NuScale Power: Seizing clean energy opportunities created by climate change

While climate change and its regulation threaten many companies’ business models, NuScale is creating a modular nuclear reactor business that capitalizes on the energy industry’s search for clean, reliable power

Sources of US energyThe need for nuclear power

Today, the energy industry supplies America’s 28 trillion kWh/yr power demand with fossil fuels, nuclear power, renewables, and hydroelectric power1. The immense portion of demand fulfilled by fossil fuel is under direct attack due to its CO2 emissions and contribution to climate change, leading the power industry to look for clean solutions. Renewables are growing, but are unable to provide base-load power (i.e. the sun is not always shining, the wind is not always blowing) and currently rely heavily on government subsidies to make the economics work2. Nuclear power presents waste and security concerns, but can sustain base-load power and is a complete carbon emission-free solution3.

However, nuclear energy’s days of positive contributions to clean energy are numbered if current trends are not reversed. 83 of America’s 100 nuclear reactors are 30+ years old and thus nearing the end of their 40-year license period4. These reactors require significant investment to upgrade and qualify for a new license, leading utilities to often take reactors offline rather than invest heavily in 1960s-era technology. Until last month, no new US nuclear capacity has come online since 1996 due to enormous up-front capital costs and lengthy construction schedules5. Thus, instead of increasing zero carbon energy production, the nuclear industry’s contribution is holding steady at best.

 

NuScale’s business model

NuScale Power has identified the need for nuclear to continue contributing to clean energy and is creating a business model that makes investing in new nuclear power capacity an attractive option for utility companies. Thus, rather than create challenges, climate change’s pressure on the energy industry has created opportunity for NuScale.

NuScale’s business model is based on solving the 5 challenges commonly associated with nuclear power:

Challenge NuScale’s response
Complexity Use existing technology and R&D in new ways to minimize challenges of first-time use

Streamline construction, operations, and maintenance

Size Develop modular reactors with ~1/3 the capacity of existing systems

Module design enables low levels of generation in remote locations and scaling in high demand locations

Cost Build the plant for current needs, then invest to add capacity (modules) as demand grows

Decrease and make construction costs predictable through off-site fabrication and assembly

Safety Design auto-shut down and passive cooling systems that remove operator action, power, or additional water

Install below grade in a reactor building designed to withstand aircraft impact and environmental events

Security Reduce target size with a smaller, lower profile building

Minimize Uranium enrichment requirement (average 3.8% vs. 90% for weapons-grade6)

NuScale Power7

By addressing the critical nuclear power challenges, NuScale has built a business model that is not only immune to climate change but poised to benefit from the growing demand for clean energy.

Economically, NuScale is currently backed by Fluor Corporation, several corporate partners providing testing and manufacturing support, and a Department of Energy fund-matching grant8. Revenue will begin shortly as the first NuScale reactor enters construction for a 2024 launch9. Ongoing conversations in the UK present additional future opportunities for NuScale9.

 

Further developing the business

NuScale’s first product installation in Idaho should be its primary focus in the coming years. However, NuScale should not lose sight of developing its operating model in this time. NuScale is the company closest to filing a modular reactor design certification application with the NRC and all eyes are on its success. As the demand for clean energy is and will continue to grow quickly, NuScale’s success will be attractive to many utility companies looking for clean energy solutions. To capture the market demand, NuScale will need to be in a position to quickly scale its sales, design, and construction operations after the Idaho facility goes online.

NuScale also faces significant headwinds is public perception. The recent core meltdown at Fukushima has led many countries to shut down or halt construction and investment in new plants. Culturally, images of ghost towns and stories of families unable to return to their homes generated stigma against nuclear power for the damage it can cause. NuScale is a utility partner rather than a public-facing entity so it does not need to go so far as to launch a pro-nuclear PR campaign, but it does need to be aware of the social stigma working against it and be extra cautious to not have accidents that further opposition to nuclear power.

On a more positive note, if NuScale is able to truly solve the challenges facing nuclear power and create a way to mass produce clean energy, it will become a 21st century icon. We will see how the story plays out…

 

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Sources

1 “Electric Power Annual,” US Energy Information Administration, February 16, 2016, http://www.eia.gov/electricity/annual/, accessed October 2016.

2 “Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013,” US Energy Information Administration website, March 12, 2015, https://www.eia.gov/analysis/requests/subsidy/, accessed November 2016.

