DOE building a bridge to bankability for nuclear

10 September 2021

The private sector must be prepared to provide the funds needed to take new and innovative reactor technologies from the first deployment stage to wide-scale commercial operation, Jigar Shah, director of the Loans Program Office (LPO) at the US Department of Energy, said yesterday during World Nuclear Association's Annual Symposium. He said the LPO is developing the business models needed to deploy new nuclear.

Jigar Shah speaking yesterday

Shah said the Biden-Harris Administration has committed to decarbonising the electric power sector by 2035 and, as part of this effort, the USA must rely on all available sources of clean energy, including nuclear power.

"The nuclear sector in the USA enjoys a robust track record in terms of annual operations, as measured by reliability, safety and zero-carbon generation," he said. Shah noted nuclear power currently accounts for half of USA's carbon-free electricity generation, representing nearly 20% of the country's total electricity generation.

However, he said the pace of nuclear new builds has slowed considerably compared with other clean energy sources. "Some of this slowdown over the past decade is attributable to the great recession and the attendant loss of electricity demand growth, the rise of fracking and the increased supply of cheap natural gas. And lastly, the unfortunate accident at Fukushima. For the nuclear sector taken together, this really amounts to a near-perfect storm."

Current options inappropriate

Shah said current nuclear power plant options are seen as "too large for the market, too costly on an overnight basis per kilowatt or too expensive on a levelised cost of energy basis compared to alternatives, too long to construct and, taken collectively altogether, as too risky by the capital markets.

"However, I think we all recognise an expansion of nuclear power will be critical to reaching net-zero emissions by 2050 and there is an urgent need to bring new clean energy technologies to market."

The Biden-Harris Administration, Shah said, has put a focus on scaling up commercial deployment of the next generation of nuclear power technology, including smaller and more flexible advanced reactor designs and on the advanced fuels that will be needed to operate them. "With these new innovative technologies (such as small modular reactors (SMRs) and microreactors), when combined with innovations in manufacturing, product delivery models and innovations in financing led by the LPO, utilities and other potential buyers of nuclear power plants can once again begin to order new units for deployment."

He added, "In addition to new, technically-ready designs, we need to consider how government and private industry can work together on new approaches - both technically and from a business execution approach."

About 40 technology developers are "striving" to develop new, innovative reactor design concepts. In October 2020, the DOE's Office of Nuclear Energy announced two awardees - TerraPower and X-energy - to receive USD80 million each of initial cost-shared funding to build an advanced reactor demonstration plant that can be operational within seven years. "These plants are of commercial scale and must be connected to the grid, providing commercially viable power to customers by 2027," Shah said.

Bridge to bankability

"But more needs to be done than just a technology-push approach," he said. "That's where the Loans Program Office can come in to not only use the 10,000 scientists at the DOE and the national laboratories to validate the technology, but also to stand up the next generation of business models needed to deploy new nuclear. What we call that is 'building a bridge to bankability' for new nuclear."

Shah said innovative reactor technologies firstly need to be identified that can be approved by the US Nuclear Regulatory Commission (NRC) to operate safely and achieve the economic viability to be competitive with other clean energy sources. "We have several designs going through the NRC process now, four of which we believe will have full approval by 2027."

Secondly, the way nuclear power plants are constructed needs to be completely rethought "so that we are building airplanes and not airports", he added. "Airplanes are very complicated, with a very detailed and long supply chain, but they can repeat their design consistently - that leads to lower costs, higher quality and a faster roll-out with the same learning curve benefit that we have seen in other clean energy technologies."

He said the public-private partnership needs to be kickstarted, such as the DOE is doing through the Advanced Reactor Demonstration Program and then through loan guarantees providing the finance necessary to prepare the supply chain and make the first few new deployments.

"Lastly, we need to recognise that we need a roll-out USD100 billion to be able to achieve the economic cost points that we hope for nuclear technology," Shah said.

"This can't be just a continuous first-of-a-kind deployment. That really won't accomplish the mission. Our goal at LPO is to work with sectors on early commercial deployments, develop the right business models and a commercial operating history, then let the private sector come in with the real money to allow the technology to reach scale."

Referring to the interest already shown by several countries around the world in deploying SMRs and microreactors, Shah said: "We really do believe that we can get USD100 billion of commercial interest, which is what will be required to reach the cost points that we all need them to reach to be able to be part of the 2050 solution."

Researched and written by World Nuclear News