NuScale Calls It Quits in Idaho – GWC Mag

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NuScale Calls It Quits in Idaho

NuScale Calls It Quits in Idaho – GWC MagIn a joint press statement on Nov 10th Utah Associated Municipal Power Systems (UAMPS) and NuScale Power Corporation (NuScale) (NYSE: SMR) announced that they have mutually agreed to terminate the Carbon Free Power Project (CFPP).

The project would have built a six-pack of 77 MWe small modular reactors (SMRs) at a site on the Arco Desert 50 miles west of Idaho Falls, ID.

The firms said that despite significant efforts by both parties to advance the CFPP, it appears unlikely that the project will have enough subscriptions from member utilities to continue the project. Therefore, UAMPS and NuScale “have mutually determined that ending the project is the most prudent decision for both parties.”

NuScale CEO John Hopkins told the Bloomberg wire service, “Once you’re on a dead horse, you dismount quickly. That’s where we are here.”

It should not be a surprise to anyone who has been paying attention that this decision was likely. Nearly a year ago this blog reported that rapidly rising costs of essential materials, steel, concrete, and key components were spooking UAMPS member utilities.

Spooked by the rising costs, which elevated the eventual cost of electricity to be produced by the plant, the rate of new subscriptions as of January 2023 had stalled out and never met the required threshold of 80% of member firms to move forward to build the reactors.

UAMPS warned in January 2023 that costs for the NuScale project were heading into the stratosphere. The company said in 2021 it would deliver power for $58/MWh. By the start of 2023 that figure has climbed 53% to $89/MWh.

The estimate cost of the six SMRs rose from just over $5 billion to over $9 billion. In terms of rough order of magnitude numbers, that meant each of the six 77 MW SMR would cost $1.5 billion. Anyone doing the math could see this was not a sustainable financial future.

NuScale’s Decision is Not a Market Signal for the Future of SMRs

While there is a lot hand wringing in the news media about the decision, it most certainly cannot be used as an event signaling the decline of SMRs in general. For instance, GE Hitach’s (GEH) BWRX-300 has commitments with the Tennessee Valley Authority and Ontario Power Generation which are likely to lead to construction of multiple units of the light water reactor design.

Plus, the two giant utilities are cooperating to share lessons learned, combined supply chains to control costs, and facilitate regulatory reviews in the US and Canada. GEH also has interesting prospects with industrial manufacturing firms in Poland.

In terms of advanced SMRs, X-Energy has signed a first of a deal with DOW Chemical to build four of its 80 MW HTGR at a chemical processing plant in Texas. The reactors will provide electricity and process heat to the facility.

What’s Next for NuScale

With the stock price at rock bottom of $2/share, compared to $8/share last May, the firm is ripe for acquisition by one of its outside investors. Several firms, such as Doosan in South Korea, might look at NuScale and surmise that the firm’s maturity of design, and regulatory approval by the NRC, position it for export to southeast Asian countries like the Philippines which want nuclear power, but can’t afford the big iron of 1000 MW units.

This conjecture is not investment advise nor is it based on any knowledge about the plans by either firm, but rather it is based on the business logic of how the bargain basement stock price for the firm makes it ripe for purchase by the right buyer. 

NuScale also has over a dozen memorandums of understanding (MOUs) with firms in other states and other countries. While none of these MOUs come with cash, they all represent market opportunities that could bolster investor confidence in the firm’s future.

NuScale CEO John Hopkins said in a statement to the news media that NuScale will continue to progress the commercialization of its technology with other existing and future customers.

“There remains an urgent need and increasing demand across the globe for advanced clean energy solutions based on cost-competitive, proven technology that can help meet climate goals while bolstering energy security. NuScale is ahead of the competition and best suited to fill that need.”

The firm has a signed a contract with Romania’s RoPower for front-end engineering and design work which is funded partially by the US government.

NuScale also has a memorandum of understanding with Nucor Corporation to explore co-locating SMR power plants to provide baseload electricity to Nucor’s scrap-based electric arc furnace steel mills. Nucor also signed an MOU with Helion Fusion power for similar reasons.

Last month NuScale announced that Standard Power, a provider of infrastructure as a service to advanced data processing companies, announced it had chosen NuScale’s SMR technology to power two facilities it plans to develop in Ohio and Pennsylvania.

This project was the target of  Iceberg Research, a short seller firm, that questioned the viability of the project. It said the goal of building 24 77 MWe SMRs, 12 at each site, was not achievable and that the firms NuScale signed up to do business with aren’t capable of managing the effort.

NuScale said in multiple press statements there are several significant errors in the research published by a short seller, and otherwise called out the criticism as short seller trash talking in search of profits at the expense of NuScale’s investors.

Deals for Data Centers Aren’t Dead

Interest in using SMRs to power data centers isn’t restricted to NuScale’s deal. In October Microsoft announced it plans to use SMRs to power its global network of data centers. According to a company fact sheet, as of August 2023 the Microsoft network connects more than 60 datacenter regions, 200 datacenters, 190 points of presence, and over 175,000 miles of terrestrial and subsea fiber worldwide, which connects to the rest of the internet at strategic global edge points of presence.

The energy intensive nature of massive data centers that support Microsoft’s rapidly growing business in the world of artificial intelligence has turned the company’s attention to acquiring the needed power from small modular reactors (SMRs).  A typical data center on the small side can use 50 MW of power but a massive facility can use twice or even six times that amount of power.

