Nuclear powerSmall modular reactors (SMEs) a “poor bet” to revive U.S. nuclear renaissance: report

A shift to “small modular reactors” (SMRs) is unlikely to breathe new life into the increasingly troubled U.S. nuclear power industry, since SMRs will likely require tens of billions of dollars in federal subsidies or government purchase orders, create new reliability vulnerabilities, as well as concerns in relation to both safety and proliferation, according a report issued last week by the nonprofit Institute for Energy and Environmental Research (IEER).

The IEER report has implications for SMR companies headquartered or with planned test sites in Florida, Missouri, North Carolina, Oregon, Pennsylvania, South Carolina, and Tennessee.

The report, titled Light Water Designs of Small Modular Reactors: Facts and Analysis, focuses on light water reactor (LWR) SMR designs, the development and certification of which the U.S. Department of Energy (DOE) is already subsidizing. The four leading SMR designs are:

• mPower Reactor by Charlotte, North Carolina-headquartered Babcock & Wilcox Company, which, in partnership with the Tennessee Valley Authority, could get from the DOE up to $226 million in federal funding, of which $79 million has been secured
• Westinghouse Electric, headquartered in Pittsburgh, Penssylvania, and now working with Missouri-based utility Ameren to secure DOE funding for design and certification of the Westinghouse SMR
• Jupiter, Florida-based Holtec, the subject of a DOE agreement for the construction of a Holtec SMR test unit at the Savannah River Site, a nuclear-weapon materials facility near Aiken, South Carolina
• NuScale Power, a Corvallis, Oregon-based company, which has signed an agreement with the DOE to build a NuScale Power SMR demonstration unit at the Savannah River Site.

IEER says that key conclusions of the IEER report include the following:

• $90 billion manufacturing order book could be required for mass production of SMRs. As the report notes: “SMR proponents claim that small size will enable mass manufacturing in a factory and shipment to the site as an assembled unit, which will enable considerable savings in two ways. First, it would reduce onsite construction cost and time; second, mass manufacturing will make up in economies of volume production what is lost in economies of scale. In other words, modular reactors will be economical because they will be more like assembly-line cars than hand-made Lamborghinis … A hundred [mPower] reactors, each costing about $900 million, including construction costs … would amount to an order book of $90 billion, leaving aside the industry’s record of huge cost escalations. This would make the SMR assembly- line launch something like creating a new commercial airliner, say like Dreamliner or the Airbus 350 … SMRs will still present enormous financial risks, but that risk would be shifted from the reactor site to the supply chain and the assembly lines. Shifting from the present behemoths to smaller unit sizes is a financial risk shell game, not a reduction in risk.”
• Who pays? China, federal subsidies, or both. As the report notes, the industry’s forecast of relatively inexpensive individual SMRs is predicated on major orders and assembly line production. However, “China, where 28 reactors are under construction, already has a much better supply chain than the United States. So the U.S. government subsidies to B&W, TVA, and Westinghouse and others may pave the way for an assembly line in China! In fact, Westinghouse has already signed a memorandum of understanding with China’s State Nuclear Power Technology Corporation ‘to develop an SMR based on Westinghouse SMR technology.’ .. The alternative to Chinese manufacture would be federal government subsidies to set up manufacturing in the United States.” Westinghouse has claimed that U.S. reactor orders would be sourced in the United States — but would require two supply chains. Already, there is discussion of billions of dollars in additional federal subsidies for SMRs to do what the private marketplace will not.
• SMRs will lose the economies of scale of large reactors. As the report notes: “Nuclear reactors are strongly sensitive to economies of scale: the cost per unit of capacity goes up as the size goes down. This is because the surface area per kilowatt of capacity, which dominates materials cost and much of the labor cost, goes up as reactor size is decreased. Similarly, the cost per kilowatt of secondary containment, as well as independent systems for control, instrumentation, and emergency management, increases as size decreases … For these reasons, the nuclear industry has historically built larger and larger reactors in an effort to benefit from economies of scale. The four designs would reduce the size of each reactor considerably: by a factor of five (Westinghouse) to a factor of 25 (NuScale) relative to the reactors now being built in Georgia and South Carolina. Such large size reductions imply significant increases in unit cost due to loss of economies of scale.” It is questionable whether mass manufacturing cost reduction can make up for the cost escalation caused by loss of economies of scale.