NuScale Power is playing the long game — and it’s going all in.
Spun off from Oregon State University in 2007, the firm is developing an innovative design for a small, modular nuclear reactor, known in industry parlance as an SMR.
If all goes as planned, the company with strong Corvallis ties will be the first ever to win certification from the U.S. Nuclear Regulatory Commission for an SMR design, giving NuScale a major advantage in an emerging global market projected to be worth more than $100 billion by 2035.
The company’s investors have sunk more than half a billion dollars into the venture so far, with most of that money coming from Fluor Corp., NuScale’s corporate parent and a heavy hitter in nuclear power plant construction. The federal government has kicked in another $275 million in matching funds under a Department of Energy program aimed at supporting promising new nuclear technologies.
In the best-case scenario, the firm’s first commercial reactor will be up and running sometime in 2026, proving that SMRs are a viable source of carbon-free energy and opening the floodgates on a steady stream of orders for NuScale reactors.
But a lot of things have to go right for that vision of success to come true. And if they don’t, the whole ambitious enterprise could go down as a costly flop.
A new kind of nuke
NuScale Power’s small modular reactor design is the brainchild of Jose Reyes, former head of the OSU Nuclear Engineering Department and now chief technology officer of the company, which he co-founded.
As the name implies, SMRs are much smaller than conventional reactors and consist of self-contained modules that can be built in a factory.
The NuScale power module comes packaged inside a cylindrical containment vessel measuring 75 feet high and 15 feet in diameter, weighing in at about 700 tons. The company says the modules can be shipped in three segments by truck, rail or barge to their final destination.
Each module is capable of generating up to 60 megawatts of electricity (that’s up from 45 megawatts as originally announced, a significant increase resulting from design improvements, according to the company).
NuScale’s SMRs are designed to be submerged in a below-grade pool of cooling water, with only the upper portion above the water’s surface. They can be operated as individual units or bundled together in arrays of up to 12 reactors (which the company refers to as a “12-pack”) with a combined generating capacity of 720 megawatts. Most commercial reactors operating in the United States today are in the 900-1,100 megawatt range.
Not only are NuScale’s SMRs much smaller than current commercial nukes, they are far simpler in design — which the company claims makes them much safer.
Rather than using elaborate systems of electrically powered pumps and valves to circulate cooling water around the reactor core, NuScale relies on natural convection currents. There are only a handful of valves in the reactor vessel, and they’re designed to fail in the “safe” position in the event of a mishap.
The company claims that its reactors will cool down on their own, without the need for any human intervention, if there should ever be a loss-of-power accident.
With its smaller, simpler design and factory-built modular components, NuScale argues that a generating plant using its SMRs can be built much more quickly and cheaply than a conventional nuclear power plant.
Amid growing concerns over climate change, the company touts its reactors as a green alternative to carbon-emitting energy sources such as coal and natural gas without the drawbacks of renewables such as solar and wind power, which can’t generate electricity on a continuous basis.
All of those factors, the company believes, should make its small modular reactors an attractive choice for a range of potential customers, from small, remote communities or isolated industrial users that could fill their energy needs with one or two modules to large utility companies looking to add carbon-free power to their generating portfolios.
Before it can start producing reactors, NuScale still must pass muster with the Nuclear Regulatory Commission.
In early 2017, the company submitted its 12,000-page design certification application to the NRC for review.
According to Reyes, the process is going well.
“There were 1,500 questions that were posed to us that we responded to, which is only about a third as many as earlier models,” he said during a recent interview in the company’s Corvallis office. “We’re down to the last 20 or so, and no red flags.”
Even so, getting to certification is a laborious and time-consuming exercise, and final design approval is not expected until September 2020.
Meanwhile, however, NuScale is forging ahead on other fronts so it can be prepared to hit the ground running when it gets a green light from the NRC.
In 2013, the company announced an agreement to partner with two electric power agencies to build and operate the first NuScale generating plant on the grounds of the Department of Energy’s Idaho National Laboratory near Idaho Falls.
Plans call for the 12-reactor generating station to be owned by the Utah Association of Municipal Power Systems, known as UAMPS, which supplies power to 46 publicly owned utilities in six Western states. The plant is to be operated by Energy Northwest, formerly known as the Washington Public Power Supply System, which serves 28 public utilities in Washington.
The arrangement with the Idaho National Laboratory calls for one of the reactors to be used for research and another to supply the lab’s power needs, with the remaining 10 generating electricity for UAMPS’ member utilities.
In order to deliver the promised reactors on time, NuScale has started lining up key partners for its manufacturing supply chain.
In September, it announced the selection of Virginia-based BWX Technologies to start the engineering work for SMR manufacturing. Two months later the company announced a similar deal with PaR Systems of Minnesota to do manufacturing engineering for a specialized crane to be used in its reactor buildings.
Even though the Idaho pilot plant is still years away from producing its first kilowatt, NuScale is already busy courting other potential buyers.
Around two dozen utility companies, possible future customers all, have seats on the company’s advisory board.
“We are talking to a number of U.S. nuclear power companies about adding NuScale technology to their power generation portfolios,” said Tom Mundy, the company’s chief commercial officer.
NuScale is also making an aggressive push into overseas markets.
