Nuclear power may need to get small to survive

With the bankruptcy this week of Westinghouse Electric Co., the future of big nuclear power plants in the US isn’t looking good at all. But maybe, just maybe, there is hope for something smaller.
Westinghouse, which was acquired by Japan’s Toshiba Corp. in 2006, has been building the only nuclear power plants currently under construction in the US: two in Georgia for Southern Co. and two in South Carolina for Scana Corp. Huge cost overruns on those projects are what landed the company in bankruptcy court.
Huge cost overruns have become a familiar feature of nuclear projects in this country. That’s due partly to complicated nuclear safety and licensing requirements, but also to the reality that building any big, complex, unique project in the US (a new subway line, for example) tends to generate huge cost
overruns.
As a result, the utility industry in the US has turned away from such projects. They have much simpler alternatives, after all. “If you’re a utility and you want a new natural gas turbine, you can sort of order it out of a catalog and get it in about 18 months,” said Jessica Lovering, director of energy at the Breakthrough Institute, an environmental think tank in Oakland, California. “It’s a much easier choice.”
Lovering is co-author of a couple of reports that explore ways to make nuclear an easier choice for US utilities: “How to Make Nuclear Innovative,” which came out last week, and “How to Make Nuclear Cheap,” from 2013. After reading them both, and talking to her, I’m intrigued, if still a tad skeptical.
First, a few words on why we might want nuclear power to be an easier choice: It doesn’t produce any carbon emissions, and it is generally pretty clean as energy options go. Unlike even-cleaner wind and solar, it’s a base-load power source that can reliably generate electricity 24 hours a day. Unlike natural gas generation, it’s not affected much by fuel-price fluctuations. And — once you’ve got the reactor up and running — it’s cheap.
In the US, nuclear accounts for about 20 percent of electrical power generation, as it has for decades.
All but four of the country’s 99 commercial nuclear reactors predate 1990, and while most of them can probably be kept operating for many decades to come, nuclear’s share of electricity generation seems doomed to decline without some new reactors coming online. And in the wake of Westinghouse’s troubles, that probably won’t happen unless a way is found to build them more cheaply. One key to this is making nuclear plant construction more standardized and modular — that is, assembled from parts made in a factory. Which is easier said than done! From an article by Bloomberg’s Chris Martin and Chris Cooper.
About ten years ago, Westinghouse came up with an approach it hoped would revolutionize nuclear power: a simplified modular design that could be sold to more than a dozen utilities at a lower cost. It had the less-than-catchy name of the AP1000.
“The AP1000 was supposed to open a new era of reactors with a generic design that can be sold or licensed,” said Mycle Schneider, a Paris-based nuclear energy consultant. “What they did was move the problems to the factory from the construction site, where you’re dealing with a labor force that hasn’t built reactors in decade. And they used extremely optimistic cost and construction estimates.”
It’s possible that some other company could still make this approach work for big reactors. The Korea Electric Power Corp., which has had much more success in reining in nuclear construction prices than most of its developed-world counterparts, has eight APR-1400 reactors completed or under construction in South Korea and the United Arab Emirates, and it has submitted the design for review to the Nuclear Regulatory Commission in the US.
But the new nuclear project generating the most excitement in the U.S. is all about making things smaller. NuScale Power LLC, a company spun out of Oregon State University in 2007, plans to churn out small reactors on an assembly line, then sell them to utilities as six-packs or 12-packs. The company signed a deal last year with Utah Associated Municipal Power Systems and the US Department of Energy to build a power-generating facility in Idaho, and its design was accepted for review by the NRC earlier this month.
All these reactors are of the same basic light-water design as existing US commercial nuclear reactors, albeit with lots of safety and efficiency upgrades. There are also companies big and small working on next-generation (Generation IV, to use the lingo) reactors that use different technologies. A key theme of last week’s Breakthrough Institute report is that the US government should be doing more to encourage small, entrepreneurial firms to lead the way.
In the United States today, there are dozens of advanced nuclear start-ups that could bring game-changing nuclear technologies to market. But the path to commercialization for these designs remains uncertain. The Nuclear Regulatory Commission is presently unprepared to license them. The Department of Energy and the National Laboratories are not well set up to assist them. Nor are all but the largest incumbent nuclear firms in position to acquire the large amounts of capital that would be required to navigate the current licensing process, develop advanced materials and fuels, or build first-of-kind reactors.
That’s followed by all sorts of interesting suggestions for how to change things that you should go ahead and read if you’re interested. There is a complication with nuclear power, though, that may limit just how entrepreneurial things can get. That would be its intrinsic danger, which doesn’t exactly lend itself to “permissionless innovation.” I was struck in particular by this passage from the report’s account of the U.S. government’s successful campaign to encourage space entrepreneurship:
The commercial space industry also benefited from favorable regulation, particularly a moratorium on regulation of the safety of crew and passengers for its first ten years (later extended to twenty years).
No, that’s probably not going to happen with nuclear reactors.

— Bloomberg

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market”