Interestingly, the new computer chip sets that are used to power the high rates of information processing needed by artificial intelligence software applications are responsible for the significant increase in demand for electricity by data centers. About 43% of the electricity used by data centers powers the computers in it. It takes a nearly equal amount of electricity to cool the data center based on all the heat generated by the servers in it.

History of DOE Funding for UAMPS

Meanwhile, the Department of Energy (DOE) , which has poured hundreds of millions of taxpayer dollars into the project via cost shared contracts, has not said anything about the decision. The plan was to build the six SMRs on a site inside the fence at the Idaho National Laboratory.

In October 2020 DOE approved a multi-year cost share award to a new special purpose entity named Carbon Free Power Project, LLC that could provide up to $1.4 billion to help demonstrate and deploy a 12-module NuScale power plant located at Idaho National Laboratory.

The money was also designated for work on the combined license application began in 2021. UAMPS had been working towards submitting a combined construction and operating license application to the NRC in January 2024, for a plant with six of NuScale’s 77 MWe power modules to generate 462 MWe of electricity.

This is half the power originally expected to be built at the Idaho site and represents even two years ago that rising costs required an adjustment in the scope of the project. It isn’t clear how much of money has been spent or what will become of this commitment.

Separately, since 2015 DOE has provided about $600M to NuScale for design, development, and licensing support in a cost shared contract.

The Associated Press reported that a spokeswoman for the Energy Department called the cancellation “unfortunate news,’’ but said first-of-a-kind deployments are often difficult. Officials believe the work accomplished to date on the project will be valuable for future nuclear energy projects.

“We absolutely need advanced nuclear energy technology to meet (the Biden administration’s) ambitious clean energy goals,’’ spokeswoman Charisma Troiano said.

“While not every project is guaranteed to succeed, DOE remains committed to doing everything we can to deploy these technologies to combat the climate crisis and increase access to clean energy.”

About UAMPS and CFPP

NuScale has agreed to pay UAMPS a termination fee of $49.8M. The payment represents a clean break with the utility consortium. It’s future power needs will probably be met by a combination of natural gas for baseload power and wind energy projects.

UAMPS is an interlocal agency of the State of Utah, established in 1980. As a project-based energy services entity, UAMPS provides a variety of power supply, transmission, and other services to its 50 members, which include public power utilities in seven western states: Utah, Arizona, California, Idaho, Nevada, New Mexico, and Wyoming. The CFPP LLC is wholly owned by UAMPS and was created to develop the Carbon Free Power Project on behalf of participating UAMPS members.

& & &

NuScale / Polish And Romanian Companies Confirm Commitment To SMRs Amidst CFPP Cancellation Fallout

  • KGHM and RoPower say SMR projects at ‘preliminary’ stages

(NucNet) Poland’s copper miner KGHM Polska Miedz and Romania’s nuclear new-build company RoPower have confirmed their commitment to proposed projects using small modular reactor (SMR) technology in the wake of an announcement by Oregon-based SMR developer NuScale of the cancellation of its pilot Voygr demonstrator plant in the US.

KGHM, one of Poland’s largest companies, released a statement denying allegations in local media that NuScale had cancelled a February 2022 agreement to begin work towards deploying a first Voygr SMR power plant in Poland as early as 2029.

The company, however, said that a decision-in-principle which was received in July 2023 from Poland’s climate ministry encompassed also other technology options including Rolls-Royce’s UK SMR, EDF’s Nuward, Holtec’s SMR-160, and GE Hitachi’s BWRX-300.

KGHM said NuScale’s technology was indicated in its application to the ministry as “preferred” due to the “significant advancement” of certification proceedings with the US Nuclear Regulatory Commission (NRC). In January, NuScale completed the submission of a standard design approval application to the NRC for an updated 77-MW module Voygr design after receiving approval for an earlier 50-MW module.

KGHM also said it is currently focusing on the “most proven” pressurized light water reactor designs “in accordance with the best global standards” set by the IAEA and the OECD Nuclear Energy Agency.

The cancellation of the Voygr demonstration project in the US has “no decisive impact” on KGHM’s new-build plans at this stage, which do not depend on “any technology supplier or reservation of exclusivity”, a statement said.

Romania ‘Remains Committed’ To SMRs

In Romania, the ministry of energy, which was involved in promoting the deployment of a NuScale SMR plant at the former Doicesti coal site, said in a statement that Bucharest “maintains confidence” in SMR technologies as “complementary” to large-scale reactors.

In January, NuScale and Romania’s project company RoPower signed a contract for front-end engineering and design work towards the deployment of a Voygr plant at Doicesti.

The contract followed the signing in June of a memorandum of understanding between NuScale and Nuclearelectrica to begin engineering studies, technical reviews, and licensing and permitting activities for the project.

RoPower, formed in September 2022, told NucNet in a statement, “In alignment with our partners, we are determined to lead the Doicesti project towards a future that promises both sustainability and energy security for our country.”

The company said the project is currently in a preliminary development stage, consisting of a series of initial engineering and design studies, of the site of the former Doiceşti plant, in the central Dambovita country.

“RoPower maintains its trust in the SMR technologies and reaffirms its commitment to follow all the local and international legislation and regulations in the development of the project in Romania,” said RoPower.

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