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Eric Wesoff: December 10, 2009, 1:31 AM

Can Small Modular Reactors Save the US Nuclear Industry?

“Nuclear is necessary, doable, and the markets are gargantuan.”  (Maurice Gunderson of CMEA Ventures)

While the U.S. nuclear industry has been in a holding pattern since the loss-of-cooling accident and partial core meltdown at Three Mile Island in 1979, European and Asian countries have been growing their nuclear reactor fleet and their nuclear workforce. Recently, construction has begun on more than 40 nuclear plants worldwide, predominantly in Asia.

The Three Mile Island nuclear incident was more of a public relations disaster than a nuclear disaster. But the result was that the U.S. lost the global lead in nuclear power technology as well as a generation of nuclear engineers, which left electrical generation in this country a slave to dirty coal.

Fast-forward to 2009. Pressures to lower carbon dioxide emissions from coal and natural gas power plants have provided the opportunity to reboot the U.S. nuclear industry. Operating nuclear reactors have zero carbon emissions and the technology has grown more reliable and more efficient. In the U.S., reactors now run more than 91 percent of the hours in a year, the highest capacity factor of any energy source.

Can new technology, policy, and thinking usher in the much-heralded “Nuclear Renaissance” or will still-grim economics and difficult regulatory terrain keep the U.S. nuclear market mired in a post Three Mile Island hangover?

Small modular reactors and standardized designs are the potential disruptors and game-changers for the US nuclear power industry. Under the SMR concept, reactors can be built in factories and shipped to the site instead of being expensively and riskily built on-site. Rather than engineer and build reactors capable of producing over 1 GW of electric power, SMRs can produce 10 MW to 350 MW of electricity (or heat). 

The move towards modularity and standardization has reportedly already lowered the costs of large-scale LWRs such as GE’s Economic Simplified Boiling Water Reactor (ESBWR) and Westinghouse’s AP-1000.  Individual SMRs can deliver power to isolated communities or off-grid industrial sites like mines now served by diesel power. Alternatively, they can be combined to scale to large-scale power production. It is anticipated that SMRs will cost about the same to construct per kW as large plants and will produce electricity at the same cost as a conventional nuclear plant (in the 6 to 8 cent/kWh range).

Most cleantech venture capital firms have taken a look at the nuclear space but have avoided investing for a variety of good reasons - enormous capital intensity and immense regualtory and technical risk.  But a few brave venture investors have taken the plunge.

“You have to dig into the details,” according to CMEA's Maurice Gunderson, one of the few brave VC investors to make the nuclear bet (He is a lead investor in NuScale).  He has said that NuScale's model of focusing on modular nuclear power would shift development away from the “cathedral model” of large-scale, over-budget, ten-year power projects.

He has claimed that the NuScale process, manufacturing modular reactors on a factory assembly line, can cut the time to develop a nuclear plant in half.  He argues that incremental modularity eliminates the “single shaft risk” of a conventional plant that must be shut down for maintenance and refueling.

He adds, “The NRC processes have become streamlined in the last few years  and can accommodate this model.”

Gunderson said that the reason that most VCs are scared of nuclear is “because they have no experience,” and “are listening to anecdotes in the popular press.”  Gunderson verified that NuScale was raising more money and added, “Nuclear is necessary, doable, and the markets are gargantuan.”  

Other VC-funded nuclear firms include Hyperion, TerraPower, and whatever Venrock is cooking up.

The December issue of Greentech Innovations offers an analysis of Small Modular Nuclear Reactors.

                                   NuScale SMR

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Comments

  • Bob Wallace 12/11/09 4:08 AM

    Three Mile Island is a distractor. 

    The reason that nuclear construction halted in the US was the cost of the plants.  The industry was already in shutdown mode when TMI underwent a partial core meltdown.

    It’s interesting that Exelon and Entergy, the number one and two largest US suppliers of nuclear energy had stated that new nuclear is just too expensive to be built.  And you well know that they’ve taken careful looks at all the ‘gee whiz’ Photoshopped ideas that are going to be the rebirth of nuclear energy.

    Say, you notice where GE is going to build one of the world’s largest wind farms in Oregon.  845 MW and they anticipate it being completed in 1012, two years from now.  And PG&E has put together the financing for their compressed air storage (CAES) facility which they expect to have operational in 2014.

    Big stuff seems to be happening quickly in the renewable area while the nuclear folks are speculating.

