In Darcy’s last article on the “need case” for nuclear, we asked the question: what is the ultimate potential, really, for advanced nuclear’s market penetration? And how do we navigate this process?

How should investors, current utilities expanding into renewables or low carbon technologies, and policy makers approach nuclear power, given climate and energy transition objectives?

The reality of advanced nuclear being a part of the energy transition is becoming more and more tangible, especially after the recent 57% increase from 2021 in the Department of Energy budget request for nuclear energy, with nearly $700 million USD allocated to drive commercialization of advanced reactor technologies within the decade. Additionally, a new DOE funded high-assay low-enriched uranium (HALEU) fuel program is being launched to provide domestic, commercial HALEU fuel to advanced reactors at scale once they enter the marketplace.

In our previous Darcy coverage of nuclear technology in the energy transition, we hosted a forum with Steve Nesbit from the Nuclear Regulatory Commission(NRC), outlined the current state of nuclear technology in an article, featured some active advanced nuclear innovators by technology type in a framework, and discussed the ”need case” and market outlook for Nuclear in an article. In today’s article, we want to dive a bit deeper and discuss some action items relevant to those interested in moving into this space.

Navigating the implementation and integration of advanced nuclear within the current energy market and infrastructure is going to include a focus on policy, financing, business models, applications, and existing nuclear.

The UNECE published an in-depth nuclear power brief where they outline five steps policy makers should take who want to make nuclear power a reality in the energy transition:

• Establish a level playing field for all low-carbon technologies
• Provide positive, long-term policy signals for new nuclear development
• Accelerate the development and deployment of SMRs and advanced reactor technologies
• Secure the long-term operation of existing nuclear plants
• Assess the merits of low-cost financing of nuclear power projects, as done with other renewable technologies.

It is clear that an integrated approach must be taken by investors, utilities, and policy makers to ensure nuclear’s future.

POLICY

According to a report by the Nuclear Energy Agency and International Energy agency, the level of nuclear energy deployment requires not major technological breakthroughs, but rather both industrial and financial policy related reform. Governments will have to take an active role for a nuclear energy program to achieve true success. With the aggressive push to accelerate clean energy technology development worldwide, the IEA has developed a series of roadmaps to identify “barriers, opportunities, and measures for policy makers and industrial and financial partners to accelerate RDD&D efforts for specific clean technologies on both the national and international level.” One major risk with novel technologies is duplication of efforts (and thus timeline extension) with regulatory processes. It is necessary that utilities and technology innovators in this space work closely with policy makers to ensure that legal and regulatory systems consist of a clear delineation of responsibilities between state and federal levels of government. Pre-license and combined license processes are under consideration from regulatory commissions worldwide, with the goal of reducing the potential for delays.

Transparency is key.

The Multinational Design Evaluation Program (MDEP) is an initiative with support of the NEA that hopes to establish a reference of regulatory practices. The Gateway for Accelerated Innovation in Nuclear (GAIN) provides a great deal of information and transparency into the regulatory milestones of active nuclear projects as well.

We see a number of states rapidly decarbonizing and having major energy policy discussions and reform. Many of these states’ policies are causing a major shift in the thinking of fossil dependent states as well, and we see a move to reimagine their own energy infrastructures and economy. Key to these initiatives is the inclusion of nuclear among other energy technologies.

One beneficial resource for early stage utilities and policy makers branching into this space is the numerical policy calculator created by the Gateway for Accelerated Innovation in Nuclear (GAIN). This policy calculator allows policy makers and utilities to create a new energy model and emissions reduction model or choose an existing one.

FINANCING

The Gateway for Accelerated Innovation in Nuclear (GAIN) recently conducted a series of interviews with nuclear technology developers, major utilities, and policy makers throughout the country and found that most of the major hesitations in becoming involved in nuclear projects are capital requirements and cost. The long delivery times, uncertainty and cost associated with the regulatory process, and historical trend of cost overruns are a major turn-off to potential technology adopters and investors. In order to accelerate and encourage adoption of new technologies, GAIN and other think-tanks propose adoption of creative financing mechanisms, flexibility in business models, and, most importantly, radical transparency of cost assumptions and data. This includes a radical transparency through proceedings with the relevant regulatory commissions as well as in regard to waste management and safety concerns.

