An advanced reactor strategic plan23 August 2023
The US Department of Energy (DOE) can be more effective in helping to commercialise advanced nuclear energy technologies and catalyse the private-public partnership that is needed. A report from the Nuclear Innovation Alliance explains how.
Above: The NIA says the US Department of Energy (DOE) should develop an Advanced Nuclear Energy Strategic Plan (Photo credit: JHVEPhoto/Shutterstock.com)
The US Department of Energy (DOE) should develop an Advanced Nuclear Energy Strategic Plan for commercialising advanced nuclear energy. This is the conclusion of a report from the Nuclear Innovation Alliance (NIA) that explores how the DOE could be transformed in order to meet the nation’s energy security and clean energy goals.
According to the report, Transforming the US Department of Energy: Paving the Way to Commercialize Advanced Nuclear Energy, developing an overarching Advanced Nuclear Energy Strategic Plan for commercialising advanced nuclear energy is critical as it would also create an integrated organising strategy for the various nuclear energy programmes, projects and technologies. This includes the Advanced Reactor Demonstration Program (ARDP) demonstration projects, risk reduction awards, and advanced reactor concepts 2020; fuels initiatives; and others.
A successful Strategic Plan would be spearheaded by the Office of Nuclear Energy (NE) and would account for the interrelationship with all the nuclear-related programmes at DOE – the Loan Programs Office (LPO), the Office of Clean Energy Demonstrations (OCED), the Advanced Research Projects Agency – Energy (ARPA-E), the Office of Science, the Office of Technology Transitions (OTT), and the National Laboratories, along with initiatives that cut across multiple DOE offices. The report notes that such a plan is certain to require adjustments over time, because of technology breakthroughs, technology stumbling blocks, and world events, but the need to adapt or a lack of unanimity should not be a bar to having such a plan, the report also notes that while an Advanced Nuclear Energy Strategic Plan would be useful in any event, it would be most useful in combination with a long-term budget plan although budget plans historically have not always made their to Congress. Another challenge is that the nuclear energy programmes currently work independently of each other and are budgeted as such. It would be difficult for them to agree on a common long-term budget. Nonetheless, by creating a budget plan, DOE could address the resources needed to achieve its goals and identify what the relevant DOE offices and National Laboratories could contribute to the effort. It could lay out a plan to hire additional staff, support more technologies and awards for advanced reactors (largely under the ARDP), fuels, and the nuclear supply chain through the journey to commercialization. The budget plan would have to be embedded in a broader budget plan for how DOE allocates resources to ensure that a suite of solutions is available to meet climate and energy objectives.
Developing a strategic plan
Alongside calling for the development of a budgeted Advanced Nuclear Energy Strategic Plan, the report also makes recommendations on how the DOE should actually develop the plan. Its primary recommendation is to create an Advanced Nuclear Energy Earthshot similar to the US lunar programme of the 1960s. However, NIA emphasises that the goal would not simply be the development of nuclear technology, but its successful commercial deployment.
Using all the elements of DOE will support commercial developers by better integrating all DOE’s existing efforts to provide advanced reactor developers with greater access to materials, tools, components and analytical capabilities that are not commercially available, or are sourced from an atrophied supply chain. An Advanced Nuclear Energy Earthshot would help identify and assess key supply chain projects for loan guarantees, for example.
Advanced reactors also need specialised fuels that must be produced by private enterprise, and DOE has programmes that can support those efforts too, the report says, adding that an Earthshot approach would focus and better coordinate DOE innovation and development efforts for the complete Advanced Reactor Demonstration Programme (ARDP), which was authorized by the Energy Act of 2020 and is the main vehicle for funding commercial advanced reactor demonstrations. The Infrastructure Investment and Jobs Act added a six-year, $2.5 billion appropriation while the Inflation Reduction Act of 2022 established a production tax credit and an investment tax credit for any zero-emissions electricity producer that enters service after 2024. The Inflation Reduction Act also established a DOE programme to catalyze domestic HALEU production. This combination, coming at a time of a national push for decarbonization, creates an opportunity for nuclear innovation that the technology has not seen in decades, the report states. DOE plans to announce “six to eight” Earthshots and to date it has unveiled the Hydrogen Shot which includes nuclear as a carbon-free source.
