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One of the leading developers of small nuclear reactors in the U.S. is facing rising costs for a key project. This situation is potentially jeopardizing its future in a low-carbon power grid.
NuScale Power Corporation and Utah Associated Municipal Power System (UAMPS) are planning to start operation of the first of six small modular reactors (SMRs) in 2029. NuScale is the leader in a global competition to construct a new generation of SMRs that could provide a base of steady power to complement wind and solar energy on a zero-carbon grid. This project hopes to show that SMRs with factory-built components can avoid the huge cost overruns that have doomed the prospects of conventional reactors in the U.S.
Unfortunately, NuScale’s first SMR now faces much higher construction cost estimates. This has been caused by inflation and higher interest rates. If projected costs rise above fifty-eight dollars per megawatt-hour, it would trigger a make or break vote on the project as early as next month from the project’s anchor customers.
LaVarr Webb is a UAMPS spokesperson. He said that analysts are getting bids from vendors for construction and “counting every nut and bolt.” Webb would not speculate about the size of the increase. However, he said, “we do know it will go up substantially.”
This development comes as another advanced nuclear reactor proposal from TerraPower for a demonstration prototype in Wyoming will likely be delayed for at least two years because of lack of access to highly enriched fuel in Russia. The delay prompted a letter from Senator John Barrasso (R-Wyo) to Senate Energy and Natural Resources Joe Manchin (D-W.Va.) requesting that an oversight hearing on this issue be held in the Senate.
UAMPS is a Salt Lake City-based group of fifty municipal utilities in six Western States. Along with NuScale, they are developing the reactor project. The U.S. Department of Energy has established a cost sharing grant of up to one billion four hundred million dollars. The organization members can leave the project if costs go above fifty-eight dollars per megawatt.
At this time, UAMPS does not intend to exit, according to Webb. Unless and until its members say otherwise. Each of its utilities will make separate decisions on buying the project’s electricity. If many of the utilities ultimately opt out, the project could fail. In order to go forward, there must be buyers for all of the SMR’s electricity.
About seventy developers in the U.S. and six other countries are also working on SMRs. However, NuScale is the only developer whose design has been approved by the Nuclear Regulatory Commission. NuScale plans to build six reactors in Idaho. The entire project could deliver four hundred and sixty-two megawatts in 2030 if all regulatory approvals come through and construction schedules are met.
However, NuScale has seen costs of construction materials skyrocket since the project was first greenlighted in 2020. The cost of fabricated steel plate has increased by fifty six percent. Carbon steel piping is a primary component of nuclear plants. The cost of piping is ninety percent higher. The reactor components constitute about one-third of the plant’s expected total costs.
Interest rates have risen sharply to their highest level in fourteen years. Chris Colbert is the CFO of NuScale. He said, “All that has impacted the cost of the plant. We’re all trying to figure out what to do with it.”
Those rising costs are also impacting NuScale’s competitors in the wind and solar industry. Webb said, “We’re seeing cost increases for all forms of generation. Our member participants feel like they need baseload, dispatchable, always-available energy to back up renewable power.”
Please read Part 2 next