The DOE and other organizations have provided a number of industry opportunities for advanced nuclear technology development. The DOE Funding Opportunity Announcement (FOA) has announced funding pathways such as the First-of-a-Kind (FOAK) nuclear demonstration readiness projects, advanced reactor development projects, and regulatory assistance grants. Additional funding opportunities exist from GAIN, the Consolidated Innovative Nuclear Research (CINR) group, the Nuclear Energy University Program (NEUP), the Nuclear Energy Enabling Technologies (NEET) Crosscutting Technology Development (CTD) program, the Nuclear Science User Facilities (NSUF) funds, and the Scientific Infrastructure Support for Consolidated Innovative Nuclear Research (Infrastructure FOA), among others.

One important initiative, among others listed above, put into place is the Advanced Reactor Demonstration Program (ARDP) by the Department of Energy. This program is incredibly interesting, as its focus is on sharing costs in research and development of advanced nuclear technology with the private industry. Private entities can submit applications to this program and be awarded funds within a few key categories. Recipients of ARDP funding include Southern Company alongside Terrapower, in a consortium alongside GE Hitachi and Bechtel. Other ARDP recipients include X-Energy, Kairos Power, Holtec, BWXT, Westinghouse Electric Co., Advanced Reactor Concepts (ARC), General Atomics, and MIT.

Other interesting new market proposals exist such as the Dynamic Forward Clean Energy Market (DFCEM), proposed by the Conservation Law Foundation and National Grid, which attempts to create a centralized market, securing clean energy at a least cost basis. The goal of this market approach would be to support existing zero emitting resources, such as nuclear and renewables, as well as draw newer technologies to the table. The current state and proposed federal Zero Emissions Credit (ZEC) mechanisms, including those proposed to be implemented via reverse auction, are also intriguing possibilities to consider moving forward in this space.

BUSINESS MODELS

We are seeing a number of proposed business models emerging in the advanced nuclear space, from those determined to own and operate their own reactors and supply power (OKLO), to those selling factory produced, modular, scalable designs (NuScale). Companies like Prodigy and Leadcold are even spending a lot of time and research targeting the appropriate business model and approach to move into the Oil and Gas sector, while others are targeting remote/electricity poor communities (BWXT), some alterative markets in industry, and others the Power and Utilities sector.

Some advanced nuclear companies such as Elysium have built a starting business model around the concept of one-to-one replacement of baseload coal plants. Unfortunately, it doesn’t seem like these timelines quite add up. Currently, most advanced reactor designs are slated to be ready by the late 2020s or early 2030s, at the earliest, and at that point most existing coal units slated to retire will have already been put out of service. However, there is a brief window in which this type of model could be quite viable, but the initiation of these projects is significantly more urgent than other models proposed. That being said, one of the most attractive things about most advanced reactor companies is their flexibility in terms of business model.

Many utilities, especially in the western states, are electing to participate in organized electricity markets. This begs the question: will rate-based, vertically-integrated power systems be in existence much longer in the U.S.? In response to this, and with the interest of securing a market share in the future energy space, advanced nuclear reactor concepts are pursuing a competitive stance with alternative storage and generation technologies through their Levelized Cost of Electricity, pursuit of novel markets, and dispatchability/load following capabilities.

For example, in a publication by Claudio Filippone of Holosgen, he outlines several market considerations of their reactor technology. Their reactor configurations allow for the supply of electric power and process heat for terrestrial and marine industrial and military applications, can provide routine or emergency electric power during peak season or a disaster, be retrofitted into large containerships or marine vessels, or even be used in mining and remote operations to replace sets of generators and reduce refueling transport costs.

APPLICATIONS

As alluded to above, and according to William Labbe of ARC Clean Energy, LLC, modern nuclear companies are realizing their unique ability to bifurcate the market through nuclear energy’s wide range of applications: “There are various different players in the industrial market, and utility players in the electrical market.”

And what are some of the applications we can gauge our future outlook off of? Nuclear power applications range from hydrogen and ammonia production, desalination, electricity production, renewable integration, outer space missions, oil refining, ship propulsion, process heat, medicine, bitcoin mining, off grid applications, to district heating.

