The Truth About Nuclear Power – Part Eight

Subtitle: No Benefits From Smaller Modular Nuclear Plants

Are there any benefits from small, modular nuclear power plants?    As background, this series on nuclear power has shown that large, “cathedral” nuclear power plants of 1,000 MWe or greater cost as much as $10 billion each to construct.  The high capital costs require a high power sales price, making the new generation of nuclear power plants uneconomic.  See Part Two,  Part Three, and  Part Six for particulars.   This article explores the costs that can be expected if smaller, modular nuclear power plants are installed.  There is a contingent of nuclear power proponents that insists that costs per kW can be reduced by building smaller plants, more of them, and building them in controlled factory conditions.   But, are those assertions true?

Modular Small Nuclear Plant
source: Energy.gov

The short answer is, No.  Supposedly, the benefits are shorter construction times, less inflation, less interest on loans, all of which lead to lower costs.  But, loss of economy of scale overwhelms such benefits.  Consider 1200 MWe vs 600, 400, 300, and note that Dept of Energy defines Small Modular Reactors as 300 MW or less.  Each of the smaller size plants must be delivered much more quickly to achieve any savings in materials inflation and interest on construction loans.    A shorter construction period very likely cannot be done due to fabrication and delivery of large items: the reactor, steam generators, turbines, and pumps. 

There is, perhaps, a case for some capital savings for a smaller plant if only one steam generator can do the job instead of two or more.  For example, the 1600 MW plant under construction in Finland has four steam generators for its one reactor.  The recently-closed plants in California at San Onofre each produced a bit more than 1000 MW, and each reactor has two steam generators.   Those steam generators, at approximately 500 MW per steam generator, caused problems that led to the plant shutting down.  Therefore, a 600 MW plant with one steam generator probably cannot be done, or at least, no one would take that risk.  But, a 400 MW plant could have one reactor and one steam generator and still remain within the proven size of approximately 400 to 500 MW per steam generator.  That single bit of savings, however, would not be enough to overcome the cost increase per kW created by the loss of economy of scale.

The initial premise is that a 1,000 MWe nuclear plant would cost $4,000 per KW as its overnight cost (the cost to construct if it could all be built in one month, or “overnight”), and materials and labor escalation or inflation over six years increases the cost by $3,000 per kW, and finally, interest on the construction loan increases the cost by another $3,000 per KW.  The total is then $10,000 per kW.    The sources for these costs is explained in detail in Part Three.   (Note, EIA shows 2013 overnight costs for a new nuclear plant as $5,530 per kW).  See Table 2 from  this link. 

Costs for a smaller plant can be expected to follow the “Point 6” power rule for economy of scale, such that the cost of Unit B is found by the formula 

Cost B = Cost A x (Size B / Size A) ^0.6.   

An example illustrates using overnight costs only, where Size B is 400 MW, Size A is 1200 MW, and Cost A is $4,800.  Then,

Cost B = $4,800 x (400/1200)^0.6  = $2,483 per kW overnight cost.

Then, for a total power output of 1200 MW, three of the 400 MW plants are required.   The total overnight costs for the three plants is then 3 x 2483, or $7,449 per kW.    The goal here is to have a final cost less than $12,000, which is the single-plant size of 1200 MW times the cost per kW of 10,000.   With the overnight cost already at $7,450 (rounded slightly, which is fine using such rough numbers), one is left with only 4,550 available for inflation and escalation, plus interest.   If we make the very rough allocation of escalation or inflation is the same as interest on the loan, that then results in each category being half of 4,550, or 2,275.   

Then, we can compute the number of years that the modular plant must require for construction, at inflation of 5 percent per year.   Calculations show that approximately 5.5 years at 5 percent per year yields the desired result.  To save any on the final costs, then, the modular plants must be built in less than 5.5 years.   Stated another way, savings are realized only if the plant can be brought online in 3 or 4 years from notice to proceed. 

The question is, then, can it be done?  Once again, the nuclear industry is scrambling, trying to find a way to justify itself.   Small, modern design, modular-constructed nuclear power plants have never been built in the US, indeed, they are not even approved by the NRC.   The first projects would suffer all the problems of first-of-a-kind projects, and likely have no cost reductions at all. 

