A foundation for advanced reactors25 October 2023
The business opportunities and deployment scenarios for advanced reactors are quite different from their larger light water cousins with a variety of sizes and scales to meet various output requirements. A new report from the US National Academy of Engineering explores the options.
Above: The AFR-100 is one of a large number of advanced reactors that offer novel deployment scenarios
Many advanced reactors use different technology to the large light water reactors (LWRs) used for electricity production today, but in marked contrast to the existing fleet there are new deployment scenarios that did not exist previously too. This is the conclusion of a new report from the US National Academies of Sciences, Engineering, and Medicine that aims to identify the unique opportunities and barriers for advanced reactors.
The authors note that some advanced reactors differ from LWRs in terms of size, neutron spectrum, coolant, fuel type, fuel enrichment, and/or outlet temperature.
And, with designs covering a variety of sizes and scales to meet various electricity output requirements, non-electric applications of reactor energy output such as process heat, transportable reactors, and factory manufacture of reactor modules, or complete factory manufacture of entire reactors there are new business opportunities. The report argues these ideas are in response to a rapidly changing electricity ecosystem that is becoming increasingly reliant on variable renewable energy, as well as a recognition of the larger decarbonisation challenge for sectors that rely on fossil fuels. While many uncertainties surround the future electricity system, increased electricity demand, greater deployment of distributed resources, increased electrification of end-uses, and the greater application of demand flexibility technologies are expected to increase and change future generation needs. Nonetheless, many modelling studies suggest that some firm capacity will be required for lowest-cost and reliable electricity in high-renewable scenarios. As a result, increased electrification and renewables development presents a significant market opportunity for advanced nuclear to serve the grid.
While advanced nuclear reactors could fill this need at a variety of scales (from a few megawatts to a gigawatt), many other low-carbon technologies will also be looking to take advantage of this opportunity as well, the report says. Even in a future with significant variable renewables, the generation of electricity will likely remain the most consequential output from advanced reactors.
Nuclear power’s competitiveness to serve projected electricity demand, however, is highly sensitive to cost projections. The report states that recent studies suggest advanced nuclear will likely be highly competitive if overnight capital costs of $2,000/kWe can be achieved, regardless of other conditions. Advanced nuclear could also be competitive for electricity production for overnight capital cost ranges of $4,000–$6,000/kWe if other power system costs are higher than expected in the event of limited transmission growth or limited materials, for example. The authors notes that nuclear power could, however, be deployed for reasons other than least cost, such as to maintain optionality, as well as for non-grid nuclear applications even if overnight capital costs are higher than $6,000/kWe. The authors contend that regulatory reforms, including to wholesale electricity markets, could also better capture the value that advanced nuclear reactors could contribute when considering their potential role in maintaining electricity system reliability and resilience.
The report notes that the up-front financing costs for developing nuclear reactors are currently higher than those for other energy technologies because of large capital requirements, extended development timelines, and limited financing options. While these challenges are being addressed in part by various DOE programmes, including the Advanced Reactor Demonstration Program (ARDP), a private–public partnership scheme that aims to demonstrate new and advanced nuclear technologies, final costs for planned ARDP plants are still uncertain. The level of government funding and vendor contributions for the first-of-a-kind (FOAK) demonstrations implies a cost of some two to two and half times the $4000–$6000/kWe capital cost threshold. Significant and rapid learning and cost reductions will be necessary when moving from FOAK to nth-of-a-kind (NOAK) to achieve market breakthrough.
The authors argue that in order to ensure the efficient deployment of scarce resources, US federal government programmes for advanced nuclear development need better coordination and continuity, from early R&D through demonstration and deployment. Such programmes should also include decision points for continuation or termination of funding for specific reactor concepts. A comprehensive set of development phases and milestones, and a clear understanding of commercialization strategy requirements should define all federal funding assistance, the report notes.
In a key recommendation the report says the nuclear industry and the Department of Energy’s Office of Nuclear Energy should fully develop a structured, ongoing programme to ensure the best performing technologies move rapidly to and through demonstration as measured by technical (testing, reliability), financial (cost, schedule), regulatory, and social acceptance milestones.
