2

Role of the Pilot Plant on the Path to Commercialization

As indicated in Figure 2.1, a consensus is building across the country that the nation needs to establish a low-carbon emission energy mix by 2050, and utilities are planning to use an inclusive strategy to achieve this goal. No form of low-carbon emission energy is being ruled out at this point. As a result, the investment in low-carbon and non-carbon emission energy technologies has skyrocketed, and advances in carbon capture, energy storage, nuclear fission, and renewables are being made at a rapid pace. If fusion is to play a role in the energy mix, it will need to distinguish itself in an extremely competitive market. As such, a fusion pilot plant will need to demonstrate characteristics that can be extrapolated with low uncertainty to a first-of-a-kind (FOAK) fusion power plant that will be competitive in the energy market. Predicting the state of the energy market is complex as it depends on state and federal policies, which are influenced by many factors, such as the political landscape and the economy. Frequent communication with the potential users of the technology, the utilities themselves, may help inform these projections as market conditions change. Utility integrated resource plans can be used to estimate the characteristics that must be met by a FOAK fusion power plant. The committee received briefings and input from three electrical utility executives, which were valuable in understanding their planning for this transition.

ELECTRICAL LANDSCAPE

The current and future energy market would suggest that the United States will remain energy independent and this will continue unless disruptive events

in policy or the geopolitical landscape occur. Changes in the generation mix are expected to continue over the next 30 years, suggesting that there will be large capital investments in both generation resources and in transmission and storage assets to accommodate the shift to low-carbon emission resources. Facilitating the low-carbon transformation and providing dispatchable power with blackstart capability competitively frames likely market opportunities for fusion generation in the foreseeable decades, if it can be developed and competitively available by the time those investments need to be made. This framing presents a window for major investment that can be captured by fusion if it can be successfully demonstrated including showing economic attractiveness. To characterize this another way: lack of a market pull could pose a challenge to the future of a commercial fusion power plant unless a fusion pilot plant with unique attributes can be successfully built prior to 2050, encouraging the development of this technology.

According to the U.S. Energy Information Administration’s Annual Energy Outlook 2020 with projections to 2050,¹ electricity use will continue to grow due to increased electrification in all sectors; however, growth will likely occur at a slower rate than in the past due to increased efficiency (Figure 2.2).

At least 30 GW of additional generation resources are expected to be needed annually from 2040 to 2050 based on the reference case analysis for the United

States. This is consistent with others’ view on the exploding demand for non-CO₂ producing sources of electricity globally,² as shown in Figure 2.3. In the future, sources of low-carbon electricity generation that can be dispatched on demand at the request of power grid operators, known as firm dispatchable generation, will be needed. By 2050, this firm dispatchable future generation will be a competition between several forms of generation—fission, natural gas with carbon capture, renewables paired with storage and hydrogen or natural gas generation, and fusion. All will need to make sure that the electric transmission upgrades will not be prohibitively expensive for the location selected. Generation with a flexibility of siting, like fusion, will have an advantage in certain geographic areas and can enable microgrid development.³ Microgrids will be a part of the new electricity grid and along with other sources such as renewable generation will reduce the number but not the need for baseload, firm low-carbon and non-carbon emission generation facilities to deal with the variability of loads, generation sources, weather condition impacts, and other factors discussed in this section.

This significant change of the electric energy landscape is underway today to shift to a low-carbon emission generation mix in the future. If successful, this

change in generation from a carbon-based fuel to a low-carbon mix will likely occur due to state regulations, public policy requirements, customer preferences, and stockholder desires. A fusion pilot plant followed by a FOAK fusion power plant would be entering the electric energy market in the middle to near the end of this transformation in the United States.

Electric utilities in the future will need firm low-carbon and non-carbon emission resources in their generation portfolio if they are going to support a low-cost, lower carbon future.⁴ These resources will assist with the load variability in daily grid operations by having generation and storage resources that can meet the demand in all seasons and over long durations (>4 hours) when needed, such as during severe weather events. The generation resources will include nuclear fission power plants capable of flexible operations, hydroelectric power plants with high-capacity reservoirs, coal and natural gas plants with carbon capture, geothermal power, biomass and bio-gas fueled power plants, and nuclear fusion power plants.

