main issue with Ft St Vrain was the steam driven pumps that leaked steam into the helium circuit. Probably should have used electric driven pumps, or magnetic couplings so no leakage. Really unfortunate that HTGRs were discontinued. They are more efficient and can be made inherently safe against TMI/Fukushima type of accidents in ways thst is hard to achieve with LWRs.
One more thing about the cost of building NuScale plants. They do not yet have their own factory. They are outsourcing the construction to other manufacturers. I have NO inside information. My suggestion is that they write contracts with manufacturers that give a residual income to the manufacturer from the net profits. This would give the manufacturers an ownership motive when pricing their products. Long term income would be enhanced by lowering the initial cost of supplied items. That profit would be even more enhanced by quickly finding ways to reduce costs of manufacturing. A 5 or 10 year residual income from each delivered item, would give a great incentive to KEEP reducing costs!
At the same time, using pre-purchased power agreements would give NuScale long term stability. The Amazon lie that they are powering their operations from renewable energy (when they are actually using grid supplied power) could be turned into a long term profit by NuScale supplying actual low carbon, reliable electricity to Amazon distribution centers. The amount of power from a single module matches well the power needs of a distribution center. Sites close to the distribution center nearly eliminate the grid costs that about double the cost of power produced.
There are lots of designs out there for small modular reactors. There has been a lot of rhetoric out there that they are cheaper to construct as they will used “factory techniques” to ensure quality, uniformity of units, the efficiency of trained workers, etc. Al of this has sounded very good. It’s sounded good for maybe a dozen years now.
Maybe, it’s true. I’d like to see someone try to actually build one. Perhaps if one is actually built, it will be like the barn door is open and the stampede will be upon us. One successful unit could provide the example to release pent up demand for more.
If small modular reactors were a smaller product that didn’t take enormous capital, we would see people be willing to take the risk on the new product. There could even be several iterations of the product produced before the ultimate market success. This somewhat normal process does not occur with nuclear reactors. Perceived high financial risk and unsure benefit prevents these first time investors from enabling the reality of small modular reactors.
Who put forth the capital to work off the rough edges of today’s existing light water reactors? I do believe this occurred due to government funding. Since existing reactors produce a bit less than 20 percent of the United State’s greenhouse gas free electricity, it seems like the post World War 2 taxpayers made a good investment. It seems like it would take a very small part of the United States budget to build several small modular reactors. Taxpayers would be told there is some risk, but also told the potential benefit could be a large source of emission free energy. It has some similarity to developing a new weapons system for the military. At any rate, it’s just a thought.
Thanks for the article – Rod.
Difficult to invest in something that doesn’t actually exist and have a long operational history. And almost any new technology is going to be expensive. It took several decades of government subsidies to finally make solar panels economically competitive.
The TVA should have simply financed the building of the first NuScale facility just to demonstrate to other utilities within the US and around the world that it works.
Please allow me to provide a different perspective.
The FOAK argument doesn’t pass a sniff test. We built FOAK LWRs in the 60s, even correcting for inflation, for well under 20% the price of UAMPS. With containments and ECCS and everything. This at a time when LWRs were new. Today, NuScale is not new. It is a small PWR, in a steel vessel in a pool of water. It is WWII technology. ECCS is simplified to being just a few valves. It should be cheap even at FOAK. It isn’t. Why not address this elephant in the room? What is NuScale going to do to get back control of costs? It appears the answer is nothing. A secondary question is: What is NuScale going to do to to de-risk its business model of having to peddle for subscribers? It appears the answer is also nothing.
Cyril:
First of a kind doesn’t just apply to new technology. For example: NuScale’s steel vessel might be similar to other steel vessels, but it needs specific tooling, jigs, processes, etc. that are different from those used to produce other steel vessels. Its steam generators use tubes that are unique, requiring the development of a new supply capability.
Any new design, even of a product as well developed as internal combustion engines or dishwashers must travel through a development and production curve that means that the first units are substantially more expensive than following units.
As far as its business model, NuScale’s development plans are far more than just the Carbon Free Power Project. They have development projects in several different locations and targeting several different types of customers.
They might not succeed. But the failure of CFPP doesn’t equate to a failure of NuScale any more than the failure of an electric van sale to Target would mean that Rivian is doomed to fail. It’s one customer – albeit a significant one – for a product with the potential to find dozens to hundreds of different customers.