Regarding the Earthshot, the report argues that of all the DOE efforts that it needs to fully integrate, none may be as important as the National Labs which each have remarkable technical capabilities and tend to have strong support in Congress. The NIA analysis notes that to fully integrate DOE’s nuclear energy programmes across the National Labs, DOE could benefit from consolidating the oversight of the National Lab nuclear energy work under a single manager to ensure they are coordinated.
Through GAIN, DOE already provides a single point of entry that helps companies navigate the bureaucracy of DOE and National Labs but internal coordination of the labs is also important for executing programmes that support cross-cutting efforts, like hydrogen, which need to integrate advanced reactor technology with other forms of clean energy.
DOE headquarters and the National Labs already place a strong focus on the ARDP’s demonstration projects, which are public-private partnerships. These partnerships are key for timely and successful commercialization of new designs but some DOE grant recipients report that they find it hard to navigate and access all of the technical expertise within the various DOE labs.
According to the report, another feature of the “Earthshots” is that they are aiming for clean energy generators and components that will be a success in the global market. Certainly, that should be a goal for an Advanced Nuclear Energy Earthshot. The authors argue that the US should be aiming to lead in that arena, rather than leaving the opportunity to a commercial or geo-political rival. Additionally, they note, the Russian invasion of Ukraine has refocused attention on the importance of energy security and adds urgency to the need to transform DOE to develop new reactor types and their domestic supply chains. The authors note this will also enable the American nuclear energy sector to enter the vacuum created by a new reluctance by some countries to do business with Russia. Nuclear energy designs and hardware were once a major American export, and they can be again, they say.
A key recommendation is that the DOE should establish an Advanced Nuclear Energy Earthshot that would integrate national capabilities to support an integrated fuel cycle, advanced reactor and supply chain innovation, and to establish the United States as a global leader in advanced nuclear energy.
Focus on cost
Cost is integral to the ability of advanced reactors to succeed in the world market, not to mention in the domestic commercial market, the authors observe, but add that nuclear energy can be priced higher than energy dependent on weather conditions because dispatchable energy is a higher-value energy product. Nonetheless, the report says, the size of the market share that nuclear energy occupies will depend in part on a reactor’s cost to build and operate. An Advanced Nuclear Energy Earthshot should focus on reducing the cost, to make successful commercial deployment more easily achievable.
For example, the solar and hydrogen Earthshots are both framed in terms of cost (per watt and per kilogram, respectively). The authors say that DOE should consider extending this idea to an Advanced Nuclear Energy and should consider making cost the organising principle as opposed to, for example, focusing only on deploying a certain number of advanced reactors or generating a specific amount of MWh of advanced nuclear energy by a predetermined date.
The report concludes that nuclear energy will not fulfil its role in climate mitigation and energy security unless the actual costs of new nuclear reactor construction and operation come down. In particular, the report says, developers must be able to reliably deliver projects on budget and on schedule. This issue has traditionally been a challenge for the nuclear sector and it is one that must be addressed if nuclear is to reach its potential. The report argues that, in partnership with industry, the DOE can be instrumental in achieving that. Firstly, by promoting best practices in project management, contracting, and oversight and, secondly, encouraging design innovations such as modularity, smaller size, higher-volume manufacturing would simplify reactor projects. For example, the report argues that the standardization of certain components used in advanced reactor designs could facilitate their rapid deployment by creating a larger, predictable market for suppliers. Such innovation in standardised parts would allow multiple reactor vendors to leverage cost and supply chain benefits and would have a compounding effect on how quickly reactors can be built.
Nuclear energy does not need to be the least expensive source of energy because the power it produces are a premium product that is available around the clock and in all atmospheric conditions. But nuclear energy needs to be more reasonably and predictably priced and new projects reliably delivered.
The report does point out that recent industry experience offers promising results. The current fleet of nuclear energy plants set for itself a goal in 2016 of cutting operating costs by 30%. It was meant to be aspirational, but the campaign brought forth new ideas, and the fleet met the goal by 2020. The motivation was also cost-based: to match the price of electricity from natural gas power plants. According to the NIA, in the construction context, the goal should be set in terms of cost per megawatt-thermal – for advanced reactors, electricity will not be the only product – and should match the cost of other clean firm technologies like geothermal energy, or natural gas with carbon capture. A stretch goal would be to match the cost of steam generated with natural gas without carbon capture, which is the utility industry’s preferred alternative at the moment, because there is no requirement to cut climate-forcing emissions.
