Efficient Cooperation or SMR Growth

Written by Paul Wiseman for IIR News (Sugar Land, Texas)

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Summary

Small modular nuclear reactors are getting a lot of buy-in these days. The sudden rush is creating a logjam of developers, finance providers, regulators and the utilities that have to make it all work. Some have suggested a sort of "dating app" to facilitate communication.

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SMRs in the Spotlight

In today's energy market, small modular nuclear reactors (SMRs) are getting a lot of interest, a situation that has changed greatly since the 1970s. At one time, nuclear power was "on the same list with cocaine and human trafficking," said David Brock, vice president, Nuclear Development SaskPower. Brock was among four speakers at a recent Reuters webinar, Unlocking SMR Growth: Strategic Partnerships Driving the Nuclear Boom Forward.

The webinar touched on speeding SMR development by connecting governments, financing, developers and end users.

Besides Brock, the other speakers included: Julien Tizorin, managing director and head of Power and New Energy for Credit Agricole CIB, a U.S.-based company with roots in France; Glenn Davis, director of the Virginia Department of Energy; and Richard Montgomery, head of licensing for Nuclear Strategic Projects for PSEG, a utility in New Jersey and parts of New York.

Utilities: Coordinating the Players is Like Speed Dating

Among all the SMR players, utilities are the centerpieces, said Davis and Montgomery. Utilities are the ones who, in most cases, have to make the system work. And for them, the current fragmentation creates lots of inefficiencies, according to the speakers.

Davis said that offtakers such as data centers were not talking to the technology developers, who also weren't talking to finance companies. "But all three of them were calling my office."

He continued, "It's like we started a speed dating round. We were sending phone calls between the developers, the technology companies and people that wanted to fund them to start having those conversations." A system for getting everyone on the same page would be more efficient.

Montgomery added that there is fragmentation even at the sector level. "There's too many of us. We need to start matching strengths. We need to start collaborating better, not duplicating efforts."

So many technology pitches vary only slightly, yet they must be waded through by the utility, said Montgomery, adding: "Stop reinventing the wheel. Let's do it one time."

Utilities only want to consider proven, efficient technology, Montgomery continued. "Investment only matters if it drives real progress. We're not going to pay for you to try things out. We're going to pay for real products."

It's the long-term view. "We're not just buying a reactor. We're buying decades of performance. We're buying the next 40, 50, 60, 80 years of this product," he said.

Financing Challenges

Credit Agricole CIB's Tizorin said traditional project financing is not available for SMR developers due a variety of factors. "Technology risk, the longer timelines (and) the lack of operational track record. It's just outside of traditional risk appetite at this point of time."

Therefore, government support is critical, and recent years have seen more of it come online. Tizorin listed U.S. Department of Energy (DOE) funding, the Title 17 Clean Energy Financing Program, the Inflation Reduction Act, and others as "a game changer." The guarantees "can cover up to about 80% of the project's costs," which "fundamentally changes the conversation for commercial lenders like us. And that's really what's making private capital willing to come alongside."

Virginia Department of Energy's Davis said state governments can also help. Recent Virginia legislation accelerated the cost recovery for an SMR's onsite preparation. That reduced not only the payback time, he said, it also reduced interest payments.

This is an important step towards the state's announced goal of hosting the first working SMR site in the U.S. Industrial Info is tracking eight such Dominion Energy Incorporated (Richmond, Virginia) sites in Virginia, with a total investment value of $24 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can view the project reports.

Nuclear Development SaskPower's Brock said that in Saskatchewan, green bonds are now an option as SMR's have left the avoidance list. The province's change "demarcates, in a pretty stark way, the changing perceptions about nuclear globally, and here in Canada," he continued. Green bonds originated in March of 2022, according to the Canadian government website, when the Department of Finance issued an inaugural seven-and-a-half year, $5 billion (Canadian) green bond.

Giving Progress the Gas

Virginia Department of Energy's Davis said many new data centers (hyperscalers in general) pushed to provide their own power and are looking at SMRs. However, a data center build takes about three years, while a best-case for SMRs is 10 years. What to do in the meantime?

Davis suggested interim use of natural gas as a way to attract and keep hyperscalers on board while waiting for the SMRs.

"For us, it's making sure that you can get accelerated recovery on site readiness, but making sure that the projects that would actually bring nuclear sites to us, like data centers, can actually go and start growing today," Davis said.

The unaddressed challenge on that score is that orders for the natural gas turbines necessary for such generation are also on back order, stretching out to 2030 for some providers.

Key Takeaways

• With most utilities holding an "all-hands-on-deck" motto for new energy sources, nuclear power has seen a resurrection since its Three Mile Island and Chernobyl days.
• Small modular reactors are looking to fill that bill, although it will be 2032 at the soonest before any are in operation.
• Speakers at the Reuters webinar recommended that all facets of the issue work together to streamline the research, development, funding and implementation of small nuclear facilities.

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About IIR News
IIR News (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).