Rolls-Royce seeks UK SMR funding as market gaps open; NRC delays Seabrook license verdict

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Rolls-Royce seeks UK SMR funding as government rethinks strategy

The Rolls-Royce small modular reactor (SMR) consortium has asked for over 200 million pounds ($263.5 million) of UK government funding to develop and license its light water reactor (LWR)-based design, the Financial Times (FT) reported January 27.

The consortium, which includes partners ARUP, Laing O’Rourke, Nuvia and AMEC Foster Wheeler, has pledged to match the government funding, the FT reported.

The UK has been forced to re-evaluate its nuclear build plan after Japan's Hitachi and Toshiba recently walked away from key large-scale nuclear build projects. The government wants new nuclear power capacity to replace coal-fired plants and ageing reactors.

On January 17, Hitachi shelved its project to build the 2.9 GW Wylfa nuclear plant in Wales after it failed to come to an agreement with the UK government (see below). Last year, Toshiba abandoned the 3.8 MW Moorside nuclear new build project in Cumbria following a strategic restructuring.

EDF's 3.2 GW Hinkley Point C EPR project is the only nuclear plant currently under construction and is expected online from 2025.

Further projects at the Sizewell C and Bradwell nuclear sites are advancing and "small modular reactors can have a role to play," Energy secretary Greg Clark said in a letter published in the FT on January 23.

Limiting the cost to consumers and taxpayers will be a key consideration in future negotiations, Clark noted.

Rolls-Royce believes its 440 MW design can be built at a first of a kind (FOAK) cost of 70 pounds/MWh and the cost will fall to around 60 pounds/MWh from around the fifth unit onwards.

                            Rolls-Royce SMR learning, production rates

                                                                (Click image to enlarge)

Source: Rolls-Royce (2018).

In 2018, the UK government agreed to provide 56 million pounds towards the development and licensing of advanced (non-LWR) modular reactor designs and 32 million pounds towards advanced manufacturing research.

The development funding will initially allocate a total 4 million pounds to eight non-LWR vendors, to perform detailed technical and commercial feasibility studies. The eight vendors are:

• Advanced Reactor Concepts
• LeadCold
• Moltex Energy
• Tokamak Energy
• U-Battery Developments
• Ultra Safe Nuclear Corporation
• Westinghouse Electric Company UK

According to the government's plan, three or four of these companies will be selected in April 2019 to receive a total of 40 million to accelerate the development of the design over two years. UK nuclear regulators will receive 5 million pounds to support this process and a further 7 million pounds to build regulatory resources to assess and license new designs.

UK government should nationalize Wylfa project: Hitachi

The UK government would need to take a majority stake in the Wylfa nuclear plant in Wales for Hitachi to rejuvenate the project, Hiroaki Nakanishi, chairman of Hitachi, said January 24.

“Nationalization is the only path,” Nakanishi said on the sidelines of the World Economic Forum in Davos, the Nikkei Asian Review reported.

During negotiations, the UK government told Hitachi it would consider taking a one-third equity stake in the Wylfa project and provide all construction debt financing, UK Energy Secretary Greg Clark told Parliament January 17.

The government was willing to provide a contract for difference (CFD) at a maximum strike price of 75 pounds per megawatt hour ($98.8/MWh), Clark said.

This is far lower than the 92.5 pounds/MWh contract agreed with EDF for the 20 billion-pound Hinkley Point C plant.

"It is clear that we need to consider a new approach to financing future projects, including those at Sizewell and Bradwell," Clark told Parliament.

The government will study the viability of a Regulated Asset Base model for new nuclear plants and will publish its findings by the summer, he said.

NRC delays Seabrook licence extension verdict until after hearing

The Nuclear Regulatory Commission (NRC) has delayed the licence amendment and extension of NextEra Energy's 1.2 GW Seabrook nuclear power plant in New Hampshire until after a public hearing which is expected to be held this summer.

NextEra has applied to extend the lifespan of the plant by 20 years to 2050 and the NRC was expected to give its approval this month. A safety report published by the NRC in late 2018 concluded the Seabrook plant fulfilled the license renewal criteria.

The NRC delayed its final approval on January 23 after a group of lawmakers called on the commission to wait until after a public hearing is held into proposed remedies for structural degradations that were reportedly identified around 10 years ago.

“Structural degradation linked to the alkali-silica reaction (ASR) has caused Seabrook to operate outside of its design basis, driving the need for a license amendment," Senators Elizabeth Warren (D-Mass.) and Edward J. Markey (D-Mass.) and Representative Seth Moulton (MA-06), said in a letter January 18.

"We request that the license amendment and renewal be delayed until after the evidentiary hearing takes place, so that concerns over the plant’s safety can be properly heard and reflected,” the lawmakers said.

Earlier this month, Connecticut's Department of Energy and Environmental Protection (DEEP) approved a power purchase bid by NextEra for the Seabrook plant. The bid was priced at $33/MWh on a levelized basis for a volume of 1.9 TWh, starting in 2022.

DEEP also approved a 10-year power purchase bid by Dominion Energy for around half the capacity of its 2.1 GW Millstone nuclear power plant in Connecticut.

The U.S. average nuclear generating cost was $33.61/MWh in 2017, according to the Nuclear Energy Institute (NEI) industry group.

                      Forecast margins for operational US reactors

                                                           (Click image to enlarge)

Source: Bloomberg New Energy Finance (BNEF), May 2018.

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