Becoming more business-like
A key aspect of the report recommendations for the DOE concerns the need to become more effective in commercialising advanced nuclear energy technologies. Apart from developing an integrated Advanced Nuclear Energy Strategic Plan, there are improvements DOE can make in its operations to assist in commercialising the nuclear technologies that will be essential to achieving climate and energy security goals, the report says.
Among those is the adopting a more business-like approach, including carrying out tasks promptly, efficiently, and without excessive bureaucratic requirements. Successful businesses are good at staffing appropriately for the tasks at hand, smoothing out contracting procedures, and recognising that some of the ventures they will pursue will not succeed, and will turn out to be blind alleys, the report says, adding that while the DOE has often shown excellence as a technical organisation, it now also needs to excel as a business incubator. According to the authors that means adopting standard business procedures when negotiating non-disclosure, or intellectual property (IP) rights agreements; improving its business operations to reflect the urgency of climate challenges and the pace of the private sector; and adopting a business-like attitude that strategically and promptly decides whether a technical approach is viable and commercially promising.
As the authors observe, successful private ventures try out many ideas and drop the ones that don’t work. The government version, which the Energy Department should adopt, is to aim for the success of the portfolio, not every project in the portfolio. If there are, for example, eight key solutions to a particular problem, the important thing is that we find them, even if it takes twelve or sixteen attempts to do so. On the way to finding those solutions, DOE can also improve its operations. Government contracts typically specify that if the government pays for it, the government owns the IP. But the IP is precisely what private investors want to own, and the IP in question may not be worth much to the government. DOE needs a way to address the importance for innovators to retain their rights to their IP, and in turn enable smoother contract issuance and the ability for developers to meet the aggressive deployment schedules that the government has established. Private sector investors do not generally stumble over problems like this. The report says that the DOE needs a way to resolve these issues promptly, so that developers can keep to the aggressive deployment schedules that the government has laid out.
Similarly, the report states that DOE non-disclosure agreements lack an effective approach because they are negotiated on a case-by-case basis, rather than being standardised among the National Laboratories.
Improving communication between the government and the companies that government seeks to help in realising its climate and energy ambitions is also essential, the authors say. Government contract procedures are designed to ensure that an agency doesn’t favour one private company over another. As a result, communications are often cumbersome. While DOE needs to remain neutral until making an award, that doesn’t necessarily preclude DOE from holding discussions with a prospective company, as long as it doesn’t give that company an edge. In contrast, private sector ventures and universities may have constraints, such as competitive pressures, but retain the ability to communicate freely before a contract is signed. Successful business requires effective communication. IP agreements, non-disclosure agreements, and communication as managed now by DOE doesn’t align with the private sector and, more to the point, technology innovation, the report concludes.
Investors are also racing to commercialise their technologies before rivals do, and in time to meet emerging needs. The government, in contrast, is more concerned with the amount spent and with following the detailed rules under government contracting processes, rather than the cost of delay. While in some situations it could make sense to prioritise traditional government procedures, this does not make sense in cases dealing with innovative technologies. These delays are not compatible with an aggressive technology deployment agenda. In developing new products the object is to deploy new technologies at minimum cost to taxpayers, while recognising that some investments will not lead to a commercial product. Additionally, delays can be expressed as parts per million of carbon dioxide added to the atmosphere. In summary, the report argues that the DOE should be handling business matters the way a business would and the DOE’s work should be motivated by the idea that time is short to decarbonize and strengthen energy competitiveness and security. The advanced nuclear technologies that DOE must nurture will be needed to replace as much as 60% of the electric system that is powered today by carbon-emitting generation, and the whole electric system will also have to grow substantially – by a factor of 2 to 2.5 – if it is to replace the carbon-emitting technologies currently used in transportation, space heating and industry. By aligning with entrepreneurial businesses, streamlining, standardising, and optimising its contracting, communication, and staffing, the DOE will be more able to promptly deploy the products that are the most viable. As the report concludes, this is essential to satisfying the urgent need for climate mitigation and energy security.
Ultimately, it will be DOE’s decision on how to organise its advanced reactor efforts but the NIA argues that an Advanced Nuclear Energy Earthshot model is one logical and practical approach.