Presently, utilities are seeing large swings in daily operations and are using their dispatchable resources or baseload generation to manage these variable conditions. The use of high-speed electronic-controlled DC to AC systems with short-term

storage, a type of Flexible AC Transmission (FACTs) device, known as STATCOMS, will continue to propagate on the transmission networks along with synchronous generators to assist with stability issues and provide the required speed for voltage or volt-ampere reactive (var) support in geographic areas where firm low-carbon emission resources are not available.

As the transmission network integrates more electronic-controlled loads and generation resources, the speed of the required network response will become faster than the four seconds that the network response has today to maintain stability. The speed of response in the future will depend on the number of firm low-carbon emission resources operating in a specific region as a percentage of the overall generation mix.

Larger grid-scale storage, such as pump storage facilities or large-scale battery installations with >4 hours of energy, will help with both short-term variability in renewable energy resources and weekly variability requirements, but the ability to cost-effectively deploy at locations needed will limit their penetration within the marketplace.

Unlike electronic-controlled generation like photovoltaic power stations, firm low-carbon emission resources will provide the inertia and fault current required for protective systems (relays, fuses) to operate as designed on the transmission and distribution systems⁵ and also within existing homes and commercial and industrial buildings.

The changes in dynamic resources required for voltage or var support with renewable generation resources plus relay protection changes required will necessitate additional system modifications to accommodate the increasing penetration of renewable resources. The number of system augmentation devices needed, such as FACTs devices, will be offset by the regional installation of firm low-carbon and non-carbon emission generation resources.

In addition, the electric industry will need a diversity in baseload or firm low-carbon and non-carbon emission energy resources to offset any disruption in future fuel supplies or technology threats (e.g., cyber attacks) or changes in policy on the nation’s energy landscape. The energy landscape has traditionally had disruptions that have pivoted the direction of generation production. At the beginning of power generation, the major units were either coal or hydroelectric units. This changed over time, and by the 1950s the movement away from coal production began, peaking around 1970. The 1973 oil embargo shifted generation away from oil generation and moved production back to coal and nuclear energy production. During this period, substantial pumped hydroelectric storage was deployed to help match these firm resources to variable demand. In 1979, the Three Mile Island accident slowed nuclear plant builds, and it was not until the 1990s when nuclear power had public acceptance and acceptable cost. The renaissance for nuclear power in the early 2000s was impeded after the 2011 Fukushima Daiichi nuclear accident and as a result of low

natural gas prices in the United States. In 2010 the market shifted again to grid-scale photovoltaics (PV) due to a continuing decline in panel price, increased efficiency, PV subsidies, and public demand. If history is any guide, disruption in the generation market will likely occur in the future, so as we envision future generation, we need to assume that the generation mix will change and that diversity is important for national security and resiliency. The United States has had one of the most reliable electrical grids due to the diversity of fuels/sources in its generation mix, allowing the industry to pivot as disrupting events occurred. These events showed the need for fuel diversity in regulated utility generation planning and the role of the natural diversity provided by the larger interconnected U.S. electrical grid with regional fuel supply diversity. Fusion energy would help ensure that diversity continues into the next century while providing a non-carbon emission source of energy.

Significant disruptive events have routinely occurred in this sector and will likely occur in the future due to possible policy decisions, such as the potential elimination of fracking to extract natural gas or oil supplies or possible nation-state decisions on the cost or availability of critical materials required for renewable energy or energy storage systems. The potential disruption of any energy fuel source has caused the nation to deploy diverse sources of energy supply so that there is resiliency in this infrastructure that is so critical for national security. The future risk to generation from nation-states enhances the national security need for resiliency of generation types as these threats now include supply chain disruptions, electromagnetic threats, and cyber threats.

UTILITY CONSIDERATIONS

The U.S. electric industry has changed significantly over the last decades as transmission system operations have been unbundled from generation assets in many areas, which has enabled competitive developers to enter the generation marketplace. Competitive generators are not expected to be the first to develop or operate a fusion plant. Rather, to diversify risk and share cost, a fusion plant will likely be funded by a coalition consisting of the federal government, state governments, private industry and private developers, plus a group of investor-owned utilities (IOUs) with regulated generation assets.

