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Report questions value of SMR programs

Staff Report

Published Aug. 12, 2013

A Washington-based energy think tank labels small modular reactors as a “poor bet” for the commercial nuclear industry.

Promoting development of small reactors, also known as SMRs, is unlikely to breathe new life into the U.S. nuclear power industry, added researchers at the Institute for Energy and Environmental Research.

The institute focuses its research on mainly two areas: energy-related climate issues and ozone layer depletion; and environmental and security aspects of nuclear weapons production and nuclear technology.

The report claimed that SMRs will likely require tens of billions of dollars in federal subsidies or government purchase orders, create new reliability vulnerabilities, as well as safety and proliferation concerns.

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 focuses on light water reactor SMR designs, the development and certification of which the U.S. Department of Energy is already subsidizing at taxpayer expense.

One of the key conclusions of the IEER report challenges the possibility that mass production of modular units actually will lower the cost of building commercial nuclear units.

A hundred [mPower] reactors, each costing about $900 million, including construction costs, would amount to an order book of $90 billion.

This would make the SMR assembly-line launch something like creating a new commercial airliner, say like Dreamliner or the Airbus 350, the report said.

“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,” the report said. “Shifting from the present behemoths to smaller unit sizes is a financial risk shell game, not a reduction in risk."


Economies of scale

The report also claims that SMRs will lose the economies of scale of large reactors, such as two 1,000-megawatt units under construction at V.C. Summer Nuclear Power Station in Fairfield County. The project is expected to cost about $9.8 billion.

It is highly questionable whether mass manufacturing cost reduction can make up for the cost escalation caused by loss of economies of scale, the report said.

"SMRs are a poor bet to solve nuclear power's problems and we see many troubling ways in which SMRs might actually make the nuclear power industry's current woes even worse,” said Arjun Makhijani, president of the institute and author of the SMR report. “SMRs are being promoted vigorously in the wake of the failure of the much-vaunted nuclear renaissance. But SMRs don't actually reduce financial risk; they increase it, transferring it from the reactor purchaser to the manufacturing supply chain.”

Makhijani added that SMR program in the United States could require “massive federal intervention with tens of billions of dollars in subsidies and orders.”

The four leading SMR designs are:

  • mPower reactor by Charlotte-headquartered Babcock & Wilcox, which is partnering with the Tennessee Valley Authority and Bechtel Corp.
  • Holtec International, headquartered in Marlton, N.J., and Jupiter, Fla., which has an agreement with the Energy Department for construction of a test unit at the Savannah River Site in Aiken County. Holtec’s project is backed by the state of South Carolina and NuHub, the commercial nuclear advocacy group in the Midlands.
  • NuScale Power, a Corvallis, Ore.-based company that also has signed an agreement with the Energy Department to build a demonstration unit at SRS. NuScale is a subsidiary of Fluor Corp., which has a major regional office in Greenville. Fluor Corp. also is a member of a consortium that manages SRS under contract with the Department of Energy.

Last year, the U.S. Department of Energy announced that it would award $452 million in grants to help design, develop and license a small modular reactor unit.

In November, B&W received the first award from the Energy Department. The B&W project has secured $79 million of a possible $226 million in grants to develop its SMR program at the TVA.

Then, in March, the Energy Department announced it would offer a second grant of up to $226 million to another vendor to develop a small modular reactor to be licensed and in commercial operation by 2025.

Holtec, NuScale and Westinghouse are competing for the remaining grant money.

The Energy Department said it favors SMR designs that generate no more than 300 megawatts. Modular reactors can be made in factories and hauled to sites where they would be ready to “plug and play” upon arrival.

NuHub and the state are backing SMR development because the units could be built in South Carolina and exported through the Port of Charleston to overseas markets. Experts believe annual sales of SMR units could reach $50 billion and the creation of thousands of jobs.

Holtec's SMR is a 160-megawatt pressurized water reactor that has been designed to withstand severe natural disasters by relying on gravity under all operating and emergency conditions.

NuScale’s project is scalable. Each reactor unit can generate 45 megawatts and up to 12 units can be co-located at one site.

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