The abrupt failure of the leading small modular nuclear reactor (SMR) project in the United States is shining a light on public subsidies that might keep similar technology under development in Canada, even if it’s prone to the same cost overruns that scuttled NuScale Power Corporation’s Carbon Free Power Project (CFPP) in Utah.
NuScale and its customer, Utah Associated Municipal Power Systems (UAMPS), announced they were cancelling the project earlier this week, after its anticipated cost increased 53% over earlier estimates, Bloomberg reports. “The decision to terminate the project underscores the hurdles the industry faces to place the first so-called small modular reactor into commercial service in the country.”
But a clear-eyed assessment of the project’s potential was really made possible by a level of accountability that doesn’t exist in Canada, said Gordon Edwards, president of the Canadian Coalition for Nuclear Responsibility.
“Private investors in Utah forced NuScale to divulge financial information regarding the cost of electricity from its proposed nuclear plant,” and “cost became the deal-breaker,” Edwards told The Energy Mix in an email. “Publicly-owned utilities in Canada are not similarly accountable. The public has little opportunity to ‘hold their feet to the fire’ and determine just how much electricity is going to cost, coming from these first-of-a-kind new nuclear reactors.”
In the U.S., the business case started to fall apart last November, when NuScale blamed higher steel costs and rising interest rates for driving the cost of the project up from US$58 to $90 or $100 per megawatt-hour of electricity. The new cost projection factored in billions of dollars in tax credits the project would receive under the Biden administration’s Inflation Reduction Act, amounting to a 30% saving.
At the time, the Institute for Energy Economics and Financial Analysis (IEEFA) estimated the total subsidy at $1.4 billion. This week, Bloomberg said NuScale had received $232 million of that total so far.
The cost increase meant that UAMPS “will not hit certain engineering, procurement, and construction benchmarks, allowing participants to renegotiate the price they pay or abandon the project,” Utility Dive wrote.
Scott Hughes, power manager for Hurricane City Power, one of the 27 municipal utilities that had signed on to buy power from the six NuScale reactors, said the news was “like a punch in the gut when they told us.” Another municipal utility official called the increase a “big red flag in our face.”
Nearly a year later, NuScale had to acknowledge that UAMPS would not be able to sell 80% of the output from the 462-MW project to its own members or other municipal utilities in the western U.S., Bloomberg writes. “The customer made it clear we needed to reach 80%, and that was just not achievable,” NuScale CEO John Hopkins said on a conference call Wednesday. “Once you’re on a dead horse, you dismount quickly. That’s where we are here.”
In Canada, “the massively expensive SMR projects in Canada will eventually face the same reckoning,” predicted Susan O’Donnell, an adjunct research professor at St. Thomas University and member of the Coalition for Responsible Energy Development in New Brunswick. While the Canadian Energy Regulator’s modelling assumes SMRs could be built at a cost of C$9,262 per kilowatt in 2020, falling to $8,348 per kilowatt by 2030 and $6,519 by 2050, the latest cost estimate from NuScale exceeded $26,000 per kilowatt in Canadian dollars, O’Donnell said—and the technology had been in development since 2007.
“Too bad our leaders have chosen to pursue an energy strategy which is too expensive, too slow, and too costly in comparison with the alternatives of energy efficiency and renewables—the fastest, cheapest, and least speculative strategies,” Edwards wrote. He added that waste disposal and management challenges and costs for SMRs will be very different from what Canadian regulators have had to confront with conventional Candu nuclear reactors.
The news from NuScale landed just days after civil society groups in the European Union warned that SMR development won’t help the continent reach its climate goals. Citing prolonged project delays and cost overruns, the long time frame to develop unproven technologies, and the risks associated with radioactive waste disposal and proliferation of nuclear materials, they urged EU governments to focus on renewable energy, power grid development, and energy storage.
“Nuclear energy is being pushed by powerful lobbies and geostrategic interests,” with several EU states relying on Russian state nuclear company Rosatom for their uranium supplies, the groups said. “To quickly decarbonize, we must choose cheap technologies, easy to deploy at scale, like solar panels and windmills.”
But in the U.S., proponents are still holding out hope for future SMR development. “We absolutely need advanced nuclear energy technology to meet ambitious clean energy goals,” the U.S. Department of Energy said in a statement. “First-of-a-kind deployments, such as CFPP, can be difficult.”