The economic considerations for IOUs to participate in the development or operation of a pilot plant will be driven by state support (regulatory or policy), the

impact on potential economic development, the value this technology may provide to the electric generation mix in the regions they serve, and their financial goals. Past pilot plants that demonstrate new generation technologies have been expensive on a cost per kW basis, typically driven by external benefits and an understanding of the potential future benefits. A few examples of past pilot plants include the Shippingport Nuclear plant, Duke’s Edwardsport Clean Coal plant, Australia’s Callide Oxyfuel, and Dominion Energy’s Offshore Wind demonstration plant.

Technology for a pilot plant must be shown to be safe and provide good indication of the economic viability, cost certainty, regulatory certainty, reliability, and availability to future operators through the development and operation of a small-scale pilot plant. Considerations need to include upfront and ongoing maintenance requirements. This will provide confidence to key decision makers, such as the boards of directors of IOUs or public utility commissions that costs will not greatly exceed estimates prior to the start of the first commercial fusion projects.

In the 2020 Annual Technology Baseline report by the National Renewable Energy Laboratory (NREL),⁶ the overnight costs for nuclear fission (moderate) are projected to decrease from $6,062/kW in 2020 to $4,916/kW in 2050,⁷ and the nuclear fission industry with support from DOE is working to reduce this cost to a level more attractive to investors through its Nuclear Technology Enabling Technologies program.⁸ Given the importance of minimizing operating and maintenance expenses plus associated personnel required to operate any generation asset, the same attention to the use of robotics and advanced analytics will be important considerations for a commercial fusion plant in design development. It is with this backdrop that electric utilities will be considering the cost for the first commercial fusion plant, so the benefits brought by this technology will need to justify any overnight cost premium. One such consideration will be the extent to which carbon emissions are reduced, as indicated in Figure 2.4, and the need for firm low-carbon and non-carbon emission electricity. Many researchers have reviewed the various cost consequences to reach a low-carbon emission future and have concluded that the lowest cost option is with firm low-carbon and non-carbon emission generation resources in our electricity mix.

Potential utility investors will require regulatory and cost certainty for a future fusion commercial plant plus an understanding of any cost risks associated with construction and operating and maintenance expenses. This plant will need to operate through at least one environmental cycle. This includes installation of integrated core components, fusion plant startup and operation in which the fusion environment degrades the component performance to the point where it must be replaced or repaired, and that such maintenance actions are taken to allow further operation of the plant. Operation of an environmental cycle provides information about the expected outage expenses and enables projections of both (1) the reductions for outage duration and (2) required operating and security costs for a commercial

facility. Characteristics for a fusion power plant that must be demonstrated by the pilot plant for electric utility acceptance through the phases of operation include safety, minimum capital cost, data for life expectancy of components, operating and maintenance expenses, acceptable emissions and waste streams, siting requirements (air and water), social acceptance, and risks related to fuel, replacement part supply chain, and insurance. Issues for fusion power plant concepts that include tritium in the fuel mixture will be discussed in Chapter 3 and need to be addressed. A pilot plant is not expected to operate for the full life cycle of a FOAK fusion power plant and thus there will be residual risks that will have to be considered. Nonetheless, the pilot plant must prove that the technology is viable and forecast economics for the commercial plant to demonstrate that the leveled cost of electricity is comparable with other available generation types, which will enable the marketplace to establish the role of fusion in meeting the energy needs of the nation.

While it is not necessary for a fusion pilot plant to demonstrate all aspects of a FOAK fusion power plant, it must enable an understanding of material issues,

including estimated replacement frequency or waste disposal, safety considerations, and environmental considerations, prior to construction of a FOAK fusion power plant. This time should allow utility operators to develop procedures, estimate maintenance intervals, validate cost assumptions, perform material research, and understand longer term waste management. Given the timeline of development for the pilot and FOAK fusion power plant, the use of robotics, remote sensing, advanced analytics, and computer controls would reduce operating and maintenance costs. These advances should also provide shorter maintenance intervals and waste stream reductions as well as reduce operations and security staffing requirements. The pilot plant will be able to evaluate the impact of these advances.

ELECTRIC GRID CONSIDERATIONS

The siting of any form of generation is also a major component of capital expenditures, since siting not only involves the cost of the land but also must deal with cost uncertainty (and potential project delays) due to federal, state, and local regulatory requirements; environmental requirements such as the National Environmental Policy Act; and any infrastructure expenditures needed to either transmit electricity from the location or bring fuel to the generation location.

