A new study commissioned by the U.S. Department of Energy recommends that federal agencies be allowed to enter into 30-year power purchase agreements with operators of small modular reactors to help deploy America's first reactors.
The DOE-funded study found that a properly sited advanced nuclear small modular reactor, or SMR — typically defined as less than 300 MW in size — could help ensure a federal facility remains operational for extended periods by providing power without the need to refuel for at least two years.
“Similar to aircraft carriers and submarines that are powered by nuclear power, no other power source can provide that much certainty to a land-based defense facility," said the report written by Kutak Rock and Scully Capital for DOE’s Office of Nuclear Energy.
With the aim of deploying SMRs as "secure, reliable and flexible" generating sources of primary and backup power for federal facilities, particularly the DOE's 17 national laboratories, the report asserted that long-term power purchase agreements between federal agency customers and power-producing utilities would help significantly reduce the risks of constructing and operating the first SMRs in the U.S. Currently, only the U.S. Department of Defense can enter into long-term power purchase agreements of 30 years or more.
“Leveraging the federal government’s strong credit standing as a purchaser of the power and its continual need for baseload power is important in the development of SMRs. Federal agency purchasers can help to set the market and offer more certainty to other initial buyers,” the report said.
The report said the U.S. Congress could help foster such arrangements by allowing the General Services Administration, which authorizes most federal agency power purchases, to sign off on power supply contracts with terms of 30 years or more when needed to bolster national defense or grid stability. It further suggested that Congress could authorize federal agencies other than DOD to purchase power, or create a new legal authority allowing federal agencies to purchase power generated by SMRs and other nuclear power plants under long-term contracts.
“By creating an authority that permits federal agencies to purchase power for up to 30 years, SMR developers will be able to use traditional financing to repay a financed project or a long-term bond over an up to 30-year term, making the financing more affordable," said the report.
The report specifically urged moving forward with the early site permitting process for the Tennessee Valley Authority's Clinch River SMR project to power the DOE's Oak Ridge National Laboratory in Tennessee. In January 2017, the U.S. Nuclear Regulatory Commission accepted the Clinch River project's early site permit application for docketing but Tennessee Valley Authority acknowledged in May 2017 that the federal utility does not need any more power and neither does anyone else in the region.
The federal government has also awarded $217 million in matching funds to NuScale Power LLC to deploy its proposed 600-MW UAMPS Carbon Free Power Project, comprised of up to 12 passively-cooled 50-MW SMRs, at the DOE's Idaho National Laboratory in eastern Idaho. The NRC is currently reviewing the design certification application of NuScale's factory built and "ready-to-install" SMR. Recently, the NRC determined that NuScale's "walk-away-safe" novel cooling ability eliminated the need for backup electrical power to ensure reactor safety.
Fluor Corp. majority-owned NuScale submitted its 12,000-page design certification application in December 2016. The application has been under review since March 2017, and the NRC's final report is expected to be completed by September 2020.
"SMRs, coupled with transmission hardening, could provide highly reliable, non-intermittent, clean, and carbon-free power," the report maintained. "Certain SMR designs allow for output to be varied over days, hours, or minutes, thereby enabling the SMR to ramp up quickly in the case of a grid outage and adjust to be in line with changing load demands."
The report also recommended supporting SMRs by extending the production tax credits provided by the 2005 Energy Policy Act for new nuclear generation beyond a Dec. 31, 2020, deadline and reauthorizing the DOE loan program for advanced reactors. The report also said the DOE and the DOD should work together to identify facilities that can benefit from hosting or siting SMRs nearby, and that a provision should be inserted into the U.S. Environmental Protection Agency's Clean Power Plan, if it survives the Trump administration's attempts to withdraw the rule, to recognize SMRs as zero-carbon energy sources.
