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NuScale, realising there’s no real market for small nuclear reactors, pins its hopes on mass orders from tax-payer funded military

Advanced US nukes need a boost; is the Pentagon the answer? As proponents for the fuel seek to establish a commercial domestic market, federal PPAs are seen as key to unlocking private investments. Utility Dive By Catherine Morehouse  July 19, 2019 “……  the large-scale reactors that are the norm across the U.S. don’t fit in with the growing trend toward smaller, decentralized power.

Small, advanced nuclear reactors better fit that mold, but have yet to enter the market. So the key question, say stakeholders, is how to spur that initial investment and establish a commercial domestic market, with a loftier goal of establishing the U.S. as a nuclear power export leader.

“……..you really are going to need to have that public involvement to persuade the private sector to roll along,” – Daniel Poneman, former U.S. Deputy Secretary of Energy, and current president and CEO of nuclear developer Centrus

One potential solution floated at the conference was federal power purchase agreements between the Department of Defense (DOD) and the Department of Energy (DOE). 

A public-private partnership

“I think that the Department of Defense is a logical first customer for these reactors, especially micro reactors that are under development that can be deployed in remote regions,” Sen. Lisa Murkowski, R-Alaska, who chairs the Committee on Energy and Natural Resources, told the New Nuclear Capital audience on Tuesday……..

DOD’s ability to purchase in bulk and “underwrite an investment that may not have an immediate commercial appeal,” makes it an ideal first customer, said Poneman. And that initial investment is key.

It “really helps to have that, frankly, that initial investment from an investor that is looking at their returns not in quarterly earning statements but in the long-term security payoffs,” said Poneman. “Then when they make that initial major investment, it’s the cost of the very first one that’s always very, very high. And sometimes you find a cost curve that declines really quite steeply as you make more.”

Currently, a lot of capital being invested in the nuclear space comes from “eccentric billionaires who want to save the world,” Managing Director of Private Equity at Growth Capital Services James Magowan said at the conference. This poses a problem when trying to bring in “real venture capitalists,” whose first question is “Who’s your customer? Do you have a customer?” 

To that end, “the suggestion that the DOD could step up and be a customer is a great one, I think that solves an initial customer problem,” he said. But in order to establish a domestic market, more players need to be involved.

The DOD has shown interest in advanced nuclear technology, Murkowski told reporters, making them a “likely candidate” for investment. DOD did not respond to multiple requests for comment.

Building a domestic market

Many in the nuclear industry argue that establishing the U.S. as a nuclear export leader is essential to both national security as well as global decarbonization. While the Pentagon can get things rolling for small-scale nuclear, utilities will be essential to building out the market as buyers.

“I think you see utilities, particularly in Canada, stepping up with the Canadian government to take on that market-making role and we look forward to similar discussions here in the U.S.,” Donald Wolf, president and CEO of Advanced Reactor Concepts, a U.S.-based developer, said at the New Nuclear Capital Conference. “Before we, in effect, push these new designs on foreign countries, it really helps to say we built it here first. We’ve improved it at home, and it’s safe for us.”

And some developers are moving to establish those markets for small reactors with municipal power systems, which make for more attractive first customers than IOUs, according to Colbert. Municipal power systems have access to a lower weighted cost of capital, around 3%-4%, compared to IOUs’ approximately 8%-10%. 

NuScale has jointly pursued both DOD and the Utah Associated Municipal Power Association (UAMP) as first customers. ……

“If you look at nuclear, the market for energy … is pretty well known,” said Chris Colbert, Chief Strategy Officer at nuclear developer NuScale  . “What’s not so well known is how do you get through the nuclear regulatory process, the [Nuclear Regulatory Commission] process.”

While safety remains a paramount concern for nuclear power, many in the industry say they no longer view public perception as a major problem.

“How do we tell the masses the progress we’re making? …….https://www.utilitydive.com/news/advanced-us-nukes-need-a-boost-is-the-pentagon-the-answer/559088/

 

July 23, 2019 - Posted by | marketing, USA

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