The electric industry is currently seeing significant cost uncertainty and delays with large electric transmission line upgrades or new installations due to public and environmental sentiment against these infrastructure projects.⁹ This is expected to continue in future years, so new generation sites will need to be installed near existing transmission corridors or at locations of existing generation plants where this infrastructure is already installed.

The same cost uncertainty and potential for project time delays also are evident today for gas transmission facilities.¹⁰ Hydrogen or natural gas generation facilities also have to contend with this same issue to ensure that gas transmission pipelines have enough capacity to support the fuel required for the generation site or that onsite gas storage is sufficient, which will significantly add to the cost of construction.

Some of the extra high voltage alternating current (EHV-AC) electric transmission corridors existing today could be repurposed for extra high voltage direct current (EHV-DC) by 2050 in an effort to bring renewable energy, such as mid-continent wind generation, to the eastern seaboard or other regions in the United States.¹¹ This will further encumber the existing infrastructure so that some transmission corridors may not allow for the easy siting of dispatchable firm generation due to the inability to obtain the needed export transmission lines.

The cost to build a fusion pilot plant or a FOAK fusion power plant will be reduced if placement can be made to leverage existing infrastructure. An enhanced value proposition can be made for a FOAK plant if it provides grid support func-

tions since this plant will perform augmentation functions that the grid operator will not have to install.

In addition, the future grid will need a percentage of its generation resources to be firm low-carbon and non-carbon emission generators to successfully manage the various conditions it must support. Therefore, unique value is possible if a FOAK fusion power plant exhibits capabilities such as:

• Dispatchability
• Load following
• Onsite fuel supplies for long-duration events (>4 hours)
• Voltage or VAR support in regions
• Inertia for frequency response
• Sufficient fault current for protective equipment to function

Another requirement that will be presented over this period is the need for more blackstart capability.^12,13 The electric utility industry must have recovery plans to ensure that it can recover from major disturbances that cause the network to go completely down, including high-impact, low-probability events such as cyberattacks or electromagnetic pulse (EMP) events and extreme weather events. A blackstart generator is a unit that can start its own power without support from the grid in the event of a major system collapse or a system-wide blackout. In the United States, every North American Electric Reliability Corporation (NERC) region has its own blackstart plan and procedures. As the generation mix changes to include more renewables,¹⁴ it challenges the existing blackstart capability that is available in the regions. Fusion has generic properties such as onsite fuel, baseload capability, and potentially dispatchable power that are attractive to blackstart. A more detailed study of specific designs and challenges to support this national security need is encouraged.

Without the grid support functions, additional cost will be shifted to individuals and businesses for protection changes. Transmission and distribution systems will incur additional expenses for enhanced communication requirements to operate a digital grid, increased cyber protection requirements with more digital devices, protective relay system changes to quickly isolate this new system, and additional grid augmentation devices such as FACTS devices to manage this grid.

A grid without firm low-carbon and non-carbon emission generation would increase exposure to cybersecurity threats, harmonic interaction of electronic devices, less response time for reaction to dynamic events, and an increased fragility of the network to overcome extreme events resulting in a higher cost to reach a low-carbon emission future.¹⁵

MARKETPLACE CONSIDERATIONS

Investor owned public utilities have an obligation to serve the public in a manner that is supported by the public they serve. It is therefore important that IOUs have public acceptance for fusion energy prior to engaging in support of a fusion pilot plant or before they can pursue financial investment in a FOAK fusion power plant. This public acceptance will need to be garnered prior to the construction of a fusion pilot plant so that IOUs can have the necessary local and state support to enter this activity. Given that the fusion pilot plant is demonstrating a new technology, it will need to reinforce the confidence of the public by demonstrating safe and viable environmental operations, which includes waste disposal. The fusion industry, along with the federal government, will need to educate the public on this technology in advance of the first pilot plant so that acceptance can be realized.

The movement by electric utilities to zero-carbon generation by the 2050 timeframe indicates an opportunity window that this technology must seize if it is going to become viable as part of the mid-century generation fuel mix. A fusion pilot plant will need to go in service in the 2035-2040 timeframe to have time to demonstrate the viability and differentiation factors of fusion generation so commercial plants can participate in this new generation investment window.

