Clean Energy and Advanced Manufacturing: A Market Opportunity for Nuclear Energy?
The World Nuclear Association (WNA) reports that the US is the world's largest producer of nuclear power, accounting for more than 30% of worldwide nuclear generation of electricity. Moreover, the nation's 98 operating nuclear reactors produced 807 billion kWh in 2018, which is about 20% of the country’s total electrical output – the same percentage share of electricity as generated from nuclear reactors in 1990. Yet, following the nuclear accident at Three Mile Island in 1979, few new reactors came online in the U.S. The newest reactor to enter service, Tennessee’s Watts Bar Unit 2, began operation in June 2016.
However, in an era when “clean energy” is the political mantra, nuclear energy is not usually in the discussion, as a viable option for America’s future energy needs. However, this situation could change in the next decade due to a confluence of three factors; the increasing dependence on solar and wind-sourced renewable “clean”, i.e., low carbon footprint, energy; the energy and localized demands of advanced small and medium-sized manufacturing facilities; and the availability of advanced small modular (nuclear) reactor technology as a local source of dependable “clean” energy.
In June 2018, Bloomberg New Energy Finance (BNEF) published its New Energy Outlook 2018, a report that focuses on the technologies that drive change in energy markets through 2050. The report finds that the renewable energy penetration rate in the U.S. will be 55 percent of electricity derived primarily from wind and solar sources.
These increases derive largely from three key dynamics and technological advances: 1) photovoltaic (PV) module prices continuing to drop, keeping pace with learning rates and capacity increases; 2) the continued development of larger and more efficient wind turbines; and 3) decreasing costs for battery packs, in part due to rising electric vehicle sales that have applications for stationary energy storage. Noting their economies of scale, BNEF projects a 66 percent drop in battery packs’ cost by 2030.
In The Vanishing American Corporation: Navigating the Hazards of a New Economy (2016), author Gerald F. Davis, Professor of Management, Ross School of Business, University of Michigan, heralds the promise of new technologies favoring distributed manufacturing in small facilities with low cost computer numerical control (CNC) equipment or 3-D printing technology operating at the city or neighborhood level.
Mark P. Mills, Manhattan Institute senior fellow, notes in his report, The Coming Revolution of American Manufacturing (2016), that 3-D printers will further blur the distinction between “manufacturing” and “service”. Mills sees this technology enabling many more people to design and directly manufacture products, as 3-D printing technology can be located in warehouses, and even customer premises, with raw materials shipped directly onsite, with scalable “mini-clusters” of manufacturing and supply/distribution chains located in mixed residential and commercial communities.
With greater use of clean, renewable energy (primarily solar and wind), coupled with the emergence of distributed manufacturing and industrial mini clusters, the market opportunity for small modular reactor (SMR) technology may be upon us. An SMR includes “advanced reactor designs that are: 1) 300 MW(e) and below; 2) modular; and 3) manufactured and constructed primarily in dedicated facilities and then shipped to site for installation.” Because of their smaller size and broader range of outputs (starting at 50 MW(e) per module in the Nuclear Regulatory Commission (NRC) approved Phase 1 review of its NuScale Power design), they can often widen the placement option and provide increased power generating opportunities for sustainable energy development.
For example, the Utah Associated Municipal Power Systems (UAMPS) will own the first NuScale plant, a 12-module SMR (generating a maximum of 720 MW(e) gross power output and a net power output of 685 MW(e) after accounting for house load) located at the Idaho National Laboratory, with construction expected to be completed by the mid-2020s. This first SMR has the specific capability to completely load-follow UAMPS’ wind farms.
What makes the SMR, and specifically the NuScale Power design, an economically viable, safe, and carbon-free option for commercial and residential use as a complement to renewable energy sources, such as solar and wind power? In addition to its small size, operational efficiency, and modular nature, the NuScale SMR has a passive safety feature, as its small size prevents any kind of “meltdown” of the core (as it simply shuts down and cools off), and the entire power plant covers less than a tenth of a square mile. Moreover, no one can computer “hack” the NuScale reactor and reactor refueling does not require the plant to shut down.
From a cost perspective, the projected cost of building and installing a NuScale reactor facility is approximately $4,200 on a kilowatt basis, implying that the NuScale SMR’s levelized cost of electricity (LCOE) may be cost competitive with power generation from renewables, coal, and natural gas, depending on the location.
The expansion of solar and wind generating capacity, however, is dependent on several factors. These key adoption factors include the continued maintenance of federal tax credits subsidizing wind power development, sales of electric vehicles, continuation of reductions in large-scale, battery storage costs, and state government requirements for wind-generated power as a mandated component in their electrical energy grids. While natural gas, the major competitor for SMR adoption, does produce less greenhouse gas emissions than other fossil fuels, it produces a “less negative” impact on the natural environment.
The inherent operational cost advantage of an SMR includes long-term stability in fuel costs, as natural gas markets are confronted with potential cost fluctuations. The NuScale SMR has the potential to be both an important component of both a “zero emissions” energy solution and source of cost-competitive, consistent power for an era of distributed manufacturing in the U.S. This energy technology is ideally suited to support economic development, because of its compatibility with smaller and more dispersed electric grids and its potential to pair with solar and wind renewables, thus reducing the overall “carbon footprint” on the environment.
Thomas A. Hemphill is a policy advisor at the Heartland Institute and David M. French Distinguished professor of strategy, innovation and public policy in the School of Management, University of Michigan-Flint