Nov 16 2023

SMR Cancellation: Major setback or hiccup?

The cancellation of the Carbon Free Power Project (CFPP) in Idaho, which was expected to be the first commercial development of small modular reactor (SMR) technology in the US, has been labelled a major setback for this nascent nuclear technology. NuScale’s design was considered to be at the forefront for commercialisation of SMR plant.

A nuclear engineer at the University of Wisconsin-Madison said in a series of online posts: “Not gonna sugar coat it, this is a major blow to the next generation of nuclear power.”  So what happened?

The Cost of Subscriptions

The project is not proceeding essentially because not enough municipal buyers of power, who are members of the Utah Associated Municipal Power Systems (UAMPS), elected to subscribe to the project.  

UAMPS is a project-based consortium providing power supply, transmission and other services to its 50 members across the states of Utah, Arizona, California, Idaho, Nevada, New Mexico, and Wyoming.  CFPP is a wholly owned subsidiary of UAMPS.

Only 116MW of the plant’s total expected 462MW capacity was subscribed to with cost cited as the major factor. When it became clear that the project would not be able to attract the necessary subscription level UAMPS and NuScale mutually agreed to wrap the project up.

In a joint statement on 8 November they said: “Despite significant efforts by both parties to advance the CFPP, it appears unlikely that the project will have enough subscription to continue toward deployment. Therefore, UAMPS and NuScale have mutually determined that ending the project is the most prudent decision for both parties.”

In March it was reported NuScale Power was looking for a subscription level of 80 per cent of the capacity (370MW) by February next year for the project to continue. The highest commitment level reached previously had been 250MW, but some participants had earlier withdrawn or reduced their commitments, again with cost cited as the main concern.

The project allowed “offramps” for participants with the first of these on 31 October 2020. At that time and despite the announcement of nearly USD1.4 billion in support from the US Department of Energy (DOE) for the project, several members at that time pulled out, which increased the cost share for remaining participating members.  Eight participants reportedly withdrew from the project entirely while 24 members reduced their share entitlement. One utility joined the project for a 1MW share.

Since UAMPS announced the CFPP would use NuScale SMR technology in 2015, the scale of the project has changed several times. In 2015, the plan was for 12 x 50MW NuScale modules for a 600MW capacity plant. This increased to 720MW, when UAMPS opted to scale up to 60MW modules. Finally in 2021 UAMPS agreed to build six 77MW modules instead of 12 (462MW).

NuScale, which also has an agreement to deliver its technology to Romania, has told investors that it would repurpose materials developed for the CFPP for other customers. It remained optimistic about its technology and the prospects for commercialisation.

“Through our work with UAMPS and our partnership with the US Department of Energy, we have advanced our NuScale Power Modules to the point that utilities, governments, and industrials can rely on a proven small modular reactor (SMR) technology that has regulatory approval and is in active production. Our work with CFPP over the past 10 years has advanced NuScale technology to the stage of commercial deployment,” NuScale President and CEO John Hopkins said when announcing the cancellation of the CFPP.

NuScale is also one of the six finalists selected for the Great Britain Nuclear light water reactor SMR program and Standard Power had announced its interest in using NuScale power plants for two data centres in Ohio and Pennsylvania. The CFPP was scheduled to start operating in 2029. NuScale’s technology was the first and only SMR to have its design certified by the US Nuclear Regulatory Commission.

Lack of Appetite

The lack of ongoing appetite amongst the municipal members of UAMPS, reflects concerns about the costs of the project that again emerged earlier this year when the target price for power from the CFPP increased from USD58/MWh to USD89/MWh ($137/MWh). The plant was originally expected to deliver power for USD55/MWh.

According to the US Institute for Energy Economics and Financial Analysis (IEEFA) presentations to the power boards of Washington City and Hurricane, two of the Utah communities that had signed agreements to buy power from the CFPP, suggested project power prices could be USD90-100/MWh. The prices included the expected USD1.4 billion subsidy from the US DOE and support under the US Inflation Reduction Act (IRA) of around USD30/MWh. The IEEFA wrote “even if the… target price is only in the range of $90 to $100 per MWh, there is no guarantee that this will be the actual price that communities will pay for the power from the CFPP.”

While NuScale remained upbeat about the prospects for commercialisation of its technology this latest development raised some questions about the commercial viability of SMRs generally. As noted by the New York Times:

In a major setback last week, the first serious effort to build small reactors in the United States was abruptly canceled amid soaring costs. While other projects are still moving forward, the industry has consistently struggled to build plants on time and on budget.

A familiar tale

The cost and delay challenges have also faced conventional, larger-scale nuclear plants. The first nuclear reactors built from scratch in the US in more than 30 years were AP1000 reactors at the Vogtle nuclear power plant in Georgia with a total capacity of 2430MW. The first of these entered commercial operation at the end of July this year. The second is expected to enter operation at the end of this year or early next.

Construction of the two new reactors began in 2009 and were originally expected to begin commercial operations in 2016 and 2017 respectively. The original cost estimate was USD14 billion. But with significant construction delays and cost overruns the total cost is now estimated at more than USD30billion. The AP1000s are a next generation advanced reactor which are considered to have a simpler design than previous reactor technologies.

Similarly, the Hinkley Point C project in the UK has seen major cost increases and delays. The French energy company, EDF, which is building the two new reactors (3260MW) indicated in February this year that the cost could be £32.7 billion (more than $61 billion), which is an increase from a May 2022 cost estimate of £26-27 billion. Originally, EDF set a budget estimate for the plant of £20.5 billion. It was originally expected to open in 2017, but is not now expected to be completed until 2027.

Why SMRs?

The argument for SMRs has been that they could produce cost-effective electricity and economices of scale by using smaller reactors and making it possible to standardise manufacturing and use systems and components that can be factory-assembled and transported as a unit to a location for installation.  SMRs are those with up to 300MW capacity rather than the 1000MW-plus common with more traditional nuclear plants.

There continues to be significant work underway to commercialise SMRs in several countries. Just prior to the announcement by NuScale and UAMPS of the end of the CFPP, the steel containment dome was successfully hoisted into place at an ACP100 small modular reactor (SMR) demonstration project at Changjiang on the Chinese island of Hainan. China National Nuclear Corporation (CNNC) describes it as "the world's first commercial land-based small modular PWR". That project has been under development since 2010, the 125 MWe ACP100 integrated PWR's preliminary design was completed in 2014. In 2016, the design became the first SMR to pass a safety review by the International Atomic Energy Agency, according to World Nuclear News.

The Future

The US Nuclear Energy Institute sees the cancellation of the CFPP as an expected hiccup with new technology development stating, “We have no doubt that NuScale has a design that will deploy and bring clean and reliable energy in the future.”

The CFPP cancellation does not spell the end of SMRs, but it does create further doubts and has the potential to reduce investor appetites.  SMRs represent a technology that is yet to prove its capabilities and it could take some time for that to occur. The US taxpayer group, Taxpayers for Common Sense, argues the slew of current incentives for SMRs has failed to foster a cost-effective nuclear reactor industry, and “the timeline for deployment of new designs is far too distant to make a timely or beneficial climate impact”.

CFPP Timeline:

Source: American Nuclear Society

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