Wednesday, February 8, 2012

SMR vendors seek $452M in federal funding

Designs that can be licensed and enter revenue service by 2022 are sought

This is an update to my coverage published in Fuel Cycle Week V11:N458 2/2/12 by International Nuclear Associates, Washington, DC

slice of pieThe U.S. Department of Energy issued on Jan. 20 a draft Funding Opportunity Announcement that would provide $452 million in federal funds over five years to establish cost-sharing agreements with private industry to support the design and licensing of small modular reactors (SMRs). Typically, SMRs are defined as reactors that generate less than 300 MW in electric power.

The DOE money is expected to be eligible for first-of-a-kind engineering, design certification, and Nuclear Regulatory Commission licensing costs. Also, the reactors must be on track to be licensed by the NRC and in commercial development by 2022. The government emphasized it is interested in designs with "passive safety features."

It isn't clear whether the Energy department will limit eligibility to LWR designs. DOE Assistant Secretary Peter Lyons is on record as saying that LWRs have the best chance of being licensed and reaching the market by 2022.

Several vendors fitting the profile are B&W with a 180 MW design and NuScale with a 45 MW design. A third vendor, Westinghouse, is developing a 225 MW plant. And a fourth, Holtec International, is developing a 140 MW design.

However, one U.S. firm, TerraPower, which isn't likely to qualify for federal funding, is in negotiations with the Chinese to build a 500 MW sodium cooled fast reactor demonstration unit. TerraPower told FCW Jan. 27 that contrary to media reports, Bill Gates, who is a private investor in the company, did make substantial progress in his trip to China late last year

Contractual, Funding Uncertainties

According to DOE Contract Specialist Layne Isom, located at the DOE Idaho field office which is managing the program, vendors will have 30 days to comment on the draft FOA. He emphasized in a telephone interview with FCW that vendors should not submit proposals at this time.

Isom said that after the comments are reviewed, a formal request for applications for funding would be released, probably sometime in mid-to-late March. Applicants will have 60 days to file their proposals with the agency.

Once proposals are in, DOE will review them with a plan to make its funding award decisions by the end of September. Isom said he is not sure about several factors that could affect the competitive environment. The reason is the FOA is still in draft.

iStock_000015337922XSmallFirst, he was not able to say whether the money would be awarded on a "winner-take-all" basis or if there would be two awards. The draft FOA calls for up to two awards of funding, splitting the five-year, $452 million pot—but not necessarily down the middle.

Second, while Isom didn't mention it, the fact is that while DOE can plan for a five-year program, a deficit-minded Congress could cut off funding for its SMR work any time. Firms that win a share of the $452 million might find themselves down the road hung out to dry by a mercurial government process.

The total sum is significant, but given the daunting costs of getting an NRC safety certification, it will only make a difference for one or two designs at the most. That isn't stopping vendors with LWRs under development from trying for it.

B&W Has a Customer

Ali Azad, CEO at Generation mPower LLC, a majority-owned subsidiary of B&W, told FCW in a Jan. 30 telephone interview that the firm's drive to get the DOE money, and to bring its 180 MW LWR SMR design to market, is proceeding on two regulatory tracks.

For the project announced last June with Tennessee Valley Authority (TVA) to license and build an SMR at the utility's Clinch River site, it is using the NRC's Part 50 process to obtain a construction license and will submit an application in summer 2014. The target date for completion of the Clinch River unit is 2020.

B&W is using the NRC's Part 52 process to achieve design certification of the mPower reactor with plans to submit an application in December 2013.

"This is a manageable date. It is reasonable and achievable," he said.

Azad said B&W is a "big proponent" of the DOE program to provide funds for licensing support of SMRs. TVA and B&W have a signed agreement about sharing the costs of the licensing and design certification tracks, but the official declined to provide details.

Asked if B&W still stood behind a media report that the mPower reactor would come in at $4,000/kw, or $720 million for a 180 MW unit, he would only say that the firm is "comfortable with the levelized competitive cost of the unit."

He added, "We are estimating costs using a bottoms up cost analysis. Our numbers must reflect the realities of the market."

In addition to TVA's site, B&W is targeting the replacement of coal fired boilers in the U.S. and overseas for its reactor.

"The infrastructure is already there. We have to make sure the selected site supports seismic requirements and that we can completely address all other safety issues."

NuScale: FIrst Customer Will Be in U.S.

Bruce Landry, marketing vice president at NuScale, told FCW in a telephone interview Feb. 1 that like the other SMR developers his firm is excited about the DOE funding and plans to apply for it. Landy called the funding "an important step forward" in government support for SMRs.