At present, IOUs are not financially supporting fusion development. Investor owned utility engagement with a fusion pilot plant will require that sufficient data are delivered to move forward expeditiously (estimated at 3 to 5 years) to the construction of a FOAK fusion power plant. To provide the necessary demonstration characteristics to the future owners of a power plant as well as state or federal regulators, the pilot plant must anticipate and provide the data required for the design of a FOAK facility while minimizing the cost.

To develop this capability at a minimum capital cost for a pilot plant, the net electricity output will likely be in the 50 MW to 100 MW range depending on technology and concept used. This output will allow for testing of the interface to a transmission system, while providing sufficient scale to support estimates for a FOAK fusion power plant. This level of electricity output includes enough data to predict availability and how it will compare to the continued improvement of nuclear fission plants at that time. The goals for the pilot plant will be discussed further in Chapter 3.

Investments in a fusion pilot plant will most likely be by a combination of government and private funding. Fusion research has historically been primarily funded by the Department of Energy (DOE), and DOE is expected to continue to play a predominant role in the development of fusion and have a major role in the development of a pilot plant. Due to the potential for electricity production, industry has become significantly involved in development of fusion concepts and technologies supporting fusion development. Funding for fusion industry developers has been rapidly growing, and fusion industry developers may play a major role in the development of a pilot plant. This development will facilitate the commercialization of fusion and the transition to a FOAK fusion power plant.

Building the U.S. fusion industry and potential investor confidence is predicated on proving the viability of technology for a sufficiently sized market opportunity. This FOAK fusion power plant will need to compete with other firm low-carbon and non-carbon emission sources of generation, and thus the estimated cost of a future plant must be competitive to firm generation sources at that time.

State and federal government support of utility involvement in the cost to build a fusion pilot plant will depend on many factors, such as public support of this technology, potential economic benefits to the region or state for future manufacturing, construction or technical jobs, or unique benefits that this technology may provide for the electric grid. Previous state and federal support for similar projects included federal grants, federal and state tax credits, cost sharing, federal government loan guarantees, federal production tax credits, and state declaration on prudency of expenditures up to a capped value for recovery of utility investment. Examples of other generation pilot plants will be discussed in Chapter 3.

FUSION ATTRIBUTES TO ADDRESS MARKETPLACE REQUIREMENTS

Fusion power generation will have an advantage in this time period if the pilot plant can demonstrate, for example, the following: load following capability, dispatchability, less long-lived radioactive waste and comparable normal radioactive effluents to fission plants, constructability for a commercial plant, reasonable staffing requirements for operations or security, licensing expectations, public acceptance, scalability to a commercial plant, and availability and

reliability, which would lead to cost and regulatory certainty for the FOAK fusion power plant.

Fusion will not be unique in providing non-carbon emission energy but will be one of a handful of generation technologies during this period that may have significant national security benefits, such as an onsite fuel source, energy fuel diversity, firm non-carbon emission generation, potential ability to load follow, dispatchability, grid support functions, and a potential to aid in the blackstart¹³ of the electric grid following a major disturbance.

There is also a foreign policy benefit for the United States to be the first country to deploy cost-effective fusion power as countries such as China and Russia are enhancing their global influence through export of fission power reactors. Nuclear technology is sought after by numerous developing countries due to the promise of energy security and as a means of gaining international prestige through the harnessing of a highly technical energy source.

The other benefits of fusion power plants include providing electrical system inertia, system fault current support, non-carbon emission energy, similar balance of plant features to conventional plants, higher energy density, flexible siting, a long-term source of energy, energy fuel diversity, var control, and voltage control. Fusion power also does not generate high-level waste and has the ability to become a heat source for other functions such as hydrogen production using high temperature steam electrolysis.¹⁶ As noted in the previous section, there is also the potential benefit of contributing as either a primary blackstart unit or secondary generating unit, but this needs to be evaluated.

While demonstrating a pathway to a commercial power plant, a fusion pilot plant can also demonstrate external benefits that can be considered for a FOAK fusion power plant such as:

• Foreign policy benefit for the United States to be the first country to deploy cost-effective fusion power.
• Impact on a region’s carbon reduction.
• Impact on renewable portfolio requirements by the state or region.
• Ability to ramp power output to react to variability of renewable generation swings.
• The potential to create national or regional growth and new employment opportunities for items such as plant operations, plant construction, manufacturing facilities, development of manufacturing support roles, and technical skill sets.

