NuScale Cancellation Should Be Wake-Up Call For Advocates
Advanced Nuclear Energy Is In Trouble, The Breakthrough Institute, Adam Stein, Adam is Director for Nuclear Energy Innovation at Breakthrough., Ted Nordhaus Ted Nordhaus is Founder and Executive Director of Breakthrough, 28 Nov 2023
Earlier this month, NuScale, the first company to receive a design certification from the Nuclear Regulatory Commission for a small modular reactor, announced that it was canceling its longstanding deal to deploy its first reactors to serve UAMPS, a consortium of small electricity cooperatives in the intermountain West, due to escalating project costs. The NuScale announcement follows several other setbacks for advanced reactors. Last month, X-Energy, another promising SMR company, announced that it was canceling plans to go public. This week, it was forced to lay off about 100 staff. In early 2022, Oklo's first license application was summarily rejected by the Nuclear Regulatory Commission before the agency had even commenced a technical review of Oklo's Aurora reactor. Meanwhile, forthcoming new cost estimates from TerraPower and XEnergy as part of the Department of Energy's Advanced Reactor Deployment Program are likely to reveal substantially higher cost estimates for the deployment of those new reactor technologies as well.
In the wake of these developments, there has been an understandable desire among many nuclear advocates to whistle past this graveyard, with advocates rightly pointing out that there are many promising advanced nuclear technologies and companies working to bring new reactors to market. You can't score if you don't shoot and the nascent advanced nuclear industry is planning to take a lot of shots on goal. But taken together, recent developments suggest that efforts to commercialize a new generation of advanced nuclear reactors are simply not on track.
High Interest Rates and Commodity Prices
..................The increase in finance and materials costs for NuScale over the period between the launch of its deal with UAMPS in 2016 and its denouement in 2023 is instructive. Over that period, the U.S. Treasury prime interest rate more than doubled, to more than 8% from less than 4%. The price of steel almost tripled, to more than $650 a ton from less than $250 a ton.
............Tax credits, clean energy standards, and loan guarantees, along with implicit reliance upon low-cost production in China, have been the primary tools that policymakers have used to drive tech expansion.
It is unclear in the current environment that these policy levers will be sufficient or that the latter reliance on Chinese supply chains is politically viable. Already, during the Trump years, Terrapower and a number of other nuclear developers concluded that developing their technologies in China was no longer a viable option as economic and political tensions between the U.S. and China rose.
For nuclear energy, the present challenges resulting from rising commodity prices and interest rates are further amplified by the regulatory environment. Simply licensing a new reactor has typically taken well over a decade, which exacerbates financing costs when interest rates rise. And regulatory restrictions deeply constrain supply chain flexibility..............................................
COMMENT. Of course this article goes on to argue that the solution is to weaken health, environmental and safety regulations !
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