     Reply
      • Rod Adams 12/12/09 6:57 AM

        Bob:

        I am cynical about the statements and even actions that come from established players in the energy business. For example - the largest beneficiary of a restricted supply of any commodity is an existing supplier of that commodity. If energy is in short supply compared to demand, that increases the price and puts money directly on the bottom line of a company that is already producing energy using paid for assets.

        Both Exelon and Entergy operate low marginal cost nuclear plants in electricity markets where the price is determined by the “last in” supplier needed to meet demand. They have billions of dollars worth of incentive to try to ensure that last in supplier is a high marginal cost supplier that must demand a high price for its product just to pay its ongoing fuel bills. If there was new nuclear power capacity in the market, that would drive prices down in those places where competitive bidding sets wholesale prices.

        When it comes to GE’s involvement in wind, just remember that the company is a a traditional engineering/manufacturing company that makes money whenever it sells equipment, no matter what kind of equipment it sells. If people want to buy wind turbines, GE is perfectly willing to make and sell them. I have spoken with some GE business types over the years. They have privately admitted that they do not think that many customers will be satisfied with the performance of wind turbines over the long haul, so GE may have the opportunity to sell whatever is selected as the replacement power - as long as the customer blames the wind, not GE for the poor performance.

        Rod Adams
        Publisher, Atomic Insights
      • Chris 12/12/09 9:28 AM

        There is some validity to the cost basis.  Building had slowed due to some pricing.  Building was still making progress.

        The current reality is still cost.  Nuclear production costs are stable around 2 cents per kwh; a price untouchable by any other means.  A 20 billion dollar investmnet is always daunting for a company (estimated price of a new build if I’m correct).  SMR might be an attractive alternative, B&W is already working on something similiar.
  • Doug 12/13/09 2:28 PM

    Using the data from the American Wind Energy Association database, the 6740 MW of installed wind power in america generates 1,941 MW of power a year.  When folks use wind power capacity data they have to derate it appropriately.  The new GE windfarm will realistically produce 200 MW.  The GE folks bump the projection up to supplying 230,000 households (230MW), but that assumes there isn’t much electricity lost from the source.  Google maps shows the windfarm about 150 miles from Portland, the nearest major population center.  Average loss is 7.2% for all transmission.  This would likely be higher due to the transmission distance.  Does the $1,4B price tag include the upgrades in transmission necessary, too?  These small nukes can be placed very near their demand area.  Oregon spent $1.3m for solar panels that generate 120 kw a yr…what is that $6000 of electricity? That is a horrible return on investment.  How often will these wind turbines need to be replaced?  Is that included in the analysis?  I realize that there are those that hate nukes and they will be too emotionally expensive at any price.  I also realize there are those that believe carbon is very expensive and this offsets the crazy losses that some of these energy solutions have (solar worse than wind).
    Nuclear, especially small, modular, will turn out to be very economical when measured with real dollars spent.  If you don’t don’t want nuclear at any price, then don’t even waste your time analyzing it.

     Reply
  • Bill Woods 12/17/09 8:27 PM

    “The reason that nuclear construction halted in the US was the cost of the plants.  The industry was already in shutdown mode when TMI underwent a partial core meltdown.”

    The industry was in trouble before TMI because, after the 1973 oil embargo, demand for power fell below projections. The plant cost overruns came after.

     Reply
  • Bob Wallace 12/19/09 12:02 AM

    “Satisfaction”, life expectancy, and maintenance of wind turbines…

    The cost to produce wind (average $0.05 per kWh) includes maintenance costs.  The current weak link in turbines is the gear box.  There are three different approaches to eliminate gear boxes in turbines.

    GE is going forward with a system, if I understand it correctly, runs a shaft straight back from the blades and places the coil on the shaft.  The system magnets can be moved closer to and further from the coil as wind speed rises and falls.  The resulting change in electromagnetic field controls spin speed.  This takes all the highly stressed gears out of the system.  GE states that this should reduce lifetime (20 years) maintenance from $600,000 to $200,000 per turbine.

    Another system in prototype puts the magnets on the shaft, but divides the coil into segments.  At low wind speed only one section of the coil would be connected.  As wind speed increases additional coil sections would be activated which would increase the drag (and produce more power).