The same analysis can be performed for smaller plants, such as 300 MW, where four plants would be required to produce 1200 MW of power, and 200 MW, where six plants would be required.  The results are as follows.  The 300 MW plants must be constructed in 4 years to have zero savings, with any savings produced only if construction time is 2 or 3 years.  The 200 MW plants must be constructed in 2.1 years to have zero savings over the cathedral design.    It seems highly unlikely that small, modular plants can be built on such short timescales.  

The analysis is dependent on the inflation or escalation rate for equipment, labor, and services over the life of the project.  If the inflation rate is higher, as many forecasters predict must be the case, then the situation is worse.  The amount of time required to build the plant and yield a cost savings will be less and less as the inflation rate increases.

Conclusion

There are no benefits to the smaller, modular nuclear power plants that some nuclear power proponents advocate.   The loss of economy of scale requires much shorter construction times for any savings to be had. 

Update: 4/17/14 - Modular reactor developer cuts development, funding by 90 percent due to lack of customers and lack of investors.  (Imagine that...)  "Babcock & Wilcox will slash its spending on the mPower small modular reactor project, having failed to find customers or investors."  also, from same article:   "In February this year (2014) Westinghouse announced it would scale back its development of its 225 MWe small modular reactor design, having lost out in the DoE competition."  see link from World Nuclear News, 4/14/14  -- end update

Update 2-   4/19/14: - Navy-style small reactors are mentioned by nuclear advocates as proof that smaller reactors are viable.  Those reactors do indeed function for the purpose.  However, the issue is one of cost and the price require for electric power on a grid powered by nuclear reactors.  The US Navy has many nuclear powered ships and submarines that work very well.  Those reactors are not designed like commercial power plants.  Also, the economy of scale applies here.  It appears that the largest of the military reactors are approximately 165 MWe, however the USS Ronald Reagan, a new aircraft carrier, has two nuclear reactors each producing just under 100 MW of shaft power.   Such small reactors would require very high-priced electricity.   -- end update 2

Previous articles in The Truth About Nuclear Power can be found at the following links. 

Part One – Nuclear Power Plants Cannot Compete

Part Two – Preposterous Power Pricing if Nuclear Power Proponents Prevail

Part Three – Nuclear Power Plants Cost Far Too Much to Construct

Part Four – Nuclear Power Plants Use Far More Fresh Water

Part Five – Cannot Simply Turn Off a Nuclear Power Plant

Part Six –  Nuclear Plants are Huge to Reduce Costs

Part Seven --  All Nuclear Grid Will Sell Less Power

Part Eight – this article

Part Nine -- Nuclear Plants Require Long Construction Schedules

Part Ten - Nuclear Plants Require Costly Upgrades After 20 to 30 Years

Part Eleven - Following France in Nuclear Is Not The Way To Go

Part Twelve - Nuclear Plants Cannot Provide Cheap Power on Small Islands
Part Thirteen - Nuclear Plants Are Heavily Subsidized
Part Fourteen - A Few More Reasons Nuclear Cannot Compete
Part Fifteen - Nuclear Safety Compromised by Bending the Rules
Part Sixteen - Near Misses on Meltdowns Occur Every 3 Weeks
Part Seventeen - Storing Spent Fuel is Hazardous for Short or Long Term
Part Eighteen - Reprocessing Spent Fuel Is Not Safe

Part Nineteen - Nuclear Radiation Injures People and Other Living Things
Part Twenty - Chernobyl Meltdown and Explosion
Part Twenty One - Three Mile Island Unit 2 Meltdown 1979
Part Twenty Two - Fukushima The Disaster That Could Not Happen
Part Twenty Three - San Onofre Shutdown Saga
Part Twenty Four - St. Lucie Ominous Tube Wear

Part Twenty Five - Price-Anderson Act Protects Nuclear Plants Too Much

Part Twenty Six - Evacuation Plans Required at Nuclear Plants

Part Twenty Seven - Power From Nuclear Fusion
Part Twenty Eight - Thorium MSR No Better Than Uranium Process
Part Twenty Nine - High Temperature Gas Reactor Still A Dream
Part Thirty - Conclusion

Roger E. Sowell, Esq.

