The world's pioneer in the development of small modular reactors, NuScale, has recently announced that the project that should have been completed first, has been canceled because no one wants to pay.1 The consequences of the project's collapse could be great for several countries' energy policy, including Japan's. NuScale has often been highlighted as an example of a company that has succeeded in developing a design for a small reactor that could meet safety requirements, produce electricity at reasonable costs and be built quickly.
An earlier version of NuScale's reactor managed to get a kind of approval from US authorities. However, the cost of that construction was so discouraging that a new construction with a larger system was developed in the hope that a slightly larger reactor would provide better economics.2
The company has been granted 1.4 billion dollars3, roughly 200 billion JPY, of tax money from the US Department of Energy to run the company. But now the project is being canceled because it was not possible to find customers willing to pay the high costs for the electricity produced.
In many countries, NuScale's project has been seen as proof that nuclear power can be built quickly. We have been talking about 2028, then about 2029. It has never been realistic that it can be built so quickly. Now it has become realistic that it will never be built.
The visions of small, modular reactors that are safe, cheap and quick to build will have difficulty regaining credibility. Many nuclear energy companies have already stopped being interested in the really small reactors. Instead, they are looking at reactors with an output of 300-500 MW.4 While still called ”SMR” they are the same size as the Fukushima dai-ichi first reactor.5 But even at this size, they will provide more expensive electricity then the 1,000 - 1,700 MW reactors that have been built in the world in recent years.
The problem is that these reactors in reality cost several thousand billion yen each and produce electricity that costs many times more than solar and wind power. Since these large reactors sometimes shut down rapidly and stand idle for weeks or months, they also entail large system costs.
In an electricity market with open competition some of these costs are directly affecting the reactor owners. Lost power generation ability due to technical problems requires the purchase of balancing power from other sources in the same way as other power producers have to do.
But more important to notice is that the risk of sudden, unplanned shutdown of reactors requires precautions from the grid operator to avoid such events resulting in grid collapse. This has recently got attention in Finland where the new Olkiluoto reactor has been forces to install batteries6 to be allowed to operate, and still can rarely operate at full capacity.7
The risk of believing in new small, safe and cheap reactors is not that they actually will be built and outcompete new renewable energy. The problem is that this vision of new reactors is used by industries and politicians to campaign against and block the development of renewable energy installations.
Politicians' propaganda is just embarrassing, but nuclear companies' can be illegal.
As early as the week before NuScale announced the cancellation of its’ Utah project, lawyers had engaged with investors to try to have the company's representatives convicted of fraud.8 They had, it was believed, exaggerated the reactors' possibilities in the market and claimed that they had customers who might not exist.9 The stock has fallen from 15 to 3 dollars in recent months. Perhaps they will now be forced into bankruptcy. So it is understandable that the investors in NuScale are disappointed.
In other countries SMR-active companies enjoy more forgiving legislation than the American one. But also there, investors can become enemies, when it turns out that the visions were unreasonably inflated and the economic competitiveness simply cannot be created.
Already in 1970, the nuclear power pioneer Hyman Rickover testified in the US Congress and declared that "academic reactors" were small, simple, flexible, fast to build and cheap but never built. Real reactors are expensive, large, take long to build and complicated. He then quipped that ignorant politicians are easily seduced by the academic descriptions, because the real ones are so complicated that the problems are hard to understand.10
In May 2022, Amory Lovins wrote an article in which the competitiveness of small modular reactors was dismissed with technical arguments: Small reactors provide more expensive electricity than large reactors. Large reactors provide more expensive electricity than renewable energy. Most of the parts used to produce electricity in nuclear power plants are well proven. Not even if you manage to bring the costs down through mass production of the reactors themselves to zero, they will ever be able to compete with solar or wind power, not even if the latter need to be arranged so that they provide at least as stable electricity as nuclear power can provide.11
The former chair of the US Nuclear Regulatory Commission, Allison MacFarlane, has published several critical articles showing SMR problems, such as more difficult-to-handle waste12 and more expensive electricity. She describes what has been going on as a kind of pyramid scheme where early investors hope to be able to sell their shares when expectations are inflated, but before the companies fail with real projects.13
Can this continue despite NuScale's collapse?