3 “Nuclear Power in the USA,” World Nuclear Association website, October 26, 2016, http://www.world-nuclear.org/ information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx, accessed October 2016.

4 “Nuclear Reactors,” US Nuclear Regulatory Commission, 2016, http://www.nrc.gov/docs/ML1624/ ML16245A046.pdf, accessed October 2016.

5 Chris Mooney, “It’s the first new US nuclear reactor in decades. And climate change has made that a very big deal,” Washington Post, June 17, 2016, https://www.washingtonpost.com/news/energy-environment/wp/2016/06/17/the-u-s-is-powering-up-its-first-new-nuclear-reactor-in-decades/?utm_term=.c90cbbf16e35, accessed November 2016.

6 Ivanka Barzashka, “Converting a civilian enrichment plant into a nuclear weapons material facility,” Bulletin of the Atomic Scientists, http://thebulletin.org/converting-civilian-enrichment-plant-nuclear-weapons-material-facility, accessed November 2016.

7 “Benefits of NuScale’s Technology,” NuScale Power website, http://www.nuscalepower.com/smr-benefits, accessed October 2016.

8 “Partnering: A History of Nuclear Excellence and Innovation,” NuScale Power website, http://www.nuscalepower.com/about-us/investors-and-partners, accessed October 2016.

9 “Preferred Site Identified for first NuScale SMR Plant,” Modern Power Systems website, October 31, 2016, http://www.modernpowersystems.com/features/featurepreferred-site-identified-for-first-nuscale-smr-plant-5653358/#.WBoRi9WSjL0.email, accessed November 2016.

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4 thoughts on “NuScale Power: Seizing clean energy opportunities created by climate change

  1. I found this to be a fascinating piece. In discussions of climate change, the ability of nuclear power to provide clean, nearly-zero-emission base load power is nearly always glossed over or relegated to quick mentions. As you point out, without the ability to provide clean base load power, it’s not clear to me how one is supposed to substantively reduce emissions without at the same time drastically decreasing quality of life for those populations who depend on the grid for power (i.e., nearly everyone).

    I find NuScale’s business model very attractive as it is able to both provide this base load power while also contributing to fighting climate change with a near-zero-emissions source of energy. Their operating model goes to the core of a major problem with building new nuclear plants, that of what some authors have called “regulatory ratcheting” [1] – the constant tightening and adding of ever more regulations that make economic construction of nuclear plants nearly impossible, even though it can be shown that most of these regulations have a minimal impact on safety at best [1]. By focusing on simplified, modular reactors to gain quick regulatory approval, NuScale is attacking the heart of the problem. Modular reactors in particular have been identified for some time as an effective approach to dealing with regulatory barriers [2].

    As you point out, the true challenge to NuScale is likely not technical or regulatory, but ultimately one of public perception. Even though the danger from coal is still far greater than nuclear even in the wake of Fukushima Daiichi [3], the public perception for whatever reason is disconnected from a quantitative assessment of risks and still views nuclear as especially dangerous. This, then, is the one area I would disagree with you on; if I were NuScale, I would try to launch a PR campaign, perhaps in conjunction with larger industry partners or advocacy groups, in an attempt to educate the public on the true risks and statistics behind nuclear power vs. the other alternatives.

    [1] Cohen, Bernard. “Costs of Nuclear Power Plants: What Went Wrong?” The Nuclear Energy Option. Chapter 9. University of Pittsburgh. Retrieved 6 November 2016.
    [2] Fares, Robert. “3 Ways Small Modular Reactors Overcome Existing Barriers to Nuclear”. Scientific American. May 19, 2016. Retrieved 6 November 2016.
    [3] Wanjek, Christopher. “Nuclear Danger Still Dwarfed By Coal.” Live Science. April 26, 2011. Retrieved 6 November 2016.

  2. I found your post on NuScale extremely interesting. While it is disappointing that that public perception of nuclear energy is so poor, I find it particularly troubling that most environmental groups (e.g. Greenpeace [1]) and the political left / green liberals (e.g. Sen. Bernie Sanders, D-VT [2]) have been so outspoken against nuclear energy. Even assuming energy consumption stays stagnant and doesn’t grow, it will take decades for renewable energy (such as water, wind and solar) to be efficient enough to completely replace coal and other “dirty” energy sources. In fact, as you state, nuclear is extremely efficient and produces almost no emissions.