Marina del Rey, California

The Truth About Nuclear Power - Part Three

Subtitle: Nuclear power plants cost far too much to construct.  

The instant cost plus inflation, escalation, and interest on loans adds up to more than $10,000 per kW. 

Vogtle Nuclear Plant and Construction Site
photo - Wiki Commons by Charles C. Watson Jr.

One reason that nuclear power plants are uneconomic is they cost far too much to construct for the amount of power that they produce.  If one were to build a new nuclear power plant in the USA today, the final cost would be more than $10,000 per kW.   Several references support this assertion, Severance (2009), MIT (2003), and California EnergyCommission (2010).  All of these three referenced sources use $4,000 per kW as the overnight cost.

Overnight cost is the cost to construct if the plant could be built all at one time, or “over night”.  Of course, a nuclear power plant cannot be built overnight, as they require years to construct.  The added years increase the cost by escalation of materials and labor, and by interest on construction loans.   

Severance calculates the escalation for materials and labor to be $3,400 per kW, and for interest on construction loans to be an additional $3,100 per kW (figures rounded).   The total then is $4,000 plus $3,400 plus $3,100 equals $10,500 per kW.  A new, twin-reactor plant that produces 2,000 MW net electricity would then cost $21 billion to construct.   However, as indicated in Part Two of this series, Severance and the others did not include funds to make the plant operate safely if a large commercial aircraft crashes into the plant.  Not only the reactor, but the spent fuel storage area and the cooling water system must remain operable, per new NRC regulations.  This brings the cost to construct to approximately $12,000 per kW. 

How does this estimate compare to recent experience in the US?  There are two reactors under construction in Georgia, at the Vogtle plant.  Two more reactors were cancelled in Texas due to the excessive cost estimate at the South Texas Nuclear Project, STNP.   The STNP expansion project would add two reactors to the existing two, and was cancelled after a cost estimate of $17 billion was conceded by the reactor vendors to be too low.  As a result, we will never know how much that plant would cost to construct. 

The Vogtle plant is advertised as costing “only” $14.3 billion for twin reactors at 1100 MW each using the Westinghouse AP-1000 design.  However, cost overruns already incurred have increased the cost to $15.5 billion.  It is notable that Georgia changed the state law to allow the utility to bill customers in advance for construction costs.  This was an attempt to not pay finance charges on the construction loans.  In essence, rate-payers pay more money for electricity they are already using, and the utility company spends that cash for the nuclear construction.  Without this creative financing, the Vogtle plant would be right in line with Severance’s number, $20 billion more or less.   

The Vogtle plant is also plagued by delays in the construction, which would add to the cost if traditional financing were used.   At present (1Q 2014), the reactors are two years behind schedule, with four years to go for the first reactor to start up.  Many problems can arise in the next four years, which will likely add to the cost and delays.  As Severance shows, each year of delay adds approximately $1.2 to $1.6 billion in interest costs to the final cost for a twin-reactor plant.    An interesting account of the Vogtle plant’s progress can be found at 

http://www.taxpayer.net/library/article/doe-loan-guarantee-program-vogtle-reactors-34

[Update 6/24/2014: Vogtle facing more delays and cost increases  see link  -- end update]

In Finland, a single-reactor Areva nuclear plant is experiencing similar cost overruns and schedule delays. 

[Update 7/16/2014:  Finland's Areva EPL reactor plant is 7 years behind schedule and Billions of Euros over budget.  Per the article linked below:

“ "Areva was ready to do anything to win the Olkiluoto deal, including downplaying project management deficiencies. They had also previously delivered and commissioned nuclear reactors but they had never undertaken an entire project end-to-end, since the main French contractor had always been the EDF Group (Électricité de France), explained Les Échos editor in chief Pascal Pogam in an interview with Yle’s A-Studio current affairs program.

