Investors’ lack of interest has broken the neck of the American project of small reactors

NuScale has completed the project of its first power plant built from small reactors of its own production. The reason was a lack of interest in long-term contracts for the supply of electricity from the reactor between possible customers, i.e. energy companies.

Small reactors are meant to help improve the economics of building nuclear power, but even NuScale’s example suggests this will be a difficult task. As with larger blocks, the main problem is not strictly technical difficulties, but above all the price.

The canceled “Carbon Free Power Project” was supposed to be created in cooperation with the UAMPS consortium, i.e. a group of power companies from the state of Idaho. It was to consist of six 77-megawatt reactors with a total output of 462 MW, and the start of operation was planned for 2029.

The project had a rather complex organizational structure. Its basis consisted in the fact that interested parties would buy electricity from the reactor at pre-guaranteed prices. Thanks to relatively strong state support, the price should eventually be around 90 dollars per MWh (i.e. approx. 2070 CZK/MWh). Which was still too much for the American market, so it was not possible to find a buyer for the larger part of the offered production (about 75 percent). Thus, the project was terminated even before any construction work had even begun (perhaps only preparatory work).

The shares of the American company reacted with a very sharp drop of 30 percent in a single day. The information that NuScale also terminated the contract with the Polish mining company KGHM probably contributed to this. For this, she was to implement a small power plant with several reactors.

In the first phase, according to the plan, the production plant would have four blocks of 77 megawatts, in the future it could be expanded to twelve small modular reactors (SMR). According to the preliminary schedule, the first phase was supposed to be in operation in 2029. However, the information about the end of the Polish order has not yet been confirmed. KGHM denied the reports.

NuScale is one of several smaller private companies in Western countries that hope that, thanks to advances in IT, materials science and nuclear engineering, they can design a small reactor that meets today’s stringent nuclear power requirements at relatively low cost.

It was created under the full name NuScale Power just for the purpose of developing small reactors in the USA in 2007. It has its headquarters in Portland, Oregon and branches in five other North American cities and also in London.

It is primarily a research organization founded by a group of experts from Oregon State University. So far, it has only built small laboratory models of parts of the planned reactor, it has never put any actual nuclear equipment into operation.

The company with which, by the way, ČEZ also signed a memorandum of cooperation (i.e. nothing too binding) in 2019 is nevertheless one of the most well-known in the development of small modular reactors. Currently, it is the only company that has a license from the US nuclear watchdog to build a reactor falling into the category of “small modular reactors”.

Her reactor project (specifically, in a smaller version with a capacity of 50 MW of electrical output) was the first “small” new generation reactor to be licensed for construction in the US. This means that the nuclear watchdog there has approved the possibility for power plants with those reactors to apply for a construction permit.

It is a reactor based on the proven principle of a light water pressurized water reactor, i.e. the same principle as the reactors in Dukovany or Temelín. On “paper”, NuScale created several variants with a maximum output of 50 to 77 MW of electrical output (that is, how much electricity can be produced by the turbine connected to the reactor at most; heat is generated in the reactor, of which, however, less than half is effectively used to produce electricity, so the rest must only “cool”). It is assumed that these units could be concentrated in larger reactor units of up to 12 units.

As “small reactors”, according to the generally accepted designation, all reactors with an electrical output of less than 300 MW, “medium” from 300 to 700 MW. Those with higher power are “big”. According to the International Atomic Energy Agency, the abbreviation SMR (Small and Medium Reactors) is used for reactors of both categories together.

The same abbreviation SMR also sometimes means “small modular reactors” in the English literature, but the name describes practically the same group of devices. Modular reactors are devices that are delivered in modules: they are not built on site, but are brought to the place of use ready from the manufacturer. Such a procedure is economically much more advantageous, so both groups of devices practically overlap.

Despite the considerable “hype” surrounding small reactors in the last decade, practical experience with their operation in the regular electricity grid is very limited. A minimum of similar devices have been created in recent decades, essentially units of pieces. There is also a complete lack of experience with their production in larger quantities, in which the key advantage of small reactors is supposed to be.

If such reactors were to be produced only in pieces, their price per power will undoubtedly be significantly higher than that of large blocks. And even these are very often uncompetitive against other sources in the current environment due to high costs and also a high risk of construction becoming more expensive.

The price of large nuclear power plants is largely determined by how much the investor pays in interest on the money he had to borrow for construction. That is why large nuclear power plants have practically no chance on the normal commercial financial market today – the volume of borrowed money would have to be so large that repayment of the loan would be extremely long and expensive.

In order for small reactors to be able to compensate for their price disadvantage with savings from mass production, customers would have to order dozens or even hundreds of them (depending on the specific type and other circumstances). However, this has not happened yet: manufacturers do not have any major binding orders.

NuScale Reactor