NuScale Power, an American start-up company developing the next generation of small nuclear power plants, the Small Modular Reactor (SMR), has canceled construction plans in the U.S. state of Idaho. The project attracted attention as the first SMR construction project in the United States due to its promise of being “cheap and safe,” but global inflation has made it unprofitable. Japanese companies also invested in the company. Although the Japanese government supports SMR, there are questions about its feasibility and economics. What does failure of advance planning mean? (Takuya Kishimoto)
◆It’s supposed to be “cheap and safe,” but it’s not profitable due to soaring material prices.
“It is unlikely that we will be able to attract enough power buyers to continue the project. Both parties have decided that the most prudent decision is to terminate the project.”
On the 8th of this month, NuScale and the Utah Municipal Power System (UAMPS), which is made up of power companies in the western United States, issued a statement announcing that they would be canceling their joint SMR construction project.
Conceptual diagram of a small nuclear power plant proposed by NuScale (from the company’s website)
The project was to install six NuScale SMR units (each with an output of 77,000 kilowatts) at a national laboratory in Idaho, with the first unit scheduled to start operating in 2029. The aim is to create a completely carbon-free power source by backing up renewable energy sources such as solar and wind power, which can be unevenly generated depending on weather conditions, with SMR power generation, and if SMR becomes a reality, it would be the first such project in the United States.
The project failed because SMR power generation costs were significantly higher than expected. In January of this year, NuScale predicted that even with U.S. government subsidies, the unit cost of SMR power generation would be 8.9 cents (approximately 13 yen) per kilowatt hour, approximately 1.5 times the previously estimated unit price. announcement. The sustainability of the project was called into question because recent inflation has caused the prices of materials such as carbon steel piping and electrical equipment needed for construction to soar across the board.
◆The market is skeptical about the ambition that the technology is at a commercial stage, and the stock price has fallen by 80%
One of the main appeals of SMR proponents was that it would reduce construction costs by downsizing nuclear power plants and manufacturing some standardized components (modules) in factories and assembling them on-site.
However, David Schlissel of the Institute for Energy Economics and Financial Analysis (IEEFA) estimates in a report that the project’s construction costs have increased from $5.3 billion to $9.3 billion. He said future inflation could further increase costs, “undermining the argument that SMR construction is cheap.”
The canceled SMR was the only one whose design had been certified by the U.S. Nuclear Regulatory Commission (NRC). NuScale has plans to construct SMRs in Wisconsin, Poland, Romania, and other locations, and President John Hopkins said, “Our technology has reached the commercial stage.We hope to continue delivering SMR technology to customers both domestically and internationally.” He commented that he was enthusiastic about his future plans.
However, the market is skeptical about the feasibility of SMR, and NuScale’s stock price has currently fallen about 80% since its listing in May 2022.
◆What to do with a large amount of unrealized loss? Some companies “continue to support”
It will also have a big impact on Japan. The Japan Bank for International Cooperation (JBIC), Chubu Electric Power, JGC Holdings, and IHI have invested over 10 billion yen in the company through a special purpose company (SPC). Although he is a major shareholder with around 8% of the company’s shares, he appears to be carrying a large amount of unrealized losses.
A spokesperson for JBIC, which announced a $110 million investment in April 2022, responded to the cancellation of the project by saying, “We are assessing the situation, including checking with NuScale. We are considering future responses, including what to do next.” At its financial results conference on the 9th, JGC commented, “SMR technology is necessary.We will continue to support it.”
◆Bill Gates also joins the “SMR” boom
The concept of small nuclear power plants such as SMRs was not new in Japan, having been presented in the long-term plan of the Atomic Energy Commission in the 1980s. The turning point was the TEPCO Fukushima Daiichi nuclear power plant accident. After the accident, nuclear power plant regulations were tightened in each country, and construction costs soared. Profitability was no longer expected, and new construction was canceled or reviewed one after another.
As mentioned above, the “approach” that modularization is expected to lower construction costs and that miniaturization will make it easier to cool the reactor in the event of an accident, increasing safety, has been reevaluated. Many countries, including Japan, are beginning to research and develop nuclear power plants as a next-generation nuclear power plant that will lead to decarbonization.