    A third system is based on how Ferris wheels operate.  Again, a simple shaft running straight back from the blades with a larger ‘take-off wheel’ mounted on the shaft.  Rather than one generator there would be multiple generators, each with a rubber “truck tire” driving wheel.  At low wind speeds only one generator would be moved into contact with the shaft wheel.  As wind speeds increase more generators would be brought into play.  Since the interface between shaft and generators would be rubber tires on a metal wheel any sudden shifts in shaft speed would be “slipped away”.  Individual generators could be maintained/swapped out without having to take the entire turbine off line.

    All three systems 1) make construction less expensive, 2) reduce maintenance costs, and 3) extend the life of the turbine.  All would bring down the price of produced electricity.

    And remember, the site work, foundations, towers, etc. are going to last a long time. 

    How long has the Eiffel Tower been standing there?

     Reply
  • Bob Wallace 12/19/09 12:20 AM

    Bill -

    Cost overruns - history

    1966-67 - a bit over 200%
    1968-69 - a bit over 350%
    1970-71 - just under 500%
    1972-73 - over 600%

    Looks like trouble to me.  Lots of plant cost overrun prior to the oil embargo.

     Reply
  • Bob Wallace 12/19/09 1:01 AM

    Doug -

    “Average loss is 7.2% for all transmission.”

    Let’s assume that the Oregon site is ‘good site, best technology’.  Then the price to produce is around $0.03 kWh.  To be generous, let’s use $0.04. 

    OK, lose 7.2% of your product to transmission and now you’ve got to sell what you deliver for a bit under $0.041 kWh.

    Of course, if there’s a lot of wind and cheap real estate out there then it might be worth building a HVDC line and cutting the loss to around 2%.  It could intersect with the Pacific Intertie which runs close to Portland and then someone could sell wind north to Seattle and south to Southern California and all parts in between.

    —

    “Oregon spent $1.3m for solar panels that generate 120 kw a yr…what is that $6000 of electricity? That is a horrible return on investment.”

    That’s absolutely true.  If you consider nothing but power return for money spent. 

    But you’re not taking into account that the overspending being done right now for solar is an investment toward future affordable solar.  We did exactly the same sort of thing to launch nuclear and wind power.  And our investments are paying off, the cost of solar is dropping much faster than anyone anticipated.

    (And I think you’ve got your numbers wrong.  I’ve got 1.2 kW of panels that generate close to 2,000 kWh per year.  They cost me about $5,000.)

    —

    I’d suggest you look at the costs for all non-carbon emitting solutions with an open mind. 

    Perhaps small scale nuclear will be cheap.  But no one in the industry seems to think so.  Remember, both Ontario and San Antonio created open bidding opportunities for someone to build them new nuclear plants and no one came forth with an affordable bid. 

    If these mini-reactors were anything other than pipe dreams don’t you think the people who know how to build them cheap would have jumped at the opportunity?

     Reply
  • Bob Wallace 12/19/09 1:17 AM

    Chris -

    “The current reality is still cost.  Nuclear production costs are stable around 2 cents per kwh; a price untouchable by any other means. “

    Yes, current reality is cost.  Two cents (or a bit more) is what it costs to produce in a nuclear plant that was built decades ago and is now paid off.

    Go out finance, build, and operate a plant today and you’re looking at a price somewhere in the 12 - 25 cents per kWh range.  Let’s use “15 cents” as a rough estimate.

    And you’ve got to be able to sell that power 24 hours a day at 15 cents in order to stay in business.  Nuclear (like coal) is not dispatchable.  You can’t turn your reactor off when demand and price are low and crank it back up when the market is willing to pay a premium price.  It’s not like a gas turbine or hydro facility.

    So what are you up against?  Off-peak, at night, demand is down and the wind is generally blowing harder.  No one is going to buy your 15 cent power when they can buy from a wind farm for 5 cents.  You’re going to have to match or beat their nickel.

    That means that you’ve got to crank your price to 25 cents or better during peak hours in order to stay in business.  Twenty-five cents is higher than PV solar, thermal solar, wind with storage, gas turbines, and just about any other way of making power.  If you have to sell for 25 cents someone is going to build a whole bunch of wind farms, produce power for a nickle, undersell your at 20 cents, and pocket a fortune.

    Both new nuclear at 12 - 25 cents kWh and new coal at ~20 cents kWh can’t give away their power half the 24 hour cycle and make it up by doubling their prices for the other half.  There’s just too much price competition on and off peak.

     Reply
  • Peter Sharma III 01/5/10 8:56 PM

    There is no need for nuclear fission power and its consequences in terms of peril and waste are unacceptable.

     Reply
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