by Mary Anne Sullivan, Daniel F. Stenger and Amy C. Roma, Hogan Lovells US LLP
With development of large-scale reactors in the United States slowed by constrained debt capital markets, the absence of climate legislation, low gas prices and flagging power demand, talk in the nuclear industry has shifted to next-generation reactors that are smaller, less capital-intensive and therefore more flexible. These small and modular reactors (SMRs), generally 300 MW or less, can serve remote locations, small power grids and large process heat needs, such as oil production from the Alberta tar sands.
Utilities as diverse as the Tennessee Valley Authority, which already generates 6,600 MW of nuclear power, and Public Service Co. of New Mexico, which previously assumed nuclear power was beyond its economic reach, have expressed interest in SMRs. Like all nuclear generation, SMRs can provide carbon-free baseload power, but SMRs can be constructed in a fraction of the time necessary for large-scale reactors for a fraction of the cost. The creation of a domestic SMR manufacturing industry also would create jobs and could increase U.S. exports.
SMR reactor designers, customers and regulators must determine whether a regulatory process that was developed for 1,000-plus-MW projects based on similar technologies can be right-sized to meet much smaller projects’ needs based on diverse technologies that must be deliverable in a reasonable time to be economical.
There are wide-ranging, proposed SMR designs, including light-water reactors, high-temperature gas-cooled reactors, liquid metal-cooled fast reactors, and molten salt reactors, with the smallest design beginning around 10 MW.
The Hyperion Power Module uses a uranium nitride fuel and a lead-bismuth eutectic as the coolant. The 25-MWe reactor is intended to be buried 33 feet underground and fueled only every eight to 10 years. In contrast, the NuScale reactor is a small, light-water reactor, the same reactor type as many of its large-scale cousins but with a modular design that allows a facility to have just one unit or as many as 24 units. If a plant had all 24 units with each reactor operating at its 45-MWe design capacity, the facility could produce more than 1,000 MWe of electricity, which is on par with the electricity production of one large-scale reactor.
Several reactor developers have been in contact with the Nuclear Regulatory Commission (NRC) to discuss their designs and licensing: Babcock & Wilcox Co. for its 125-MW mPower reactor; GE-Hitachi for its 311-MW PRISM reactor; Hyperion Power Generation for its 25-MW HPM reactor; NuScale Power Inc. for its 45-MW reactor; Toshiba for its 10-MW 4S reactor; and Westinghouse for its 335-MW IRIS reactor. Other developers are working on other SMR designs but have not yet filed a letter of intent to submit an application with the NRC.
The biggest challenge to getting SMRs to market in the United States is NRC licensing. The NRC’s licensing requirements are geared toward certifying a design and then conducting a site-specific construction and operating licensing proceeding for large-scale nuclear reactors, a process that can take as much as a decade. Many SMR reactor developers are focused on the design certification. This process allows the NRC to approve a reactor design independent of an application to construct or operate a plant. It has been used by the agency a handful of times during the past decade for large-scale reactors. It seems well-suited to the small-reactor designs, some of which are intended to be factory-built and transported whole for drop-in installation at sites.
SMRs must undergo rigorous NRC safety and licensing reviews, but under the regulations as written, an applicant for an SMR design certification would need to determine on its own and on a case-specific basis which of the safety and licensing standards in the regulations–all of which were designed with large reactors in mind–are relevant to its design and which ones should not be applicable. This is a laborious, uncertain process.
The NRC recognizes its regulations must be re-examined to address the new SMR technologies. The agency has begun to review the potential policy, technical and licensing issues for SMRs. The NRC has identified issues associated with the licensing process, design requirements, operational matters and financial matters where tailoring to meet SMRs’ specific needs might be warranted.
NRC commissioners have recognized the need to examine their processes with the risks and requirements of SMRs in mind, and they have taken steps to accelerate the development of a risk-informed licensing framework for SMRs; one that might recognize some SMRs do not present the same level or nature of nuclear safety and security issues that must be addressed for their large-scale counterparts. For example, some SMRs can be built underground. Some use reactor design features or fuel types similar to existing research reactors that have operated safely for decades at universities across the country. Thus, the commissioners directed the NRC staff to report to the commission within six months on how risk-informed insights can be used to improve the licensing process for SMRs. Many hope the commission’s initiative will result in the relaxation or elimination of unnecessary regulations in the NRC’s licensing of SMRs.
Risk insights could inform the agency of the appropriate accident source terms to use for SMRs. A source term refers to the types and amounts of radioactive or hazardous material that could be released to the environment following an accident. Given their size, the bounding source term for SMRs is smaller than for large power reactors. Other factors can affect the source term, as well. Installation underground, for example, would provide an additional barrier to release. The NRC has used source terms for the assessment of the containment effectiveness and other safety features, site suitability and emergency planning. By establishing early the appropriate bounding source terms for individual SMR designs, the NRC will be better able to determine how to tailor many other regulatory provisions for that specific SMR design.
