Cheap gas and falling solar prices and rising development costs have suddenly made SMRs less attractive. Photo: Rolls-Royce
NuScale is the only SMR developer to have a regulatory approved design.
Utah United Municipal Power Systems (UAMPS), which provides power to parts of the Midwest, first signed an agreement with NuScale in 2015.
The purpose of the project has changed. UAMPS ultimately settled on plans to buy six NuScale reactors, each of which could produce 77 megawatts (MW) of electricity, collectively enough to power nearly 1.4 million homes.
However, UAMPS members, Small towns and local areas were concerned about the long timeframe and high cost of the project.
When the city of Logan, Utah, pulled out in 2020, its chief financial officer, Richard Anderson, told the Salt Lake City Deseret News: “We have no experience navigating these waters. I didn't like it.”
The death knell for NuScale sounded in January, when new estimates showed a 53% increase in costs. Prices for steel and other raw materials have jumped, causing the price of nuclear power to rise from $58 per megawatt-hour to $89.
The sharp increase came despite a pledge of $4 billion (£3.2 billion) in US taxpayer support under President Biden's Inflation Reduction Act.
Several member cities withdrew due to a sharp increase in costs, leaving the project dead.
Tony Roulstone, a lecturer in nuclear energy at the University of Cambridge and a former Rolls-Royce engineer, said the deal's failure was “bad for the wider market.”
“They have a ticket from the safety authority,” he said of NuScale. “They are the ones who have a project that was supported by the US government.”
SMR promised to bring the price discipline of mass production to nuclear power. They were touted as a way to shift the industry away from cumbersome megaprojects that were leading to cost overruns and delays.
Projections suggested that the price of a mini-nuclear bomb could start at $100 million, rather than the tens of billions that traditional nuclear power plants cost.
A country could buy a dozen to simulate a full-size power plant, or industry could buy your own to meet the electricity needs of a large plant or processing plant.
But rising costs in Utah are raising troubling parallels with industries of the past. For example, Hinkley Point C in Somerset was estimated to cost around £26 billion in 2015, but the latest estimate now suggests it could cost £33 billion.
Although the scale of the costs varies, they are unpredictable concern.
The cost of Hinkley Point C was estimated at around £26 billion. in 2015, but could now be worth £33 billion. Photo: Finnbarr Webster/Getty Images
Cheap gas and falling solar prices, as well as rising development costs, have suddenly made SMRs less attractive.
Roulstone says: “Currently low gas prices, as well as renewables and renewable subsidies energy, is a very hostile time for nuclear power in the United States.”
The market is also quite crowded. France's EDF, the US-Japan alliance GE-Hitachi, Rolls-Royce and US companies Holtec, NuScale and Westinghouse are competing for a share of the UK SMR market through government competition.
As costs rise and interest declines, representatives industries complain the government is moving too slowly.
Rolls-Royce CEO Tufan Erginbilgic has repeatedly called for the project to be accelerated in the UK.
The winner needs “tangible commitments to projects, multiple projects,” he said. Rolls will complete a design assessment with British regulators at the end of next year, which will put it ahead of rivals in the UK, he added.
SMR is one of the key businesses Erginbilgic is betting on for Rolls' future, even even as he downsizes the group with plans to sell £1.5 billion worth of assets.
Speed and determination are needed to save Britain's SMR dream, says Roulstone.
“There needs to be some kind of urgency that just isn’t there.”
The government has six contenders and “has to make a choice,” he says.
“Any number above two is the wrong answer. Frankly, one type of SMR will do just fine for the UK.”
To achieve the economies of scale promised by factory production, SMRs need to be developed en masse.
p> “You can't do it if you have an order for it,” Roulstone says. “You can do this if you have an order for 10 pieces.”
Rolls-Royce CEO Tufan Erginbilgic has repeatedly called for the project to be accelerated in the UK. Photo: F. Carter Smith/Bloomberg
The recent slowness has coincided with high turnover in government. Since 2019, seven ministers have led the Department for Energy Security and Net Zero, as well as its predecessor, the Department for Business, Energy and Industrial Strategy.
Experts say Britain's gains have been held back for years by lingering concerns about the destructive potential of nuclear disasters and a historical over-reliance on other energy sources such as North Sea gas.
There is now a realization that an alternative is needed.
“In Western Europe, people understand that we will have a lot of renewable energy, solar and wind,” says Roulstone. “But what we really need is something that has zero carbon emissions and provides electricity all the time.”
Nuclear power is the obvious answer.
While NuScale's problems in Utah are a setback for the company, industry observers do not believe it is necessarily a blow to its UK ambitions.
NuScale's strength was deemed too much expensive for Utah customers, but Michael Crabb, chief executive of US SMR contender Last Energy, says: “I think in the UK you guys would want $89 per MWh for base power.”
John Hopkins, chief executive of NuScale, says his company still has $200 million in the bank. Photo: Manuel Balche Seneta/AP
Electricity prices in the United States vary widely and are seasonal. But in March, the U.S. Energy Information Administration said it expected prices to average $51.36 per MWh this year. By comparison, today's UK price is around £84 ($105) per MWh.
NuScale energy could also be cheaper than Hinkley Point C. It has promised £92.50 per MWh in prices 2012, but the cost goes up as the cost increases. inflation, today it exceeds £120.
Last Energy intends to build smaller 20 MW reactors in the UK, Poland and Romania at a cost of about $100 million apiece.
This is not part of the UK Government's competition for projects and is instead aimed at attracting private funding. The company wants to have the reactor up and running by 2025, which is admittedly an aggressive goal, Crabb says.
Meanwhile, John Hopkins, NuScale's chief executive, said last week that his company is still in good shape. position to pursue other opportunities.
“I know that from a financial standpoint we have $200 million in the bank,” he said at a conference in Washington.
He has other projects in Romania and South Korea. develop and let's hope the UK joins the list.
A government spokesman said: “Our goal is to make our small modular reactor design competition the fastest of its kind in the world.”
“When these small modular reactors are delivered, they will delivering cheaper, cleaner and safer energy to families and businesses, enabling the rapid expansion of nuclear power to reach our goal of 24 GW by 2050.”
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