Technical and financial challenges
The analysis points to the need for substantial private sector and government investment to transform the energy system and achieve climate and energy security goals. However, to realise these scenarios, advanced reactors must also succeed in many different areas too. The report gives multiple examples: completing new reactor technology demonstrations, verifying new business cases for non-electric applications, showing improved cost metrics that are competitive with other low-carbon power generation technologies, improving construction and project management compared to current LWR builds, obtaining timely regulatory approval, gaining societal acceptance in host communities, and responding to security and safeguard obligations. Overlooking any of these areas could compromise commercial viability, the authors say.
The various advanced reactors under development are at different levels of technological maturity and therefore must confront different technology gaps before wide-scale deployment. More mature concepts – small modular LWRs, small modular sodium-cooled fast reactors (SFRs), small modular high-temperature gas-cooled reactors (HTGRs) – need to address regulatory qualification of unique systems, resolve fuel and supply chain issues, and demonstrate operational performance. SFRs and HTGRs will also need to address supply chain and high-assay low-enrichment uranium (HALEU) issues and operational reliability, which have impacted those designs in the past. Less mature concepts, such as gas-cooled fast reactors (GFRs), fluoride-molten-salt-cooled high-temperature reactors (FHRs), molten-salt-fuelled reactors (MSRs), and large SFRs, have technology gaps related to viability and performance of key reactor features, including fuel and materials behaviour and adequacy of passive safety systems. Increased use of better-performing materials, advanced fuels and high-performance fuel cladding materials, and advanced/additive manufacturing could produce notable improvements in performance and economics. However, while many of the current concepts plan to move to commercial reactor demonstration with existing materials, optimisation of future reactor systems and further improvements in safety, reliability, and economics will require advancements in technology and materials. Focused investment in these issues is necessary to enable these technologies to advance to wider deployment.
Because demonstrations of advanced nuclear designs are not expected until the late 2020s or early 2030s, it may be difficult for new nuclear technologies to make a significant contribution until the next few decades, the authors note. Nonetheless, they also observe that there is a potential longer-term role for advanced reactors. They argue that the race against climate change is both a marathon and a sprint and will span several decades. Projected growth in electricity demand during the coming decades presents important opportunities for advanced nuclear technologies.
Getting the timing right
The report makes a number of recommendations that the authors argue will foster the timely development of advanced reactors. For example, they call on the DOE to initiate a research programme that sets aggressive goals for improving fuels and materials performance and incentivises the use of modern materials science, including access to modern test reactors, to decrease the time to deployment of materials with improved performance and accelerated qualification. The report says this programme could take the form of a strategic partnership involving the DOE’s Office of Nuclear Energy and Office of Science, the Nuclear Regulatory Commission, the Electric Power Research Institute, the nuclear industry, national laboratories, and universities.
Congress and the DOE should also maintain the Advanced Reactor Demonstration Program (ARDP) concept and develop a coordinated plan among owner/operators, industry vendors, and the DOE laboratories that can support development efforts. This should include long-range funding linked to staged milestones, ongoing design, cost, and schedule reviews, and siting and community acceptance reviews.
To enable a cost-competitive market environment for nuclear, the report also calls for federal and state governments to provide tailored financial incentives that industry can use as part of a commercialisation plan.
This should be consistent with the successful incentives provided to renewables and potentially includes extending and enhancing those provided in the Inflation Reduction Act. The scale of these incentives needs to be sufficient not only to encourage nuclear projects but also the vendors and the supporting supply chains, the authors state.
In addition to providing electricity, nuclear power plants can provide heat for industrial processes. Depending on the specific process, electricity and/or heat could be used for hydrogen production or associated synfuels, desalination, or district heating.
