The State of Small Modular Nuclear Reactors

Last week the Department of Energy (DOE) announced
its decision to award the first company to receive government funding in
support of commercializing Small Modular Reactors (SMR), a new generation of
nuclear power plants. Funds were awarded to a consortium of companies
responding to a funding announcement in March 2012; the consortium is led by
Babcock & Wilcox (B&W) in conjunction with the Tennessee Valley
Authority and Bechtel. The Department of Energy established the Small Modular
Reactor Licensing Technical Support Program to provide federal support of up to
$450 million to expedite the licensing process of SMRs Originally, two projects
would receive funding; so far only one has, leaving other initiatives such as
Westinghouse, NuScale and the Holtec HI-SMUR out of luck for now.

The SMR initiative is part of the Obama administration’s
efforts to have low-carbon nuclear energy play an important part of America’s
energy future. SMRs are defined as having power outputs of up to 300 megawatts
of electricity, according to the International Atomic Energy Agency. They are
touted for their compact scalable designs that offer a host of safety,
construction and economic benefits. According to Energy Secretary Steven Chu,
SMRs have the potential to create new export and job opportunities for many
Americans as the world is increasingly demanding nuclear energy to fulfill its
energy needs, despite recent retreat from nuclear power by some countries.
Developing countries that do not have the capacity or expertise are looking for
more modular and cost effective power sources and SMRs may be an increasingly
attractive option.

SMRs also
present a unique opportunity for the United States to restore leadership in the
global nuclear energy market. As U.S. SMR businesses grow the share of the
market, the United States is positioned to play a leading role in future
negotiations on nuclear reprocessing and spent fuel. More countries will be
eager to reinstate 1-2-3 negotiations and the United States will have
subsequently more leverage in these discussions. U.S. leadership in the nuclear
energy markets can go a long way in ensuring safeguards can go in place of
nuclear stockpiles which are critical to non-proliferation goals.

While SMRs
could usher in a new wave of nuclear renaissance, many hurdles still lie ahead.
First, the Nuclear Regulation Commission (NRC) still has to approve all of the
design certifications before any nuclear reactor becomes operational. The NRC
hasn’t issued a license for a full-scale nuclear reactor since 1976, which is
in part a reason the U.S. influence in the nuclear energy market has eroded.
The NRC has more experience and familiarity with large light water reactors and
has thus taken a more cautious role in studying the safety of SMRs. This
presents a problem for manufacturers because the uncertainties of NRC
regulations make it so they won’t invest in SMR production. Whether the Small
Modular Reactor Program established by the DOE will be able to overcome NRC
licensing costs is still unclear as negotiations for the exact cost of its
partnership with B&W is still being negotiated.

Some
have argued that the Department of Defense (DOD) would be a unique testing
ground for an SMR demonstration. While this might be true, there does not
appear to be enough political will for using the DOD as a site for energy
experimentation. A DOD SMR program might also entail high political costs due
to the larger defense cut negotiations that are taking place in Congress as
part of the fiscal cliff.

The bottom line: the administration’s recent moves are a
sign that SMRs are poised to play a large role in any nuclear energy future. 

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