The Department of Energy (DOE) started a fascinating new project. It is allowing developers build, own and operate small module reactors (SMRs) on government property.
In all likelihood, SMRs offer an easier path for most utilities to adopt new nuclear power plant technologies. The huge monsters being built by Southern (SO) and perhaps by SCANA (SCG) will cost $15 billion, more costly than most utilities can afford. Under the current financial and regulatory framework, few utilities have the financial capacity and capability to buy $15 billion power plants. In fact, there are only 10 U.S. utilities that have market caps greater than the cost of a new nuclear power plant. There are only four with market caps above $20 billion. A nuclear renaissance is not going to happen if the only choice is to invest in $15 billion power plants.
SMRs offer a different strategy. Typically, SMRs are one tenth or one twentieth of the size of Southern's new plant. They are not as cost efficient because size does offer clear economic advantages. But SMRs offer price points that work for most U.S. utilities.
A utility can buy one SMR and then later buy another. Larger utilities can buy more than one at the same time and link them together.
Better, under the current regulatory framework at the Nuclear Regulatory Commission (NRC), siting additional SMRs on a previously approved site should not require additional permits. Over the last several years, the nuclear industry and the NRC streamlined the regulatory process to incorporate the principal of regulating once and building many. Once the NRC certified the SMR's design, that certification is good for everyone. Once the NRC has approved a site for a nuclear power plant that site can accept any reactor certified by the NRC without further review.
SMR owners will need permission from the NRC to operate their reactor. But the NRC might need to adjust its regulatory process to account for SMRs and allow previously licensed operators to automatically own additional modules. Some other one-size-fits-all rules, such as insurance, will also need modification.
It appears the DOE concluded SMRs would be an important technology for the nation. Early this month, the DOE and its Savannah River Site announced three public-private partnerships to develop deployment plans for SMR technologies at Savannah River facilities, near Aiken, South Carolina.
DOE knows a thing or two about nuclear energy. DOE, not the Department of Defense, owns and maintains the nation's nuclear weapons, naval reactors and nuclear technologies. Siting SMRs on Savannah River property, the same site that was home to five experimental reactors makes practical sense. It also relieves developers of some regulatory constraints. The Savannah River Site is already approved to host nuclear reactors.
It is not just the site. Savannah River currently has considerable nuclear capabilities. It is home to DOE's Savannah River National Laboratory, the nation's only radiochemical separations facility and the nations' only source of tritium. The nations' only mixed oxide fuel manufacturing plant is also being constructed on that same site.
NuScale Power is one of the three companies that won an agreement with DOE to build SMRs at Savannah River Site. Fluor is the majority investor in NuScale Power. The other two companies are Hyperion Power Generation and Holtec International, both privately owned.
Missing from DOE's list of SMR developers is Babcock & Wilcox's (BWC) mPower reactor, Westinghouse's (Toshiba) 4S reactor and Bill Gates' TerraPower reactor. Babcock & Wilcox's omission is a surprise. They are aggressively pursuing SMR technologies and they expect to receive NRC's design certification within the next 20 months. The others may have foreign ownership and may not have access to federal facilities.
The business potential for SMR technologies is significant. Presidential candidate John McCain argued the nation needed 100 new nuclear power plants. With SMR technology shrinking the size, cost and risk of conventional nuclear plants, the nation may need 1,000 new module plants. And the opportunities don't stop at the nation's shores. Worldwide demand for SMR technologies is incalculable.