What we did not see was the third reactor building. That is because it was never built. Constellation Energy, now a subsidiary of Exelon, applied for a construction and operating license in 2007 to build a third reactor that would have been equal to the size of the first two reactors combined.
However, in October 2010, Constellation Energy decided to scrap its plan to build a third reactor because DOE requested an $880 million fee in exchange for a $7.6 billion loan guarantee, an amount Constellation said was “unreasonably burdensome.” DOE argues the fee is necessary to compensate taxpayers for taking on risk.
Leaving aside who was right and who was wrong in this situation, the fact remains: large nuclear power plants suffer from extraordinary upfront costs.
This is a big problem, especially when considering the role nuclear power plays in our energy mix: it is the only source of large base load power that emits zero greenhouse gas emissions.
So, what do we do? One path forward for the nuclear industry is through the construction of Small Modular Reactors (SMRs). SMRs are nuclear reactors that are intentionally designed to be less than 300-megawatts, or about one-third of the size of conventional large reactor. By making them small, they have several key benefits not available to large reactors. These issues are discussed at length in a new American Security Project (ASP) report, “Small Modular Reactors: A Possible Path Forward for Nuclear Power.”
First, SMRs offer flexibility. Since they are small, they can be added to the electric grid incrementally. Slow incremental additions better match the slow energy demand growth in the United States, which is projected to be less than 1% per year. Utilities have little interest in building a huge nuclear reactor when demand is not rising quickly enough to justify the investment.
Second, SMRs are designed with several safety features that are an improvement over large reactors. By using simpler designs with fewer coolant pipes and components, the risk of a safety accident declines.
Third, and perhaps most importantly, SMRs have an advantage in cost over large reactors. While a typical large reactor can cost between $6 and $9 billion, an SMR has an estimated price tag of only $250 million for a 100-megawatt reactor. With smaller upfront costs and shorter construction timeframes, utilities can get loans with lower interest rates.
Despite these advantages, no SMR has been constructed to date. Why isn’t the industry building SMRs right now? The biggest obstacle for SMRs is that the Nuclear Regulatory Commission (NRC) has licensed no SMR design.
A second impediment is the lack of a track record on performance. Without an example to point to, the burden is on the nuclear industry to prove that the advantages of SMRs discussed above are indeed an improvement over conventional reactors. Until the first plant moves ahead, uncertainty remains.
A third problem is low natural gas prices. The nuclear industry remains bullish on their prospects over the long-term, and with assets that last 60 years, it is essential to not get swept up in the latest hype. However, low natural gas prices present real problems for industry, at least in the near-term.
For Calvert Cliffs, a third large reactor no longer makes economic sense. While hurdles remain, moving forward with an SMR may offer a viable alternative.
Whoever occupies the White House come January 2013, the administration will need to lay out an ambitious energy agenda, one that will shape our energy mix for years to come. Nuclear power will likely play a prominent role in America’s energy future, but in order to do so, the nuclear industry must chart a new course. SMRs offer a possible path forward.
Cunningham is a policy analyst at the American Security Project, a nonpartisan think tank.