Laying the Foundation for New and Advanced Nuclear Reactors in the United States (2023) / Chapter Skim
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4 The Economic Challenge
4 The Economic Challenge
Pages 53-72
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From page 53... ...
Finding 4-1: The key economic challenge for advanced nuclear reactors is the need to either be cost competi tive with other low-carbon energy systems in providing electricity, expand their use to applications beyond the electricity sector, or have an otherwise strong value proposition that encourages investment. Given anticipated market conditions, and the range of low carbon energy technology options, this will require reductions in capital cost.
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From page 54... ...
While the EPRI and PNNL studies highlight the importance of capital costs, the entire cost landscape for nuclear development impacts its economic competitiveness and market viability. The PNNL study capital costs are based on the Idaho National Laboratory (INL)
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From page 55... ...
, and owner's costs (10 percent) .2 In its projections for market viability, the same MIT study independently estimated NOAK overnight capital costs for advanced reactor designs that were between $4,600 and $5,400 per kWe.
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From page 56... ...
UNIQUE ADVANCED REACTOR COST DRIVERS Beyond the typical capital cost drivers, there are also unique cost drivers that advanced reactor developers will need to address, including a potentially more complex fuel cycle for some designs. Given the lack of reliable cost data on development of a fuel production facility, it is treated qualitatively rather than quantitatively in this report.
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From page 57... ...
, design differences limit economies of scale that could reduce capital costs. As a result, government financial support may be required to ensure that supply chains are developed and maintained if a diverse advanced reactor ecosystem develops.
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From page 58... ...
Achieving cost-competitiveness would enable advanced reactors to enter the market and attract enough private investment to be deployed at scale, whether the primary goal is to provide electricity or to support industrial processes. As with most energy technologies, federal government support will be required in many phases of the research, development, and demonstration process.
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From page 59... ...
Such a framework will be necessary to result in successful demonstration of first-of-a-kind advanced reactors. An American Nuclear Society Task Force proposed a set of development phases for private–public partnerships that would involve teams of industry, national laboratories, and universities (ANS Task Force 2021)
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From page 60... ...
Test Bed capable of hosting operational test and experimental nuclear reactor concepts that produce less than 500 kW thermal power suitable for DOE Authorization; • Evaluation of Demonstration Site Alternatives; and • Funding for collaborative R&D efforts between industry and the national laboratories that directly enable future demonstrations of advanced reactors. The following section summarizes these advanced reactor program efforts and Appendix D describes in detail the breadth of these DOE programs.
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From page 61... ...
This shift occurred as NASA transitioned its programs to enable the creation and growth of SpaceX. Such a transition was possible because NASA deployed a new model for working with the private sector that provided commercial incentives for technology development and private finance.a Both technology improvement as well as large-scale financing are current challenges for developing a new generation of advanced reactors.
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From page 62... ...
The overall DOE program has elements in addition to ARDP. The combined portfolio includes • University-led research with industry and national laboratory teams; • Industry-led research through targeted Funding Opportunity Announcements; • Laboratory-led advanced SMR program for early-stage, crosscutting engineering technologies; • Laboratory-led advanced reactor technology program for long-term innovative technologies; and • ARPA-E independent programs in support of nuclear energy.
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From page 63... ...
designs, the implied demonstration cost is likely >$10,000/kWe for these initial plants, which provides an indication of the cost reductions required to reach market competitive prices.10 Finding 4-5: Past studies suggest that for advanced reactors to achieve a strong market demand signal, it is likely that they will need to reach overnight capital costs in the range of ~$4,000–$5,000/kWe. While final costs for planned Advanced Reactor Demonstration Program (ARDP)
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From page 64... ...
The current DOE portfolio is not structured to continuously move ideas from basic discovery to deployment and has not incorporated independent reviews of Advanced Reactor Demonstration Program (ARDP) project performance nor demonstrated the ability to make funding decisions based on accomplishment of critical development milestones.
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From page 65... ...
ADVANCED REACTOR COMMERCIALIZATION PROGRAM The preceding section described government efforts to support technical development of advanced reactor technologies through R&D support programs. Even if programs such as ARDP are successful in demonstrating the possible viability of advanced reactors, the overall aim of the effort would not be achieved unless the barriers to wide scale deployment are overcome.
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From page 66... ...
Two aspects bearing on the evaluation of the financial opportunity for advanced reactors require specific mention. First is the evaluation of the opportunities for nuclear power to provide alternative products.
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From page 67... ...
Commercialization Risk. Even after a reassuring demonstration, there are challenges associated with commercial deployment, such as overcoming the project management cost and schedule delays that have plagued nuclear construction in the United States and Europe; establishing supply chains for fuel, parts, and components of sufficient quality, volume, and price; developing a sufficient order book to justify the establishment of a manufacturing facility; and ensuring the availability and cost of the necessary skilled workforce both for construction and operations.
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From page 68... ...
Deployment mechanisms exist that could create a clear and durable market signal for the commercialization of advanced reactors, several of which are briefly described below. Loan Guarantees.
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From page 69... ...
The Inflation Reduction Act provides a 10 percent enhancement of tax credits for clean-energy projects in an "energy community." Among several criteria of eligibility for this bonus is a project be located in a census tract within which a coal power plant has closed since 2010. Several vendors of advanced reactors have examined the siting of new reactors at retired coal plants and these coal-to-nuclear projects may be eligible for this enhancement of tax credits.
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From page 70... ...
Recommendation 4-4: To enable a cost-competitive market environment for nuclear energy, federal and state governments should provide appropriately tailored financial incentives (extending and perhaps enhancing those provided recently in the Inflation Reduction Act) that industry can use as part of a commercialization plan, consistent with the successful incentives provided to renewables.
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From page 71... ...
2017. Program on Technology Innovation: Expanding the Concept of Flexibility for Advanced Reactors, Refined Cri teria, a Proposed Technology Readiness Scale, and Time-Dependent Technical Information Availability.
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From page 72... ...
2022. Merits and Viability of Different Nuclear Fuel Cycles and Technology Options and the Waste Aspects of Advanced Nuclear Reactors.
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