NOTES

1. U.S. Energy Information Administration, 2021, “Annual Energy Outlook 2020 with projection to 2050,” https://www.eia.gov/outlooks/aeo/.

2. M. R. Wade, Oak Ridge National Laboratory, 2020, “Exploding Demand Requires Urgency in Fusion Energy R&D,” virtual presentation to the committee on Key Goals and Innovations Needed for a U.S. Fusion Pilot Plant on October 7, 2020, Referencing data from the Intergovernmental Panel on Climate Change (IPCC) model on AMPERE Public Database website, https://tntcat.iiasa.ac.at/AMPEREDB/dsd.

3. DOE defines microgrid as “a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or islandmode.” https://www.energy.gov/sites/prod/files/2016/06/f32/The%20US%20Department%20of%20Energy’s%20Microgrid%20Initiative.pdf.

4. N. A. Sepulveda, J. D. Jenkins, F. J. de Sistemes, and R. K. Lester, 2018, The role of firm low-carbon electricity resources in deep decarbonization of power generation, Joule 2:2403-2420.

5. M. J. Reno, Sandia National Laboratories, November 1, 2019, “Advanced Protection for Inverter-Based Systems,” https://www.osti.gov/servlets/purl/1646214.

6. NREL, 2020, “Electricity Annual Technology Baseline (ATB) Data Download,” https://atb.nrel.gov/electricity/2020/data.php.

7. Relies on U.S. Energy Information Administration (EIA) representation of current year plant cost estimates and for plant cost projections through 2050 from AEO2020 (U.S. Energy Information Administration, 2020, “Annual Energy Outlook 2020 with Projections to 2050 (No. AEO2020),” https://www.eia.gov/outlooks/aeo/pdf/AEO2020.pdf.) This report notes data are based on 2019 dollars/kW.

8. Office of Nuclear Energy, 2020, “Nuclear Energy Enabling Technologies (NEET),” https://www.energy.gov/ne/nuclear-reactor-technologies/nuclear-energy-enabling-technologies.

9. Federal Energy Regulatory Commission, June 2020, Staff report to Congress, “Report on Barriers and Opportunities for High Voltage Transmission, A Report to the Committees on Appropriations of Both Houses of Congress Pursuant to the 2020 Further Consolidated Appropriations Act,” https://cleanenergygrid.org/wp-content/uploads/2020/08/Report-to-Congress-on-HighVoltage-Transmission_17June2020-002.pdf.

10. Energy Now, July 8, 2020, “The Problematic Future of Gas Pipelines,” https://energynow.com/2020/07/the-problematic-future-of-gas-pipelines/.

11. U.S. Energy Information Administration, June 2018, “Assessing HVDC Transmission for Impacts of Non-Dispatchable Generation,” https://www.eia.gov/analysis/studies/electricity/hvdctransmission/pdf/transmission.pdf.

12. M. M. Adibi, G. Adamski, R. Jenkins, and P. Gill, 1995, Nuclear Plant Requirements during System Restoration, IEEE Transactions on Power Systems 10(3):1486-1491.

13. U.S. Department of Energy, 2019, “Hydro Plants as Black Start Resources,” ORNL/SPR-2018/1077, https://www.energy.gov/sites/prod/files/2019/05/f62/Hydro-Black-Start_May2019.pdf. Pp. vi.

14. North American Electric Reliability Corporation, September 2019, “NERC Reliability Guidelines: Improvement to Interconnection Requirements for BPS-Connected Inverter-Based Resources,” https://www.nerc.com/comm/PC_Reliability_Guidelines_DL/Reliability_Guideline_IBR_Interconnection_Requirements_Improvements.pdf. Pp. 18-22.

15. J. D. Jenkins, M. Luke, and S. Thernstrom, 2018, Getting to zero carbon emissions in the electric power sector, Joule 2:2487-2510.

16. Idaho National Laboratory Media Relations, 2020, “Private-Public Partnership Will Use Nuclear Energy for Clean Hydrogen Production,” https://inl.gov/article/xcel-energy-inl-hydrogenproduction.