In the United States, there is an “SMR boom”, with Microsoft founder Bill Gates’ launch of a venture company to develop SMR, which has become a hot topic. At the GX (Green Transformation) Executive Committee, which aims to realize a decarbonized society, the Japanese government listed SMR as one of the candidates for next-generation nuclear power plants, with an eye toward new and expanded nuclear power plants.
Prime Minister Kishida (second from left) giving a greeting at the GX Executive Meeting at the Prime Minister’s Office on the 7th.
However, questions have been raised both domestically and internationally about its feasibility, economy, and safety.
◆Junichiro Koizumi and others blatantly call it “baseless enthusiasm”
The Japan Federation for the Promotion of Zero Nuclear Energy and Renewable Energy (Hara Jiren), to which former Prime Minister Junichiro Koizumi serves as an advisor, dismissed SMR as “baseless enthusiasm” in a proposal published last August. The reason for this is that there are dozens of SMR reactor types being developed in various countries, including light water reactors and fast reactors, and that “cost reductions due to the mass production effect (of modularization) cannot be expected.”
He also questioned the safety of SMR, as it is supposed to have many small nuclear reactors lined up in one location, saying, “There could be a chain meltdown (core meltdown) like the one at the Fukushima Daiichi Nuclear Power Plant.”
Hajime Matsukubo, executive director of the NPO Nuclear Materials Information Center, commented on the module construction method, which is considered to be an advantage of SMR, saying, “It was also used in the large-scale nuclear power plant AP1000 developed by Westinghouse in the United States, There were numerous problems leading up to the assembly, and things didn’t go well. In the end, the two units ended up costing an extremely high amount of 35 billion dollars (approximately 5.2 trillion yen). Just because it’s a modular construction method doesn’t mean it’s going to be cheap.”
Since SMR is a nuclear power plant, it also produces radioactive waste. In May 2022, Lindsey Krall, a nuclear fuel researcher at Stanford University in the US, and colleagues concluded that in the case of SMR, “the amount of nuclear waste that needs to be managed and disposed of is 2 to 30 times greater” due to the differences in the physical reactions that occur in large reactors. announced the results of a study that found that
◆Costs will continue to rise…Is it time for a change in energy policy?
Not only the SMR, which is fraught with challenges, but also the development of the “dream new type of nuclear reactor” continues to fail. Japan spent 1 trillion yen on the prototype fast breeder reactor Monju, but decided to decommission it in 2016 due to continued problems. The focus shifted to the ASTRID project, a fast reactor demonstration reactor being jointly developed by Japan and France, with Japan investing approximately 20 billion yen, but in 2019 the French side officially announced that the project would be frozen.
A turbine generator that will be dismantled and removed at Monju, where decommissioning work is progressing, on June 1 in Tsuruga City, Fukui Prefecture.
Still, the Ministry of Economy, Trade and Industry and the Agency for Natural Resources and Energy are calling for continued development of SMRs and fast reactors as “innovative reactors.” The Kishida administration is also moving toward a return to nuclear power, including restarting existing nuclear power plants and extending their operating periods.
However, Tetsuya Iida, director of the Institute for Environmental Energy Policy, said, “The cost of solar power has fallen by one-tenth in 10 years, and wind power has also fallen by 30%.Renewable energy is the cheapest energy source, and costs will continue to fall. On the other hand, nuclear power plant costs are skyrocketing around the world due to delays and delays,” he said, calling for a shift in energy policy.
“The mainstream of the world is renewable energy and electric vehicles that can also be used as storage batteries.Japan is left behind in both.SMR is the same, but we should not cling to nuclear power plants that have no future forever.”
Since it is small, the electrical output is also small. If nuclear power plants were to handle the same level of power as existing nuclear power plants, they would have to be dispersed and build small nuclear power plants all over the place. However, how much land in Japan is suitable for constructing such a nuclear power plant? If you think about it for a moment, it might seem like a no-brainer. (Ayumu)