Focus on USA

A new kind of nuclear new-build

19 January 2012

Energy infrastructure company Blue Castle Holdings (BCH) is taking an innovative business approach to the deployment of a two-unit nuclear plant in Utah by privately financing the pre-construction site development risks. The anticipated end result is a fully-licensed, ready-to-construct greenfield nuclear plant site in 2016. By Rob Graber and Tom Retson

Blue Castle Plant will be a two unit nuclear plant located near Green River in east-central Utah. It will be only the ninth nuclear power plant built in the Western USA (after Humboldt Bay (shut down in 1976), Hanford N (shut down in 1987), San Onofre Nuclear Generating Station, Rancho Seco (shut down in 1989), Trojan (shut down in 1992), Columbia, Diablo Canyon, and Palo Verde). It could be among the first 10 new plants under construction in the US, adding to the existing 65 total US nuclear plants (104 units).

The Blue Castle site is a 1700 acre parcel of land about five miles west of the nearest population centre, Green River, a city with a population of about 900 people. The water source for the plant is the Green River, about six miles to the east of the plant. Water leases have been negotiated for 53,000 acre feet (6.54x107 m3) per year, which represents the projected requirements for the two-unit project. A decision from the Utah state water engineer, which is required to change the point of diversion, is expected in the near term. A meteorological tower was put into service on the site in April 2011, to meet license application requirements for one year of data prior to license application.

The site has undergone preliminary suitability assessments, including seismic studies, yielding very favourable results. Initial estimates from the geotechnical analysis indicate a peak ground acceleration of 0.18g (the design basis for nuclear plant design certification in the US is typically 0.30g). Much more extensive confirmatory investigations are underway as part of the licensing process.

The site features nearby rail and transmission lines, as well as a major interstate highway, all additional valuable components of the site infrastructure. The site is also located near a US government-designated energy corridor. Other planned transmission projects and proposed energy corridors near the site are currently undergoing environmental impact studies. These regional additions would greatly simplify the plant’s transmission infrastructure development during construction of the plant.

The site itself, as seen in Figure 2, is in a remote part of Utah where the geography can be described as 'high desert', meaning that the environmental conditions are arid land about 4250 feet above sea level.

It is vital in the US for nuclear plants to obtain state and local governmental support, and BCP’s viability has been greatly enhanced by Utah legislation and resolutions supporting nuclear power. Utah’s power generation mix is currently heavily weighted to coal (85%), although presently it appears very difficult to licence any additional coal plants in Utah owing to environmental concerns, a pattern that is being repeated throughout the US. Since 2000, over 150 planned coal plants have been cancelled in the continental US, and no coal plants are on the drawing board after 2018. Utah has also provided nuclear power with tax credits on par with other clean energy sources. In addition to supportive legislation, strong endorsements have been voted and issued by the host city, county and state governments.

The business model

There are currently 13 nuclear plants (and 21 reactor units) actively engaged in licensing activities, with another three plants expected to file for licenses with the Nuclear Regulatory Commission (TVA for mPower reactors at Clinch River, AmerenUE for Callaway, and Blue Castle). BCH recognizes that there are difficulties to building nuclear plants in the USA. The path to nuclear plant construction currently involves political, economic and site development risks which many electric utilities appear to be reluctant to undertake at this time. The BCH business model is to assume the political, financial and site development risk for preparing a nuclear plant for construction and operation. Licensing costs for a two-unit nuclear plant represent less than 1% of total nuclear plant construction costs-generally around $120 million (not including site pre-construction cost). BCH is following the NRC original Part 52 proposed sequence that starts with an early site permit, references a technology with a certified design, and then applies for a combined construction and operating license. Presently, this approach of first conducting the environmental work, then referencing a certified design and a lead reference plant when applying for a COL should shorten the total licensing time by 6 to 12 months relative to project developers that only filed an early COL.

Upon or prior to the completion of licensing in 2016, BCH intends to involve a qualified nuclear utility (or utility ownership team) to support plant construction when overall conditions are favourable and financially advantageous. A licensed nuclear plant has a large economic value (an ‘option value’) because its operating license is granted for 40 years, can be extended for another 20 years, and the construction period, whenever it starts, can be excluded from the operating period. BCH does intend to maintain an equity position in the nuclear plant in any event. In the meantime, BCH generates cash from operating business. It generated $27 million in revenues in 2010 through its oil pipeline construction business Willow Creek, which it acquired in 2010.

The executive managers of developer Blue Castle Holdings, which employs about 110 people based in Provo, Utah, include a former Utah State legislator, executives from a leading nuclear supply firm (General Electric), a former chairman of the US Nuclear Regulatory Commission (Nils Diaz), and the former general manager of one of the largest power plants in the Western US (the Intermountain Power Agency). The company was formed in 2007 and has spent four years locating the best site for the plant, acquiring land and water rights and building support for the project with state and local governments. It is now preparing to file an early site permit (ESP) application with the NRC by 2013. A construction and operating license (COL) application will follow to facilitate licensing process completion in early 2016.

Licensing status

The Blue Castle Project has completed about 30% of its pre-ESP site characterization activities and is currently on budget and on time (see also Figure 4). BCH has contracted US nuclear plant licensing support firm ENERCON to complete all activities leading up to the license submittals to the NRC. Site characterization comprises a host of 'ologies', including seismology, meteorology, hydrology and geology, leading to a preliminary and final safety analysis report to the NRC. Also included in licensing activities are demographics, emergency planning, plant security and environmental impact studies.

As mentioned above, the meteorological tower is in operation, and to date has collected six months of data. All geotechnical borehole drilling is complete and site water monitoring wells (30 feet-150 feet) are operational. Geophysical and aircraft hazard analyses are complete. The NRC has completed two site visits for geotechnical and environmental process reviews. Additionally, socioeconomic surveys have been conducted with local community and county representatives and emergency plan development activities have been initiated with applicable organizations.

A very significant and resource-intensive element of the ESP is the seismic analysis, currently on the schedule critical path. This activity involves the development of both seismic source and site attenuation models via a senior seismic hazards analysis committee (SSHAC) level 3 process. As of October 2011, the initial seismic/SSHAC data needs and methodology meetings have been completed as well as a detailed seismic analysis process review with the NRC; significant work in this area will continue through September 2012.

One of the near-future project activities involves the selection of the project nuclear technology. This process will begin in early 2012. At the current time, no decisions have been made regarding the technology to be employed, although BCH has established guidelines regarding near-term completion of design certification by the NRC and completion of a reference COL.

The foundation of the BCH strategy for its current project is a strong belief that nuclear power has a vital role to play, driven by current environmental regulations for coal generation and long term price stability relative to other available options. It would be made even more attractive whenever climate change policies and fossil fuel volatilities re-emerge. At the conclusion of licensing in early 2016, BCH plans to transfer the project assets to an owner who can optimize the project value by either initiating construction immediately or by opting to wait until economic conditions are more favourable.

Author Info:

This article was first published in the December 2011 issue of Nuclear Engineering International magazine

Figure 4: Blue Castle project licensing schedule Figure 4: Blue Castle project licensing schedule
Figure 2: Meteorological  tower on site Figure 2: Meteorological tower on site
Figure 1: Blue Castle would be one of the few nuclear power plants in the western USA.  Its closest Figure 1: Blue Castle would be one of the few nuclear power plants in the western USA. Its closest

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