Dive Brief:
- Potential project sponsors have been slow to commit to advanced nuclear reactor projects due to the unclear business case for first-of-a-kind technologies, uncertainty around development costs, extended preconstruction timelines, and other factors, the Nuclear Innovation Alliance said in a report released Monday.
- Private-sector stakeholders can catalyze advanced nuclear development by committing capital to backstop project completion costs, while Congress can pass legislation authorizing the federal government to share completion-cost risk with developers that commit to project management best practices, NIA said.
- These and other risk-mitigation efforts should provide “comfort to the investment community and private capital markets,” NIA Senior Fellow and report author Stephen Greene said in a Monday webinar discussing the report’s findings.
Dive Insight:
NIA developed the report, “Catalyzing Commitments to Advanced Nuclear Energy Projects,” from insights shared by industry stakeholders at a series of workshops in 2023 and 2024. The workshops focused on deployment of small modular reactors, but its conclusions may apply to larger reactor designs, NIA said.
A commercial-scale advanced nuclear project has yet to begin construction in the United States, despite the Nuclear Regulatory Commission’s certification in January 2023 of NuScale’s small modular reactor design, its December approval of a construction permit for Kairos Power’s Hermes reactor and its ongoing efforts to simplify advanced reactor licensing rules.
Advanced nuclear projects with committed offtakers include Ontario Power Generation’s Darlington New Nuclear Project, which could have four SMRs producing 1.2 GW of power by the early 2030s; TerraPower’s 345-MWe demonstration reactor, which has an energy storage component that can temporarily boost output to 500 MWe and could be operational at a former Wyoming coal plant in 2030; and Dow’s partnership with X-energy to construct four 80-MWe reactors by around 2030 at its Seadrift, Texas petrochemical plant, Greene said on the webinar.
But “commitments to additional projects have been slow in coming,” he said.
Potential sponsors are hesitant to support first-of-a-kind projects with uncertain costs and construction timelines, especially given the lengthy and costly preconstruction design, permitting and licensing process, Greene noted. While “the perceived risk may be greater than the actual risk,” advanced nuclear companies and their advocates in the federal government can take steps to mitigate it, he said.
The most impactful private-sector action is for offtakers of reactor output, such as industrial facilities, data center operators and municipal utilities, “to make capital commitments to provide a backstop for project completion cost in exchange for a range of possible compensation” and other incentives along with closer involvement in project planning, NIA said in the report.
Dow today “[owns the Seadrift project] the way we’d own any other project that is in the early stages of development,” said webinar participant Kreshka Young, Dow’s North America business director for energy and climate, in response to an audience question about the planned Seadrift reactor’s ownership model.
But because Dow is “primarily a petrochemical producer … the model will likely evolve over time,” Young added. The company continues to evaluate partnerships with other offtakers and facility owners and is still looking for an operator, she said.
The most impactful public-sector actions would be “legislation to share completion-cost risk for early-mover advanced nuclear energy projects that commit to a defined set of best project management practices, combined with cost-sharing and incentives to keep costs down,” and possibly federal grants for advanced nuclear deployments beyond those available through the DOE’s Advanced Reactor Demonstration Projects program, NIA said in the report.
The Consolidated Appropriations Act of 2024 authorized $800 million for up to two reactor projects, the report noted.
Other private-sector actions include pursuing serial, multi-project developments that spread first-of-a-kind risk across several reactor deployments; sharing development costs among multiple offtakers during the lengthy pre-construction phase, possibly in exchange for offtake pricing adjustments or revenue-sharing once the project is operational; accepting higher offtake pricing for early projects; and creating price-adjustment mechanisms to absorb unanticipated development cost increases, NIA said in the report.
Serial, multi-project commitments are important for enabling faster learning and achieving economies of scale, said webinar participant Julie Kozeracki, director of strategy at the U.S. Department of Energy’s Loan Programs Office.
A 2018 Nuclear Energy Institute study found approximately 30% lower generating costs at multi-reactor plants, Kozeracki said, noting that a number of existing U.S. nuclear plants have room for additional units. The single-unit Shearon Harris Nuclear Plant near Raleigh, North Carolina, was originally planned to have four reactors, she said.
“The worst thing we could do is stop after two units,” Kozeracki said, referring to the recent completion of Georgia Power’s Plant Vogtle Units 3 and 4. “[Vogtle was] a down payment for everyone else to capitalize on.”