Existing nuclear can benefit from expansion into some of these applications, and the design of many advanced reactors allows for multiple configurations, opening up new markets and supporting an even wider range of applications where the sale of electricity is not the dominant aim.

EXISTING NUCLEAR

In the status quo, nuclear power accounts for over 20% of U.S. electricity generation, over 50% of zero-emission generation. Also, in the status quo, multiple nuclear reactors have been set to retire prematurely by 2025, with several already retired in the past ten years. A Carnegie Mellon University study determined that, without policy reform and a serious commitment to existing nuclear reactors, these premature closures will continue to happen, something that is detrimental to the support of current energy transition initiatives. Certain policy actions as mentioned earlier in this article as well as electricity alternative market options could be majorly beneficial.

The recent Bipartisan Infrastructure Law includes over $62 billion USD for the DOE to help support a clean energy transition. In fact, over $6 billion is allocated to a Civil Nuclear Credit program, something that could majorly support existing nuclear fleets. This program allows for owners and operators of commercial reactors in the United States to apply for and bid on four year credits that support operation extension through proof that premature closure is purely economic.

TIMELINE OF ADVANCED REACTOR TECHNOLOGIES

With new technologies being announced and funded daily, there’s an ever-evolving timeline for proposed demonstration or commercialization. For anyone interested in active regulatory timeline updates and milestones, you can consult the GAIN timeline.

What are the key takeaways here?

• The key challenge to accomplishing the successful inclusion of nuclear in the energy transition is cost. This is an even greater challenge than “nuclear fear.” As safety measures reach a point of removing the risk of previous scale disaster challenges, the nuclear industry’s primary goal is to pursue cost reduction as a step to marketability and widespread commercialization.
• There are clear ways that the industry is currently pursuing cost reduction, including modular small reactors, passive safety features, government assistance, updated energy policies and incentives, and new fuel use methods, etc.
• The main opportunity for nuclear’s inclusion in the energy transition is its ability to support other renewables for decarbonization of the power sector, as well as some of its end use potential beyond electrification.
• Environmental and energy policies, government assistance programs in early research and development stages, and clear initiatives are key to optimizing nuclear’s potential in the next few decades.
• Regulatory and licensing processes must be optimized and updated with new reactor technologies in mind. This will be a join action from current innovators in the space and organizations like the NRC.
• Utilities expanding into energy transition efforts who will be implementing new reactor technologies (especially SMRs) must be willing to be flexible with new market and business model opportunities that bring together an “all hands on deck” approach to new technologies in renewables and nuclear energy to meet demand.

In upcoming Darcy Nuclear coverage, we will be diving a bit deeper into the regulatory routes to commercial nuclear deployment, identifying the application process (with a focus on US and Canada) and responsibilities based on business model and technology type. We will also further discuss how companies are tailoring business constructs specific to certain operating and industry needs, and eventually move into deployment, siting, safety, supply chain, overall lifecycle management strategies from a lens of satisfying local communities/stakeholders, regulatory conditions, and end-users.

Are you planning on moving into the nuclear energy space? Leave a note in the comments below! And keep a lookout for upcoming Darcy coverage and updates.

REFERENCES

• https://www.energy.gov/ne/articles/energy-departments-advanced-reactor-demonstration-program-awards-20-million-advanced
• https://www.airtable.com/universe/expnrIMohdf6dIvZl/milestones-in-advanced-nuclear?explore=true
• https://www.c2es.org/document/promising-market-and-federal-solutions-for-existing-nuclear-power/
• https://www.cmu.edu/engineering/estp/world-energy-resources/nuclear.html
• https://www.brattle.com/insights-events/publications/a-dynamic-clean-energy-market-in-new-england/
• https://www.thirdway.org/blog/advanced-reactors-turning-the-corner
• https://www.oecd-nea.org/upload/docs/application/pdf/2019-12/nea6962-nuclear-roadmap.pdf
• https://engrxiv.org/preprint/view/90/216
• https://www.energy.gov/articles/saving-existing-nuclear-fleet-brings-net-zero-future-closer
• https://www.energy.gov/ne/articles/5-key-takeaways-nuclear-energy-fy2022-budget-request
• https://energy.mit.edu/wp-content/uploads/2018/09/The-Future-of-Nuclear-Energy-in-a-Carbon-Constrained-World.pdf