One of the country’s leading developers of small nuclear reactors is facing ballooning costs for a key project, potentially jeopardizing its future in a low-carbon power grid.
NuScale Power Corp. and Utah Associated Municipal Power Systems (UAMPS) plan to begin operation of the first of six small modular reactors in 2029. NuScale is the leader in a global competition to build a new generation of smaller reactors that could provide a base of around-the-clock power to complement wind and solar energy on a zero-carbon grid.
The project hopes to show that small reactors, with factory-built components, can avoid the enormous cost overruns that have doomed the prospects of conventional reactors in the U.S.
But NuScale’s first reactor now faces sharply higher construction cost estimates, due to inflation and higher interest rates. If projected costs rise above $58 per megawatt-hour, it would trigger an up-or-down vote as early as next month from the project’s anchor customers.
To update the projected costs, analysts are getting bids from vendors for construction and “counting every nut and bolt,” said UAMPS spokesperson LaVarr Webb.
Webb would not speculate about the level of increase. But, he said, “we do know it will go up substantially.”
The development comes as another advanced nuclear reactor proposal — TerraPower’s project in Wyoming — likely is being delayed for at least two years because of lack of access to highly enriched fuel in Russia, the Casper Star Tribune reported Tuesday. The delay prompted a letter from Sen. John Barrasso (R-Wyo.) to Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) requesting an oversight hearing on the issue.
With NuScale, UAMPS, a Salt Lake City-based group of 50 municipal utilities in six Western states, is developing the reactor project, aided by a Department of Energy cost-sharing grant of up to $1.4 billion. The organization’s members can duck out of the project if costs go above $58 per MWh.
UAMPS does not intend to exit, Webb said — unless and until its members say otherwise. Each of its utilities will make separate decisions on buying the project’s power, and if many opt out, the project could fail. To go forward, there must be buyers for all of the reactor’s power, Webb said.
Some 70 developers in the U.S. and six other nations are also working on small modular reactors, but NuScale is the only developer with a design approved by the Nuclear Regulatory Commission. It plans to build six reactors in Idaho, with the entire project delivering 462 megawatts in 2030, if all regulatory approvals come through and construction schedules are met.
But it has seen costs of construction materials skyrocket since the project was first greenlighted in 2020.
The cost of fabricated steel plate has increased by 56 percent, while the cost of carbon steel piping — another primary plant component — is 90 percent higher. The reactor components constitute about one-third of the plant’s expected total costs.
Interest rates have also soared to their highest levels in 14 years.
“All that has impacted the cost of the plant,” NuScale Chief Financial Officer Chris Colbert said in an interview with E&E News. “We’re all trying to figure out what to do with it.”
Those costs also are hitting NuScale’s competitors in the wind and solar industry.
“We’re seeing cost increases for all forms of generation,” Webb said, later adding: “Our member participants feel like they need baseload, dispatchable, always-available energy to back up renewable power.”
Rising costs would be eased by the tax incentives in the Inflation Reduction Act, Colbert said. The law allows new reactor owners to claim a $25-per-MWh production tax credit for a plant’s first 10 years of operation, or a 30 percent investment tax credit on plants that begin operating in 2025 or later. There are other credits for plants that meet labor, location or domestic sourcing goals.
NuScale informed an investor conference last month that federal tax incentives could reduce construction costs of its reactor by up to 50 percent, if located at a shutdown U.S. coal plant site.
“The IRS has issued dozens of circulars asking for input” on the tax provisions for new nuclear plants, Colbert said. “The devil is in the details. It’s going to take awhile for [UAMPS members] to digest what it all means. But we think it will be hugely beneficial.”
Design hurdles
To keep the UAMPS project on track, developers will not only have to keep existing utility sponsors — they will have to sign on new ones.
Twenty-seven of UAMPS’ 50 member utilities are sponsors of the project, agreeing to buy 116 MW of power. But Webb said the entire 462 MW of capacity must be fully subscribed for the project to go forward.
“We’re going to have to see measured improvement off the current subscription to keep moving forward with the project,” UAMPS Chief Executive Mason Baker told the Salt Lake Tribune last month. “We’re very actively doing that.”
NuScale said it is also in discussions for projects elsewhere in the U.S., as well as in Bulgaria, Canada, Estonia, Jordan, Poland, Romania and Ukraine.
NuScale and KGHM, a large copper and silver producer in Poland, agreed in February to work toward deployment of a NuScale reactor as early as 2029. But the company also lost a potential U.S. customer recently, with Washington state’s Grant County Public Utility District deciding to instead consider a small modular reactor from Rockville, Md.-based X-energy.
NuScale also will need to gain design approval from the Nuclear Regulatory Commission for a new small modular reactor design. It has replaced its 50-MW design — which NRC approved two years ago — with a 77-MW one that it plans to use for the UAMPS project and others.
Diane Hughes, NuScale vice president for marketing and communications, said in an email that the company remains on track to submit the new design application this month.
But NRC staff has raised concerns about the design, writing in a letter to NuScale that its proposed module raised “several challenging and/or significant issues.”
The letter, first reported by the Utility Dive newsletter, is based on a draft application NuScale submitted to NRC seeking feedback for its final application.
The letter includes 18 pages of questions and concerns. NRC staff write that NuScale’s draft application is missing information needed to determine whether the design provides “reasonable assurance of public health and safety.”
Edwin Lyman, director of nuclear power safety with the Union of Concerned Scientists, said the issues NRC raised “will take substantial analytical work to fix.”
“Although NuScale claims that it is still on track to submit the application by Dec. 31, it is hard to see how that can happen unless the company does a rush job — which will only lead to more revisions and delays down the road,” Lyman said. “NuScale should take all the time necessary to do a comprehensive and accurate rewrite of the application instead of trying to stick to an arbitrary timeline.”
Hughes said NuScale never intended its draft application to answer all design review issues and instead sought feedback on new issues to consider before submitting a final application.
She also pointed out that NuScale had submitted a draft of its 50-MW design — without any adverse impacts.
“Ultimately,” she said, “that application led to NuScale receiving design approval from the NRC ahead of schedule.”
