WILLIAM TUCKER: Nuclear Begins a New Era

By William Tucker

Things began to look much better for nuclear last week as the Department of Energy finally got around to awarding the first grant for construction of an experimental small modular reactor (SMR).

Nothing has been negotiated yet and the amount hasn’t even been announced, but Babcock & Wilcox, Bechtel and the Tennessee Valley Authority look like they’re on their way to applying for a license to the Nuclear Regulatory Commission.  Of course the irony here is that the company estimates securing design approval will cost $500 million.  The pot being distributed by DOE is only $450 million and it wants to make two grants, so B&W is likely to get only $250 million, which will cover barely half the costs of design certification!  Never mind the actual construction of a prototype, that will come later.  

Oh well, at least it’s a start. SMRs are creating a lot of excitement.  Ameren, the Missouri utility, went so far as to hold a suppliers’ summit last month for constructing a prototype of Westinghouse’s SMR.  Missouri Governor Jay Nixon has expressed high hopes of turning his state into a manufacturing center if they ever go into production.  Ameren and Westinghouse were disappointed last week but say they are ready to apply for the next round.  

NuScale, Gen4 (formerly Hyperion) and Holtec may be left out in the cold as far DOE assistance is concerned.  But once the NRC approves one design things may get easier and private investors may get interested.  It’s hard to imagine the $500 million costs for design approval will remain that high.  One or SMRs may also catch the attention of the public, which may finally get enthusiastic about nuclear again.  Since most SMRs are little more than twice the size of an atomic bomb, it may at last be possible to explain that the 3 percent enriched uranium inside is a different composition than the 90 percent enrichment of an atomic bomb.   After all there are three or four generations of submarine crews out there who have slept next to small reactors.  They can vouch for their safety.

That nuclear still has tremendous potential for solving all the world’s energy and environmental problems can be seen in a graph issued this week by, of all people, the wind industry:  

 

The graph shows the levelized costs of each form of generation and is supposed to prove that wind is the most economical.  (Levelized costs include investment and installation costs, operations and maintenance costs, fuel costs, life of the generating unit, and energy generated by the unit.)  Without the help of the federal production tax credit, wind is cheaper than everything but combined-cycle natural gas and with the PTC it is cheapest of all.  (Congress may be on the verge of discontinuing the PTC.)  

But notice what else comes in surprisingly low.  Nuclear is estimated to be cheaper than coal both in the old-fashioned way of burning and with advanced pollution equipment as well.  (These figures do not include carbon capture and storage, which would be vastly more expensive.)  Nuclear is beaten only by combined cycle natural gas and wind.

So here’s the problem with wind, easily deduced from the graph.  At best, windmills generate electricity only one-third of the time.  That means to get the real costs you have to combine the $90.25 or $68.25 figure with something else.  The choice today is peaking natural gas generators, since only they can be ramped up and down to match wind’s variations.  But when you combine the weighted costs of natural gas peakers and wind without the production tax credit you get $148.22, far more expensive than coal or nuclear.  Even with the production tax credit, the cost remains at $104.50, slightly higher than nuclear.  Now General Electric is now marketing a combined-cycle plant that it says can be ramped up and down to partner for wind.  But if combined cycle is already $15 cheaper than wind without the production tax credit, then what’s the sense of adding windmills?  Even with the PTC, the differential is only $6, which is hardly worth the effort.   

So the fuel of choice these days is definitely natural gas – which explains why everybody is building natural gas plants and nobody is building coal or nuclear.  But can we count on these low prices lasting forever or even ten years?  Fracking has created a seemingly unlimited bonanza and there is talk of gas supplies lasting 100 years or more.  But skeptics are pointing out that these estimates are based on the life cycle of traditional gas wells.  Fracking wells seem to be playing out much sooner.  The Oil Drum (admittedly a Peak Oil hotbed) published the following report this week:  [http://www.theoildrum.com/node/9630]

One of the headlines this week from the IEA Report suggests that the United States will be the top global oil producer in five years. Yet back in DeSoto Parish in Louisiana, where the Haynesville Shale discovery in 2008 started the bonanza, revenues are now falling and school board budgets are strapped as the end of the glory days are beginning to appear. 

Just this week Aubrey McClendon said that Chesapeake’s prospects for oil in Ohio, where Chesapeake had high hopes for the Utica Shale, are now dim. It is easy to look at one of the large maps . . .  that the Oil and Gas Journal include in their print editions, and to be carried away (as the IEA apparently are) with the vast acreage [of shale resources].  Unfortunately, . . . reality tells another story. The size of the resources have been measured in the past, and with the best plays being given preference, the recognition of decline rates and unprofitable wells have not yet been given the prominence in the popular press that they will ultimately draw.

All things being equal, then, any sensible utility executive would be hedging the bet on natural gas and constructing some new nuclear capacity.  Unfortunately, all things are not equal where the NRC and the general public are concerned.  But SMRs could change all this.  If the NRC can get through a few design approvals in a reasonable amount of time and if the public can be convinced that an SMR is not a new version of Little Boy or Big Man, then nuclear may be at last poised for a comeback.

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  • http://www.facebook.com/people/Cal-Abel/100002187683415 Cal Abel

    Did the source reference if the cost used for estimating the natural gas was Henry Hub or delivered cost to the Utility, typically about $3/MMBtu higher than Henry Hub? It makes a tremendous difference when analyzing the LCOE.

  • http://www.facebook.com/profile.php?id=625389379 John Wheeler

    The USA has almost as many SMRs…as in small MOBILE reactors…as it does land based nuclear power plants (about 101 vs. 103 respectively), and we have a boatload of experience operating small reactors (pardon the pun!). There’s alot to be said for the flexibility, safety features, and durability of smaller reactors. Let’s get the assembly lines rolling!