Rolls-Royce plans UK funding surge upon SMR design approval

Deployment of a UK-developed Small Modular Reactor (SMR) could support 40,000 jobs in the next 20 years and add 100 billion pounds ($132.9 billion) to the UK economy in 2030-2050, David Orr, ‎Senior Vice President Nuclear at Rolls-Royce, the UK engineering group and SMR developer, told a webinar.

UK-based SMR developers predict major economic benefits and intellectual property gains for domestic suppliers if the UK government backs their designs, company executives said during the webinar, held by Nuclear Energy Insider on August 16.

A sustainable SMR industry could provide a total benefit to the UK economy of around 188 billion pounds by 2121 and over half of this benefit could be generated in 2030-2050, Orr told the webinar. These projections are based on 7 GW of SMR new build in the UK and 9 GW of exports.

Rolls-Royce is one of a number of domestic and international firms shortlisted in the U.K.'s competition for the best value SMR design. The company has reportedly submitted a detailed design for a 220 MW SMR power plant unit which could be doubled to 440 MW, drawing from its experience in supplying reactors for submarines.

The government is expected to provide further details on its SMR selection process this fall, along with timelines for deployment.

"Should our program be accepted by government we would be employing up to 330 people by the end of next year and this would grow to a population on the core program for the power station development in the order of 800 people at its peak. That's just in the internal, our estimates are that 30 to 40% would be done internally by the [UK SMR industry] and the rest would be put out into academia, technology centres and into the supply chain," Orr said.

"We'd be investing in the order of 30 million pounds in the early years into the universities around the UK so we can leverage the wider academic capability," he said.

The cost effectiveness of mass-manufactured components for SMRs must be improved in order to gain from economies of volume associated with modular manufacturing and build a sustainable supply base in the UK.

"At the moment we are looking at a 40 million pound program to support the industrialisation of SMRs," Orr said. This investment would be provided over 2016-2020 and channelled towards advanced manufacturing, in particular the development of modular and standardised processes, he said.

Hot property

The UK government has pledged to invest at least 250 million pounds in nuclear R&D over the next five years and in March it launched a competition to identify the most cost-efficient SMR design.

The first phase of the competition has seen the government receive design proposals and gauge market interest among technology developers, utilities and potential investors.

There has been a high level of international interest in the competition. Entrants include U.S. developers NuScale and Westinghouse and Canadian molten salt reactor developer Terrestrial Energy.

UK developers such as Rolls-Royce and molten salt developer Moltex Energy believe their proposals offer the UK economy more benefits in terms of intellectual property (IP) rights, local content and export opportunities.

"There is large potential for IP generation," Rory O'Sullivan, Chief Operating Officer of Moltex Energy, told the webinar.

"We have a strong patent position with any un-pumped molten salt and we want to share that with suppliers so they can get their own IP for subcomponents," he said.

The winner of the design competition is expected to begin the UK’s Generic Design Approval process around 2017 and approval could be completed in the early 2020s, Johnny Stephenson, Business Development Manager at the UK's Nuclear Advanced Manufacturing Research Centre, (Nuclear AMRC), told the webinar.

Following site approval and a power purchase agreement, a final investment decision (FID) for the first SMR plant could be made around 2022 and the plant could be online in 2028, Stephenson said.

"That very much depends on the maturity of the technology that is chosen to proceed and the efficiency of the regulatory process," he said.

Industry ties

SMR developers are forming a range of partnerships with U.K. supply firms which will optimize construction timescales upon completion of the government's SMR design competition.

UK industry is currently better equipped to supply SMR components than large scale reactor parts and has the capability to manufacture all SMR components aside from steam turbine sets, Stephenson said.

Manufacturing capacity would need to be expanded in areas such as reactor vessel internals, core and fuel components, and steam generator and pressurised systems and this would require public or private investment depending on the chosen technology, he said.

According to Orr, industry partnerships could be formed to build new manufacturing facilities.

"We currently believe we would have to set up a separate manufacturing facility for volume of [reactor pressure vessel] steam generators and pressurisers," he noted.

Nuclear AMRC has been developing new manufacturing techniques, such as welding and joining, to achieve “incremental gains” and lower manufacturing costs, Stephenson added. The research center is drawing from lesson learned in oil and gas and aerospace sectors, he said.

"We are also looking at advanced inspection techniques-- that is equally important to prove the quality of these techniques and bring the cost down of the final components," Stephenson said.

Cost is king

SMR designs vary widely and this has led to wide differences between cost estimates at this pre-build stage.

NuScale has targeted a levelized cost of energy (LCOE) for its PWR-based design of below $90/MWh (67.7 pounds/MWh) upon wider deployment, while Terrestrial Energy and Moltex Energy have predicted costs in the region of $45/MWh for their molten salt reactor designs.

In comparison, the power purchase contract for the large scale 3.2 GW Hinkley point C project in south-west England-- agreed in principle between the UK government and EDF in October 2013--was set at a “strike price” of 92.50 pounds/MWh ($122.2/MWh) for 35 years.

The government's decision in July to review the "component parts" of the Hinkley point C project has prompted some uncertainty over the future of the project.

According to Orr, the deployment of SMR reactors would ensure a more sustainable future for the UK nuclear industry.

"I think it's the UK's last chance to have a vibrant nuclear industry again, but it will rely so heavily on UK government conditions and it being commercially viable as an option," Orr said.

"It has to be commercially attractive against the strike price of larger reactors," he said.

Nuclear Energy Insider