While the nuclear industry reached key milestones in 2023 toward a goal of launching a new generation of advanced reactors in North America, the cancellation of a key project has skepticism mounting for the role nuclear technology will play in the clean energy transition.
In January, nuclear advocates celebrated the US Nuclear Regulatory Commission's first certification of a small modular reactor (SMR) design, NuScale Power Corp.'s 50-MW VOYGR design. A week later, GE-Hitachi Nuclear Energy Inc. announced the first commercial contract for a grid-scale SMR to be built at Ontario Power Generation Inc.'s Darlington nuclear plant site.
But recent setbacks for new nuclear deployment have tempered that optimism. In October, reactor developer X-Energy Reactor Co. LLC canceled its deal with a special purpose acquisition company to go public. Another vendor planning to go public, Oklo Inc., was tentatively chosen in August for a US Defense Department contract to power Alaska's Eielson Air Force Base, only for that offer to be rescinded.
Jeff Waksman, a program manager with the Office of the Secretary of Defense, told US lawmakers in November that the Defense Department is "figuring out some issues that might have happened during the procurement process," but is still pursuing the microreactor project, regardless of the vendor.
In October, Oklo extended the deadline for its go-public decision to July 12, 2024.
Another project, led by NuScale and Utah Associated Municipal Power Systems to build the country's first SMR power plant, was scrapped altogether after failing to identify enough buyers to take a share of the output from the planned 462-MW plant. The first unit of the now-canceled UAMPS Carbon Free Power Project was set to enter service in Idaho Falls, Idaho, by 2029.
New nuclear hurdles
New nuclear bears the burden of the commercial nuclear power sector's history of hefty price tags and lengthy delays. Those burdens may prove too heavy for the industry to bear, said David Schlissel of the Institute for Energy Economics and Financial Analysis (IEEFA), stifling the growth that nuclear advocates have projected for the sector amid the clean energy transition.
"It's the financial costs. It's the risks," said Schlissel, IEEFA's director of resource planning analysis.
Those risks include unknowns such as how well different advanced reactor designs will perform, and that uncertainty could give some investors and communities pause despite lofty goals such as a recently announced international pledge between the US and other nations to triple nuclear power generation by 2050.
"We don't know what it's going to cost, we don't know whether it's going to work," Schlissel said of advanced nuclear. "None have been built [in the US]. But that's what they're asking the American people to commit to. ... It's not like a utility or company puts a cost into their resource models, and it pops up that nuclear is the cheapest."
A December report from the Columbia University School of International and Public Affairs Center on Global Energy Policy found that while decarbonization models aimed at mitigating climate change almost always include a role for nuclear, the level of deployment "remains uncertain," largely due to a wide range of estimated costs for new builds as well as uncertainty on policy, public support and competing generation. And if nuclear's price tag reaches the upper limits in the studies cited in the report, "new nuclear will play a marginal role, if any, in the US energy transition," report authors wrote.
"You can't think or say the words 'risk' or 'uncertainty' too many times," Schlissel said.
The future of new and advanced nuclear may be sunnier in emerging markets than in much of Europe and North America, Schlissel and Raymond James analyst Pavel Molchanov told S&P Global Commodity Insights.
"Nuclear power in the US and Canada is not a growth industry," Molchanov said. "The question is not, 'Will nuclear power grow in North America between now and 2030?' The answer is no. But does nuclear have a chance to grow beyond 2030? Even in the best-case scenario, it's not going to be much."
That does not mean new nuclear will not be realized in North America. While NuScale's project was canceled, other projects will hinge on further capital investment and generous federal subsidies to materialize in coming years, Schlissel said.
NuScale still sees alternatives
New nuclear advocates argue that the Carbon Free Power Project's cancellation does not spell disaster for NuScale or the broader industry.
"What made this particular cancellation painful for NuScale is the fact that it was the first," Molchanov said.
While the Nuclear Energy Institute is "certainly disappointed" that the NuScale plant will not be built, "any innovative area is going to have fits and starts," Doug True, chief nuclear officer and senior vice president of technical and regulatory services with the trade group, said at a November forum hosted by the US Energy Association. "This is a fit, but NuScale has a lot of other starts that it's pursuing."
Those include the opportunity to supply power to datacenters, utilities and process heat users and to deploy its reactors internationally, NuScale spokesperson Garrett Poorman said. In the past two years, the company has signed commitments with companies in Romania and Poland to explore SMR deployment in those countries.
But it does not bode well that NuScale's light-water reactor was scrapped after being touted as one of the better commercialization prospects compared to less conventional designs, including proposals that use sodium and gas as coolants, said Edwin Lyman, director of nuclear power safety at Union of Concerned Scientists.
And the Idaho Falls project faced hurdles that were no secret to industry observers, including a subscription rate that developers were "pretty far from achieving" as of early November, said John Wagner, director of the US Energy Department's Idaho National Laboratory.
"Those who were very familiar with the project knew what they were up against and so were not necessarily terribly surprised," said Wagner, whose lab had been slated to host the power plant. "Those who were not aware of the situation were surprised, and they had more questions."
Policy options
Nuclear advocates including Wagner argued that statutory reform could help ease future hurdles by reducing the burden of licensing and permitting new reactors. For example, the NRC is required to hold an uncontested hearing on all combined license applications, even after commission staff have already approved the request.
"This adds typically on the order of six months to the process and doesn't result in any changes," Wagner said.
Congressional lawmakers have sought to encourage advanced reactor deployment through subsidies and grant programs, providing $2.4 billion in the bipartisan infrastructure law passed in 2021 to support commercial demonstration projects. A year later, the US Inflation Reduction Act created investment and production tax credits for new nuclear.
The financial incentives have been "incredibly helpful," Wagner said. "But a lot of these things wouldn't be necessary if the electricity markets properly valued the attributes of nuclear energy. For example, new gas plants don't pay any costs associated with their carbon emissions; wind and solar don't pay any costs associated with their intermittency."
Nuclear power is both carbon-free and available around-the-clock, avoiding gas generation's climate impacts and the intermittency of renewable resources.
But while the nuclear industry continues to promote advanced reactors as a key component of the clean energy transition to address the climate crisis, Schlissel said that "hype machine" echoes a decadeslong tendency of the nuclear sector to over-promise and under-deliver, particularly compared to more affordable generation resources. For nuclear to be economical, Schlissel said those plants must run constantly and would not be an ideal fit as backup generation for more intermittent resources.
"Renewables, battery storage, geothermal, energy efficiency can do the job and do it cheaper, from today's perspective," Schlissel said. "Nuclear is not financially viable without permanent subsidies. We can do better. Go after the low-hanging fruit first. If in 20 years it looks like we do need some reactors, we've got the designs now and a future generation can make that decision."
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.