Industry heads warn nuclear costs must be slashed
Reducing the cost of building advanced nuclear power plants is essential for wide adoption over the next ten years, industry leaders agreed during Reuters Events Virtual International SMR & Advanced Reactor Summit 2020.
“We’re not building nuclear because it’s not cheap enough... we’ve got to get the cost under control, that’s the number one priority,” said Bret Kugelmass, Managing Director of research institute Energy Impact Center, during his keynote speech for the summit.
Delivering plants for less than $3,000/kW would make a plant an attractive investment, according to a recent study by the consultancy Lucid Catalyst.
However, even optimistic studies by the developers themselves struggle to come close to that figure.
An Energy Innovation Reform Project study of eight selected companies looked at reactor models in development with reactor capacity of between 47.5 MWe and 1,648 MWe and found that average costs remained above the Lucid Catalyst target.
According to the study, the advanced reactors had an average capital cost total of $3,782/kW, average operating cost total of $21/MWh and levelized cost of electricity (LCOE) of $60/MWh.
Estimates vary and there is no standardised approach in the evaluation of the economic and financial performances of the latest reactors in development, making it difficult for an apples-to-apples comparison between models and existing infrastructure, analysts warn.
One 2016 study by the OECD and Nuclear Energy Agency showed LCOE differed depending on plant size, country and financing costs. Nuclear plant costs depended greatly on whether a country already has an established industry, the agencies said.
“In those countries, with their experienced project organisations and well-established supply chains, nuclear projects are being executed cost- and time-effectively,” the OECD and NEA report “Unlocking Reductions in the Construction Costs of Nuclear: A Practical Guide for Stakeholders” said.
Projected Costs of Nuclear LCOEs from Defining Plant-level Costs (2016) (Source: OECD, Nuclear Energy Agency)
Kugelmass said he believed nuclear capacity would need to grow by more than 100 times, or by some 40,000 GW, in the next few decades to become economically viable and meet climate change goals of Net Zero carbon by 2050.
The nuclear industry has been weighed down by regulatory issues that just added to the cost, according to Kugelmass.
“Everything I originally thought about waste, safety or public perception, turned out to be an excuse...and every attempt to address those non issues made power plants ever more expensive,” he said.
By switching mindset from technology vendors to real estate and infrastructure project developers, thousands of SMRs could be built in parallel, thus reducing costs associated with long borrowing times for prolonged construction schedules and reducing risk premiums currently linked to large projects, he said.
His open-source blueprint Open-100 project envisions 100MW, standardised-build nuclear plants in urban centres that take a year and a half to construct with a total capital cost of $2,901/kW and LCOE of $36/MWh.
Though many analysts are yet to be convinced the Open-100 project is workable, at the summit the theory behind it was applauded as solid, out-of-the-box thinking for an industry struggling with assuring the next new big thing is commercially viable.
The modular element of SMRs, whereby one reactor is connected and others are placed in parallel beside it to increased capacity, will also help reduce costs associated with extended construction times, a problem faced when building LRs, said Jon Ball, Executive Vice President at GE Hitachi Nuclear Energy.
“You’ve got to figure out how to be competitive with all forms of generation, including gas. And there isn't an appetite to invest billions of dollars. A billion dollars or less is the common theme,” he said.
Heralding GEH's BWRX-300 SMR, Ball said the advantage of the small reactor is a user can install their first unit, instantly generating revenue and cash flows, then later add as many other smaller reactors as necessary, thus cutting back on financing times and saving on long, drawn out construction processes.
SMRs, over LRs, benefit from this approach because orders for expansions of new units can be made while the first module is already up and running, agreed Chief Commercial Officer at NuScale Power Tom Mundy.
"You don’t have to place orders for that equipment as early as you do for a large nuclear plant, where you’re placing orders for the reactor vessel 5, 6, 7 years prior to construction, and that changes the cash flow profile quite a bit if you’re placing the orders say 24 months prior to construction,” he said.
Repurposing coal power plant sites would also help cut spending, Mundy said.
“A 720 MWe NuScale plant has a small land footprint of around 30 acres and should be able to fit and built on an existing coal plant site ... some of the coal plant infrastructure can be repurposed and reused,” he said.
The main cooling water delivery system, other water systems like demineralized or potable water and the administrative and training buildings are just some of the aspects of an old coal facility that can be recycled.
“It obviously depends on site specific characteristics, but the total capital cost savings could be on average approximately $100 million,” Mundy said.
Advanced reactors can be used for more than just electricity generation, and taking advantage of that would also make them more economically attractive, said Product Manager of SMR & Advanced Technologies at Tractebel Anicet Toure.
“Considering industrial and non-electric usage such as district heating, water desalination, hydrogen production and other process heat applications, small and advanced nuclear reactors may in fact be in a unique position to enable a decarbonisation of sector less easily addressed by other non-fossil energy sources,” he said.
Then there is the unique way in which a small reactor, disconnected from the grid, can be employed in isolated communities. In these cases, the cost of energy is already sky high for fuels such as diesel which must be shipped to the location on a regular basis.
“Current cost base on diesel generation in northern remote communities is in the range of 50 cents to sometimes over a dollar per kilowatt hour depending on the location, while SMR generation would be under 12 c/KWh,” said Blair Skinner, mayor of Pinawa, a remote Canadian community, 110 kilometres north-east of Winnipeg.
By Paul Day