Certain geographic locations, and new demand scenarios such as industrial decarbonisation could create future market opportunities. All of these applications could become important as the chemical, materials, and transportation sectors transition to low-carbon operations, with hydrogen providing perhaps the most credible potential revenue stream owing to its value across all these sectors. Reactors could also be deployed as hybrid systems that can provide non-electric services when electricity from a reactor is not needed to meet grid demand, for example. However, the report acknowledges that engaging in such hybrid operations is not trivial and poses technical and regulatory challenges that must be resolved for each unique deployment paradigm.
For this reason the authors call for key research and development needs for industrial applications to include assessing system integration, operations, safety, community acceptance, market size as a function of varying levels of implicit or explicit carbon price, and regulatory risks, with hydrogen production as a top priority. The DOE with the support of industry support groups such as EPRI and nuclear vendors should conduct a systematic analysis to this end, the report says.
Building and deployment
Noting that nuclear projects in the United States and Europe have not been built on budget or on schedule in recent decades, the report further observes that much of the cost growth does not necessarily arise from the nuclear island, but from the civil works. The authors therefore recommend that while it is vital to demonstrate that advanced reactors are viable from a technical perspective, it is perhaps even more vital to ensure that the overall plant, including the onsite civil work, can be built within cost and schedule constraints. Costs for onsite development will still likely be a significant contributor to capital cost, and so more should be done over an extended period to research technologies that may streamline and reduce costs for this work. DOE should expand its current efforts in R&D for nuclear construction and make these advanced technologies broadly available.
Some advanced reactor vendors are considering moving from the traditional “project-based” approach to a “product-based” approach with the goal of enabling improved schedules, reduced construction risk, associated cost savings, and improved quality. But, even if there are savings with the nuclear components, the challenge of timely and cost-effective construction of the overall civil works remains for deployment scenarios involving extensive on-site construction work.
Nuclear owner/operators pursuing new nuclear construction should also consider the creation of a consortium or joint venture to pursue the construction, thereby enabling the creation and maintenance of the necessary skilled technical engineering personnel to pursue projects successfully. Alternatively, advanced reactor developers operating within the traditional project delivery model should consider implementing a long-term business relationship, preferably an equity partnership such as a joint venture, or a consortium, with a qualified engineering, procurement, and construction firm experienced in the nuclear industry, the report concludes.
The authors also pick up on the international ambitions many vendors contemplate, noting that to foster a healthy international market the US government will need to better equip itself to swiftly negotiate and implement more arrangements for nuclear cooperation with existing and emerging nuclear countries. The report adds that although it is not anticipated that significant modifications of export regulations are required, efforts to increase international harmonisation could greatly improve options for export financing.
Nonetheless, the authors argue that international nuclear projects are likely to require a financing support package that reflects a blending of federal grants, loans, and loan guarantees along with various forms of private equity and debt financing. They further recommend that the Executive Branch works with the private sector to build an effective and competitive financing package for US exporters to capitalise on export markets.
The report also explores the regulatory environment, noting that with advanced reactor designs, the NRC must adjust a variety of regulatory requirements to accommodate the many differences between those and existing LWRs. NRC resolution of these issues is required for many new deployment scenarios to be realised, they note, adding that establishing the safety case for an advanced reactor will require a thorough verification of safety claims. The regulatory process should, however, be made as efficient and flexible as possible if advanced reactors are to be commercialised in the coming decades.
The NRC therefore needs to enhance its capability to resolve the many issues with which it is and will be confronted. In recognition of the urgency for the NRC to prepare now, the report argues that Congress should provide increased resources on the order of tens of millions of dollars per year to the NRC that are not drawn from fees paid by existing licensees and applicants.
Clearly, for advanced reactors to contribute significantly to a decarbonised energy system, there are many challenges to overcome. The report acknowledges that their resolution requires sustained effort and robust financial support by Congress, various departments of the US government (especially the Department of Energy and the Nuclear Regulatory Commission), the nuclear industry, and the financial community. Nonetheless, given the urgency of the need to respond to climate change, the report’s conclusion is emphatic that there is a need for the prompt resolution of the issues associated with commercialisation of low-carbon technologies.