Based on accounts by parties such as the Olkiluoto owner-operator, the Finnish power consortium Teollisuuden Voima or TVO, Areva is said to have lied about the possibility of constructing a nuclear reactor within the agreed schedule."   see link  -- end update ]

Criticism

It is asserted that other countries can and do build nuclear power plants for approximately $2000 per kW.  As an example, China claims to build AP-1000 reactors at $2,000 per kW, according to world-nuclear.org.   One must pause at that; perhaps the lower labor rate in China is the reason, perhaps lower escalation for materials, and perhaps favorable (read: zero) cost for interest on construction.   However, the same website (world-nuclear.org) states that France’s current program has reactors that cost the US-equivalent of $5,000 per kW for overnight costs.  (Euro 3,700 per kW)

Conclusion

Truth Number 3:  Nuclear power plants cost far too much to construct, more than $10,000 per kW. 

Overview of The Truth About Nuclear Power series:

The series on Truth About Nuclear Power has several main themes:

1         

          Nuclear power operating costs are too high, cannot compete

2         

         Nuclear power costs too much to construct, require government assistance in loan guarantees or bill current ratepayers for construction funds (Georgia).

3         

         Nuclear power is unsafe to operate, near-misses occur frequently, disasters happen too; they must run at steady, high output to reduce upsets; this increases revenue to spread out the very high fixed costs; older reactors are more uneconomic and less safe (San Onofre leaks in new heat exchanger is a prime example)

4         

         Nuclear power is unsafe long-term for spent fuel storage

5         

         Nuclear power consumes far too much precious water

6         

         New designs to overcome these failures are unlikely to work, or to be economic if they can be made to work

a.       Thorium Reactors have serious developmental issues

b.      Modularized, smaller PWR (pressurized water reactor) reactors lose economy of scale advantages

c.       High temperature gas-turbine style reactors are far from developed

d.      Fusion at high temperature e.g. in magnetic bottle, is a pipe dream

7         

         Nuclear death spiral on the demand for power is real and present, customers have a variety of ways to self-generate (distributed generation), and alternatives become attractive as power prices increase.  Nuclear power will increase power prices, the greater the percent nuclear, the more alternatives become attractive. 

      Part One  --  Nuclear Power Plants Cannot Compete.

Part Two  --  Preposterous Power Pricing in Nuclear Proponents Prevail
Part Three -- this article
Part Four  --  Nuclear Plants Use Far More Fresh Water
Part Five --   Cannot Simply Turn Off a Nuclear Power Plant

Part Six –  Nuclear Plants are Huge to Reduce Costs

Part Seven -- All Nuclear Grid Will Sell Less Power

Part Eight – No Benefits from Smaller Modular Nuclear Plants

Part Nine -- Nuclear Plants Require Long Construction Schedules

Part Ten - Nuclear Plants Require Costly Upgrades After 20 to 30 Years

Part Eleven - Following France in Nuclear Is Not The Way To Go

Part Twelve - Nuclear Plants Cannot Provide Cheap Power on Small Islands
Part Thirteen - Nuclear Plants Are Heavily Subsidized
Part Fourteen - A Few More Reasons Nuclear Cannot Compete
Part Fifteen - Nuclear Safety Compromised by Bending the Rules
Part Sixteen - Near Misses on Meltdowns Occur Every 3 Weeks
Part Seventeen - Storing Spent Fuel is Hazardous for Short or Long Term

Part Eighteen - Reprocessing Spent Fuel Is Not Safe

Part Nineteen - Nuclear Radiation Injures People and Other Living Things
Part Twenty - Chernobyl Meltdown and Explosion
Part Twenty One - Three Mile Island Unit 2 Meltdown 1979
Part Twenty Two - Fukushima The Disaster That Could Not Happen
Part Twenty Three - San Onofre Shutdown Saga
Part Twenty Four - St. Lucie Ominous Tube Wear

Part Twenty Five - Price-Anderson Act Protects Nuclear Plants Too Much

Part Twenty Six - Evacuation Plans Required at Nuclear Plants

Part Twenty Seven - Power From Nuclear Fusion
Part Twenty Eight - Thorium MSR No Better Than Uranium Process
Part Twenty Nine - High Temperature Gas Reactor Still A Dream
Part Thirty - Conclusion

      Roger E. Sowell, Esq.

      Marina del Rey, California