Although NuScale has a sales representative in Mumbai, India, Landy says the first unit to be built for a customer will likely be in the U.S. While he declined to name early prospects for one, Landry said that the success factors are that there will be a clear definition of a customer need and an agreement on who will be the reactor owner/operator.

NuScale declined to comment on the nuclear liability law in India. This is an update from an comment that appeared in the print edition. The reason is a company representative told FCW in a telephone call Feb 5 is that the current situation with India is that the implementing rules for the law have not been approved. Separately, Sen. Richard Lugar, R-Indiana, issued a statement on Feb 8 that was highly critical of the law.

Bruce Landry wrote to FCW in an email Feb 7 emphasizing that for any customer, NuScale is a vendor and not the developer of a project at a specific site.

One potential customer in the U.S. is MidAmerican. Landry says that company is conducting due diligence on a number of SMR vendors for a possible new reactor in Iowa. MidAmerican is close to success in convincing the Iowa legislature to adopt CWIP as a rate rule for new reactor construction.

Westinghouse Claims Partners

A cloak of competitive secrecy is draped over the desks of SMR program managers at Westinghouse who are engaged in the effort to get a share of the DOE money.

Kate Jackson, Ph.D., the chief technology officer of the firm, did confirm to FCW in an emailed statement that Westinghouse will apply for a share of the DOE funds.

She said the company has a consortium of utility partners lined up to help build the first one but declined to name them or the state where the project would take place.

Angela Fenwick, a Westinghouse spokesperson, told FCW Jan. 31 that discussions are still ongoing with potential partners and that a final deal will determine scope of utility funding and the site for the first unit.

Holtec Touts Fabrication Prowess

Holtec International is developing a 140 MW LWR SMR. Pierre Oneid, President of the firm's SMR subsidiary located in Jupiter, Fla., told FCW on Feb. 1 that the company was very pleased to hear about the Energy department’s FOA.

"We plan to apply for it."

Oneid said that the firm's competitive advantage will be complete end-to-end manufacturing of the reactor, among them the major systems such as the reactor pressure vessel, heat exchanger, feed water heaters, and steam system.

"We will be a completely American made system. We already have 450,000 square feet of manufacturing space in Pennsylvania in an old Westinghouse plant in Pittsburgh, and another 300,000 square feet in Orville, Ohio, near Akron."

However, Oneid declined to offer dates for filing a construction license under NRC Part 50 or design certification under Part 52.

TeraPower heads overseas

Software billionaire Bill Gates went to China last Fall looking for partnerships and to tout TerraPower's 500 and 1,000 MW fast reactor designs. Media coverage at the time reported that Chinese officials received Gates politely as a world class celebrity, but did not ink a deal.

In a telephone interview Jan 27 Doug Adkisson, Head of Operations for TerraPower, told FCW the firm made "aggressive progress with the Chinese," and that the firm is involved in discussions to build a fleet of the sodium-cooled fast reactors in China.

Discussions are so advanced, Adkission said, that TerraPower is developing U.S. and offshore supply chain relationships that include technology transfer agreements for the Chinese.

"We believe there is a big market for fast reactors in China. By 2050 the Chinese want 50% of their reactors to be based on this type of technology."

As part of the supply chain work, TerraPower is developing a parallel plan to produce the fuel that will be used in the unique reactor. According Adkisson, the fuel goes in the reactor just once and stays there for 40 years. It is a breeder reactor which uses U235 as an "igniter" and then fissions depleted uranium, taken from enrichment plants, to become PU-239.

TerraPower has no plans to seek a license from the NRC to build one of its plants in the U.S. Adkisson said the NRC's focus is on LWR designs and has no funds to support licensing of a new type of fast reactor.

"We have a more conducive licensing environment in China for a fast reactor."

The firm is on a fast track. Adkisson said the first unit will be completed by 2020 with a two-year commissioning period. He added that the Chinese have said in talks with the firm they are interested in modules of up to six, 1000 MW versions of the TerraPower reactor at a single location.

He added that while the reactor design is innovative, the TerraPower reactor will use a conventional steam system for transfer of heat from the reactor to turbines and generators.

Asked why the firm was so sure it could build an entirely new reactor so quickly, Adkisson pointed out the TerraPower design owes a lot to the work done by Argonne National Laboratory in Idaho on the Integral Fast Reactor.

"We are standing on the shoulders of giants," he said.

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