No one in the industry or at the NRC seems to be arguing for a whole new set of SMR licensing regulations. Such a rulemaking would take years and introduce new levels of uncertainty, which either would leave a nascent industry struggling for a foothold in the marketplace or drive it abroad to friendlier regulatory pastures and would leave the U.S. without SMR benefits.
Rather, by continuing on the NRC path of customizing its existing regulations to address only what should be different in the SMR design certification and licensing processes, the NRC can build on its existing and known licensing regime, which should result in the development of a usable licensing process in the shortest time.
With several companies already in pre-application discussions with the NRC and gearing up to submit applications during the next few years, the NRC would be hard-pressed to provide the necessary guidance to potential applicants and conduct timely, efficient reviews of any submitted applications while creating an SMR rule. In addition, by using the existing regulations, the NRC and applicants can benefit from the NRC staff’s experience and a proven process. If the NRC’s new initiative to develop a risk-informed approach to licensing can help accelerate this process, it would be a great improvement. To assist the NRC in its efforts, SMR vendors should continue supporting the NRC’s initiative through industry working groups.
Department of Energy (DOE) Assistance
The NRC is not the only agency looking to help move SMRs from concept to commercialization. The DOE has developed not just a five-year plan, but a 25-year plan to help move a range of SMR designs to market. The DOE wants to help fund over the next five years the development of an appropriately tailored licensing process at the NRC. As a second phase over the next 10 years, the DOE has asked for funding to help the first two SMRs get through the licensing gate. Although not all agree with its priorities, the DOE has concluded that SMRs based on light-water reactor technology, e.g., NuScale’s design, because of their similarity to the technology of existing large nuclear plants, offer the nearest-term promise for commercialization. The DOE is likely to limit the initial competition for funding for design certification efforts to light-water reactor designs.
Recognizing that there are other SMR designs that incorporate more revolutionary technology, the DOE also sought funding for research and development on more advanced designs. In particular, it sees an important role for its high-speed computing capability to simulate and test the new designs. If private funding can be found, however, it is not clear the proponents of these alternate designs will have the patience to proceed on the DOE’s timeline. Many have been working for a decade or more on their designs and already have approached the NRC to discuss licensing schedules.
The DOE might also play host at its Savannah River Site to an energy park that could include nonlight-water SMRs. If the vision is realized, the SMRs constructed at the proposed energy park could make Savannah River independent of the local power grid and help meet a 2009 presidential directive to cut significantly greenhouse gas emissions at government facilities.
In addition to its research and development role, the DOE will work with the international nuclear community to develop codes and standards that make sense for SMR technologies and in facilitating export approvals when SMR technology is ready for deployment overseas.
Another tool in the DOE’s toolbox for advancing innovative energy technologies into commercial viability is the loan guarantee program. It’s unclear whether that program, which many have said is essential for building large new nuclear plants, can be tailored to meet the needs of smaller, lower-cost designs. For the small plug-and-play reactor designs, loan guarantees might make the most sense for SMR manufacturing facilities, rather than individual power plants.
But SMRs and the struggling loan guarantee program will have reached milestones if the question of how best to structure loan guarantees to meet the needs of SMR developers and customers for assistance in commercial deployment becomes important for resolution.
SMRs have enjoyed bipartisan support in Congress. The House Committee on Science and Technology and the Senate Energy and Natural Resources Committee have approved similar legislation designed to promote the development and deployment of SMRs along the lines the DOE has proposed. Promoting SMR development in legislation has its price.
The Congressional Budget Office recently estimated that the Senate bill would cost $407 million over the next five years to support cost-sharing programs with private companies for the development of two standard SMR designs. Costs for the out-years were not included in the estimate, but the bill would require the DOE to obtain NRC design certifications for the reactors by 2018 and to secure combined construction and operating licenses by Jan. 1, 2021.
If Congress can pass an energy bill, it seems likely the bill will support SMRs. Even in the absence of new authorizing legislation, however, appropriations bills that must be passed to keep the government running almost certainly will contain strong support for the DOE’s research and development program for SMRs.
SMRs respond to a critical suite of power needs: reliable, low-carbon, baseload generation at a manageable capital cost for even small utilities. But as with many other power solutions, much still needs to happen to realize the promise.
Mary Anne Sullivan is a partner in Hogan Lovells’ energy practice in Washington, D.C. Reach her at maryanne.sullivan @hoganlovells.com.
Daniel F. Stenger is a partner in Hogan Lovells’ energy practice in Washington, D.C. Reach him at email@example.com.
Amy C. Roma is a senior associate in Hogan Lovells’ energy practice in Washington, D.C. Reach her at firstname.lastname@example.org.
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