    Specifically regarding NuScale, it would be interesting to see how NuScale compares to the competition… does it have significantly superior technology that can’t be replicated? How exactly does it compare to conventional reactors? Is it really a breakthrough in terms of how nuclear energy is generated (in terms of safety, efficiency, cost…) or is it just smaller and slightly more efficient than a conventional modern one offered by competitors? If it is a significant enough breakthrough, could it solve some of the issues related to nuclear energy?

    I agree with the former comment that a PR campaign to educate the population would be useful. Without sufficient support by the electorate, future governments may impose additional restrictions on nuclear power that could significantly threaten NuScale’s business – i.e. what happened in Germany – where Chancellor Angela Merkel’s laudable push for more renewable energy unfortunately also included a plan to shut down all nuclear plants, which causes Germany to import more electricity from other (ironically, often nuclear-powered) countries [3]. What I would particularly do, is to try to win over environmental groups and green liberals. They should understand that, for the next few decades (absent any ridiculous scientific breakthrough), nuclear energy is our ONLY HOPE to get rid of coal plants and reduce emissions from the power industry. Sen. Bernie Sanders made protection of the environment his central issue when he competed in the Democratic primary, and for many is the face of today’s young generation’s desire to save the planet in the U.S. He should be the face of nuclear energy! Or maybe Leonardo DiCaprio?

    [1] Greenpeace USA. 2016. Nuclear Energy . [ONLINE] Available at: http://www.greenpeace.org/usa/global-warming/issues/nuclear/. [Accessed 06 November 2016].
    [2] Bernie Sanders. 2016. Full Plan: Combating Climate Change to Save the Planet. [ONLINE] Available at: https://berniesanders.com/issues/climate-change/. [Accessed 06 November 2016].
    [3] Judy Dempsey. 2016. How Merkel Decided to End Nuclear Power – The New York Times. [ONLINE] Available at: http://www.nytimes.com/2011/08/13/world/europe/13iht-germany.html. [Accessed 06 November 2016].

  3. Thanks for writing about this topic! I am personally very passionate about advanced nuclear and small modular reactors. Your post nicely outlines the current situation in the industry and how NuScale intends to disrupt the industry to continue to provide zero emissions power to communities and industries when storage technology is nowhere close to viable to rely only on renewable power. The state of the current nuclear fleet is troubling. Many of the plants that have been operating for decades are now being shut down largely for cost reasons. A recent shut down example is the Vermont Yankee Nuclear Power Plant (604 MW), which was shut down on Dec 29, 2014. While many in favor of the plant shut down argued that the nuclear power generation would be replaced by other renewable sources, the state of Vermont’s emissions increased 7% in 2015 [1]. This pattern of shutting down the current nuclear fleet shows that new business plans and different operating models for the nuclear industry are imperative for zero emissions generation implementation. NuScale is one of the leaders in this segment and I am excited to see how they progress over the next decade.

    One of the major issues facing all the advanced nuclear companies is licensing through the Nuclear Regulatory Commission. This process is extremely costly for the company pursuing licensing and will likely be the pitfall for all of these companies unless the processes are significantly overhauled. Many people in the industry are working with the NRC to try to develop new / different policies to help manage the differences for new nuclear. Read here for some of the issues related to advanced nuclear licensing http://www.nrc.gov/reactors/advanced/policy-issues.html

    [1] http://instituteforenergyresearch.org/analysis/new-englands-emissions-rise-as-vermont-yankee-is-shuttered/

  4. Elise – Thanks for writing about nuclear energy! I think this is a fascinating topic and one that has fallen off many people’s radars given the public perception issue nuclear faces, as you mentioned above. In my last job, my boss was moderating a panel on the future of nuclear energy and as part of my research, the use of thorium came up. Thorium is difficult to weaponize and is also 3-4x more abundant than uranium [1]. The article cited is a couple years old, but I thought it provided a good, quick glance at a possible new source. While I admit I don’t understand the physics behind it, I thought it could be a possible avenue to pursue that could alleviate any security concerns around nuclear, help revitalize public perception and partially address potential supply issues. I’d be interested to hear what you think!

    [1] http://www.economist.com/news/science-and-technology/21600656-thorium-element-named-after-norse-god-thunder-may-soon-contribute

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