It has signed memoranda of understanding to explore potential deals in Canada and Jordan, has opened a London office and is pursuing opportunities throughout the Middle East, Eastern Europe and Asia.
“There’s quite a bit of interest internationally,” Mundy said.
All eyes on Idaho
So far, however, that interest has not translated into any signed contracts. Before that can happen, NuScale will have to finish running the NRC certification gantlet and prove that its technology lives up to the company’s claims.
A lot is riding on the success of NuScale’s planned power plant in Idaho.
“Our first project is so important. We have to be able to deliver it on time and under budget,” Reyes acknowledged. “I think that will drive a lot of other customers to look at it.”
If the plant opens in 2026 as scheduled and performs as advertised, it could be a powerful marketing tool for the company’s SMR technology. If not, it could have the opposite effect.
The world is watching, said Jonathan Hinze of UxC, a market research firm that tracks the nuclear power industry.
“At the moment, nuclear isn’t experiencing the kind of rebirth many had hoped for,” he said.
A number of factors have combined to stall the nuclear renaissance that was widely predicted a few years ago, including the boom in natural gas production, government subsidies for renewable power sources, lower-than-expected growth in demand for electricity and strong gains in energy efficiency. And the radiation leaks and partial core meltdown caused by a powerful earthquake and tsunami at Fukushima, Japan, in 2011 stoked old fears about the dangers of nuclear power.
Despite NuScale’s optimism, Hinze pointed out, only two utilities — UAMPS and Energy Northwest — have signed up to partner with the company on a generating project so far.
“I think most folks are waiting to see what happens with that first one,” he said.
And there are so many things that could go wrong to knock the project off track.
Just getting through the NRC certification process could still be a challenge, Hinze said, noting that NuScale’s design is unlike anything on the market today.
“That’s a big one,” he said. “They’re having to pave a lot of new ground, and I will caution that the NRC has a track record of taking a little longer than people might like.”
In addition to the design certification, NuScale and its partners also need to obtain NRC approval for a combined construction and operating license, another time-consuming process.
The supply chain is yet another potential trouble spot. NuScale will have to find precision manufacturers for a large number of highly specialized components to be able to produce its new reactors, Hinze said.
And even if the company overcomes all those hurdles, it could still run into delays during the plant construction phase. Construction times are a crucial cost and risk factor in developing nuclear power plants, something the industry will be closely scrutinizing with the NuScale project.
“Timelines tend to be relatively elongated in this industry, no matter what you’re dealing with,” Hinze said.
But there’s a flip side to all those concerns, he noted: A success in Idaho could give NuScale a major boost. Aging coal-fired power plants and nuclear generating stations are likely to be decommissioned just as the new technology comes to market.
“If that project goes well, I do think there are other opportunities for NuScale in the United States,” Hinze said. “A lot of coal or even nuclear (generating) capacity will come offline by 2030.”
Cause for optimism
Doug Hunter, the chief executive officer of UAMPS, is keenly aware of the scrutiny the new plant will face.
“We believe we’ve got a good place to test this out and show it’s as safe as NuScale says it is,” he said. “We hope we can be able to prove this out at Idaho National Laboratory.”
In addition to safety, another aspect of the project that will be closely watched is generating cost. In order to make a NuScale power plant pencil out in the wholesale energy market, it has to be price-competitive with other major generating sources such as combined-cycle natural gas, a current low-price leader.
Mundy estimates the first NuScale 12-pack will be able to produce electricity at a levelized cost of $65 per megawatt hour, close enough to gas-fired sources to make it attractive to most potential customers — especially those looking to reduce their reliance on fossil fuels.
“At the $65 price point, we are competitive with most technologies,” Mundy said.
But he also pointed out that natural gas may not be such a tough competitor by the time NuScale’s Idaho plant comes online.
“Gas is going to continue to go up,” he said. “It’s not going to be where it is now for the 60-year life of a nuclear power plant.”
Hunter thinks Mundy’s estimates may be on the conservative side. He suggested that a little “pencil-sharpening” by NuScale’s engineers — who have already found a way to increase the generating capacity of their power modules from 45 to 60 megawatts — could bring those costs down still further.
“Our all-in costs will be 5½ cents per kilowatt hour onto the grid — $55 per megawatt hour,” he predicted.
“That’s our target price right now. We see that as very competitive with combined-cycle natural gas.”
In addition to an attractive price point, Hunter said, NuScale could give UAMPS a reliable source of carbon-free power. Even though the agency is already tapping unto renewable energy sources such as wind and solar, both remain intermittent producers — and a solution to the storage problem remains elusive.
With SMRs, UAMPS will have ready access to baseload or load-following power to supplement what it gets from wind and solar.
“We love renewables,” Hunter said. “This allows us to keep a lot of renewables in our portfolio.”
And he sees one more big advantage to NuScale’s small modular reactors: regulatory certainty.
Throughout his professional career, Hunter said, he’s seen increasingly stringent regulations on energy sources that generate pollution, and he’s anticipating possible restrictions on greenhouse gas emissions in the future.
As slow-moving as the Nuclear Regulatory Commission can be, he pointed out, its decisions tend to stand the test of time.
“They hardly ever change their regulations,” Hunter said.
“Once you’re licensed, you’re licensed.”