November 28, 2012

The State of Small Modular Nuclear Reactors

Last week the Department of Energy (DOE) announced its decision to award the first company to receive government funding in support of commercializing Small Modular Reactors (SMR), a new generation of nuclear power plants. Funds were awarded to a consortium of companies responding to a funding announcement in March 2012; the consortium is led by Babcock & Wilcox (B&W) in conjunction with the Tennessee Valley Authority and Bechtel. The Department of Energy established the Small Modular Reactor Licensing Technical Support Program to provide federal support of up to $450 million to expedite the licensing process of SMRs Originally, two projects would receive funding; so far only one has, leaving other initiatives such as Westinghouse, NuScale and the Holtec HI-SMUR out of luck for now.

The SMR initiative is part of the Obama administration’s efforts to have low-carbon nuclear energy play an important part of America’s energy future. SMRs are defined as having power outputs of up to 300 megawatts of electricity, according to the International Atomic Energy Agency. They are touted for their compact scalable designs that offer a host of safety, construction and economic benefits. According to Energy Secretary Steven Chu, SMRs have the potential to create new export and job opportunities for many Americans as the world is increasingly demanding nuclear energy to fulfill its energy needs, despite recent retreat from nuclear power by some countries. Developing countries that do not have the capacity or expertise are looking for more modular and cost effective power sources and SMRs may be an increasingly attractive option.

SMRs also present a unique opportunity for the United States to restore leadership in the global nuclear energy market. As U.S. SMR businesses grow the share of the market, the United States is positioned to play a leading role in future negotiations on nuclear reprocessing and spent fuel. More countries will be eager to reinstate 1-2-3 negotiations and the United States will have subsequently more leverage in these discussions. U.S. leadership in the nuclear energy markets can go a long way in ensuring safeguards can go in place of nuclear stockpiles which are critical to non-proliferation goals.

While SMRs could usher in a new wave of nuclear renaissance, many hurdles still lie ahead. First, the Nuclear Regulation Commission (NRC) still has to approve all of the design certifications before any nuclear reactor becomes operational. The NRC hasn’t issued a license for a full-scale nuclear reactor since 1976, which is in part a reason the U.S. influence in the nuclear energy market has eroded. The NRC has more experience and familiarity with large light water reactors and has thus taken a more cautious role in studying the safety of SMRs. This presents a problem for manufacturers because the uncertainties of NRC regulations make it so they won’t invest in SMR production. Whether the Small Modular Reactor Program established by the DOE will be able to overcome NRC licensing costs is still unclear as negotiations for the exact cost of its partnership with B&W is still being negotiated.

Some have argued that the Department of Defense (DOD) would be a unique testing ground for an SMR demonstration. While this might be true, there does not appear to be enough political will for using the DOD as a site for energy experimentation. A DOD SMR program might also entail high political costs due to the larger defense cut negotiations that are taking place in Congress as part of the fiscal cliff.

The bottom line: the administration’s recent moves are a sign that SMRs are poised to play a large role in any nuclear energy future. 

Photo: Courtesy of flickr user Irish Typepad.