Rod, that’s dodging the question. At the risk of repeating myself: FOAK PWRs were built in the 60s that were cheaper than coal plants. The FOAK argument doesn’t pass even a cursory sniff test. FOAK PWRs were competitive. After 7 decades of claimed innovation, they are no longer. The nuclear industry in general and nuscale in this particular instance of debate, have lost control of costs. To get better you first have to admit to being sick. $10000/kW is not acceptable. NuScale needs to start by admitting this and explain their plan to try to get back control of costs. I see no reason to believe the other projects will succeed if they don’t address the root causes of their problems. I want no more excuses that lamely blame things on interest rates, materials costs or FOAK. These are not the real issue.
Cyril:
I disagree. Nuclear has always been a very capital intensive enterprise. Increases in material costs, labor costs and interest rates have a major effect on the cost trend even without considering the specific challenges associated with a lack of practice and dedicated, skilled opposition.
The plants that were “cheaper than coal” were planned and built in the 1960s, an era of modest inflation and low interest rates. The stagflation and extreme interest rates that plagued the 1970s and early 1980s played a role in elevating nuclear plant costs into the stratosphere. That effect was magnified by delays like the 2 year licensing hiatus after NEPA & Calvert Cliffs and a similar hiatus after TMI. Plants under construction, with money already borrowed and labor forces already assembled were hit hard by interest rates and labor rates.
And, BTW, each of the plants ended up being partly affected by FOAK-like inexperience as regulations changed and major new systems had to be retrofitted into a design that was in various stages of completeness – including being fully constructed.
NuScale’s projected cost increases don’t have much to do with letting costs get out of control. They are mostly a result of mathematical calculations on spreadsheets that result when external conditions change the input values for various prices and carrying costs.
Once again, compare the cost increases to a contemporary, similarly capital intensive technology like offshore wind. And don’t forget to compare the full cost, not just the rate of cost increases.
Not so sure it’s great idea for nuclear power to put all the eggs in the basket of “carbon free” as a justification for badly noncompetitive products. That band wagon may end up in the ditch when the next administration shows up.
Strikes me a better approach lies with energy independence, but that presupposes the U.S. will stop importing nearly all of our uranium from countries who are not our friends.
As far as NUSCALE is concerned, I believe their fate was preordained by fundamental economies-of-scale. Throughout the history of power plants, costs have been driven down by bigger more efficient machines. NUSCALE went in exactly the opposite direction. A number of proposed small reactor types may suffer a similar fate, particularly those that appear to be novel physics experiments that overlook the fundamentals. Ultimately energy from the machines needs to be reasonably priced and reliable.
I believe that many (perhaps most) observers are confused about the economies of scale and believe that the term only applies to ever larger machines.
Scale is also related to the enterprise that develops the power plant and the supply chain that produces the parts for the machines. If the power plants are so large that all of their components are produced in limited quantities, their supply chain never has the chance to develop economic scale.
NuScale’s system includes many simplifications that might enable it to achieve competitive pricing, especially when the kWh that they sell get appropriately differentiated and valued as superior to similar units of electricity that do not include valuable characteristics like cleanliness, reliability, stability, inertia and power factor.
As I pointed out in my post, the $89/MWh price tag for NuScale output is competitive in a number of different markets. Their mistake was trying to sell to reluctant customers in a place where power is generally cheap and where the customers have no real reason to take risks and bet on FOAK technology.
My sources tell me that the fatal decision to focus on UAMPS as the initial customer was a result of strong pressure by INL to host US’s the pioneering SMR.
That might have worked if NuScale had planned to offer a single 50 MWe module. That power output that could be handled by INL, perhaps with the help of Idaho Power. But NuScale decided they needed to achieve scale more quickly and chose initially to build a 12 unit, 600 MWe power plant in the middle of a vast, nearly unpopulated desert. (The initial plan was rescaled to 6 units of 77 MWe each, but that is still a 462 MWe facility on an 860 square mile site with a total local consumption of roughly 80 MWe.
Consuming the power from their proposed plant required a much larger customer base, but the only utility available was a consortium of 40+ small town cooperatives.
Abandoning the UAMPS project before wasting any more money was a good decision. NuScale has a number of additional potential customers in its pipeline, though it still needs to overcome the FOAK challenge.