This article was originally published on 23 Aug 2023.
The central theme driving the energy transition and decarbonisation efforts revolves around the objective of maximising the use of electricity and sourcing this electrical power from renewable and low-carbon origins. The potential inclusion of nuclear energy in this shift toward electrification is gaining traction. Many experts and governments are reconsidering nuclear energy as a replacement for decommissioned coal-fired plants, but with a focus on smaller and safer units. These smaller units are driven by a new kind of nuclear technology known as small modular reactors (SMRs). These changes in the landscape underscore the significance of FactSet's newly released Workstation report in monitoring the role of nuclear power in the U.S. market.
Recent developments in the U.S. power sector have caught the attention of industry observers. Notably, a breakthrough in replicating a minuscule nuclear fusion reaction has emerged, potentially holding substantial transformative power generation implications in the long term.
Another significant development is the approval by the Nuclear Regulatory Commission (NRC) of an application for an enlarged 77 MWe SMR. This follows the approval of a smaller 50 MWe SMR in 2020. The new application will undergo a 24-month review process starting this month.
These narratives surrounding fusion and SMRs provide a glimpse into the future trajectory of nuclear power. A third storyline involves the commencement of Southern Company's Vogtle Unit 3, bringing us one step closer to Vogtle 4, likely the final addition to the U.S.'s new-generation, large-scale nuclear power plants. Unlike its thermal counterparts, coal and natural gas, the state of nuclear power in the U.S. has remained largely static since the 1980s. Coal-based power generation has declined significantly, while natural gas generation has nearly doubled over the past two decades.
U.S. Operational Fleet of Coal, Natural Gas, and Nuclear Power Plants
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As the transition from coal to natural gas gains momentum and an increasing emphasis is placed on ESG considerations along with decarbonisation efforts, the power industry in the United States has witnessed a reduction in emissions. The collective emissions from coal and natural gas power facilities have decreased by approximately one-third over the past decade.
U.S. CO2 Emissions from Coal and Natural Gas Power Plants
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In the meantime, the ongoing joint efforts from both private entities and public institutions to achieve decarbonisation have created economic and societal incentives for the closure of coal-fired power facilities. The provided report indicates that a substantial capacity of approximately 110,000 MWe from additional coal plants has declared their plans for decommissioning. This represents slightly over fifty percent of the remaining coal-powered fleet in the United States and accounts for around 11% of the total U.S. generation from coal, natural gas, and nuclear sources.
U.S. Planned Coal-Fired Power Plant Retirements
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However, regional ISOs and power balancing authorities across the country continue to struggle with the prospect of replacing baseload and dispatchable coal generation, which can be called upon whenever needed, with intermittent wind and solar resources that answer to the whims of nature (and transmission constraints). This struggle has brought about a noticeable shift in government support of the U.S.’ aging nuclear fleet, which provides baseload, dispatchable, emissions-free generation. The clearest illustration of that has been the Civil Nuclear Credit Program, which amounts to funding the U.S.’ nuclear fleet in the hopes of keeping them economic.
Even so, that program is meant to only maintain the current fleet, not grow it. Vogtle Units 3 and 4 will very likely be the last new-build, large-scale fission reactors in the U.S. The new units at Vogtle have provided a warning to the market of the massive financial ($30 Billion), technological, and regulatory undertaking that is building a modern-day nuclear-powered generator in the U.S.
Instead, emphasis has shifted to SMRs. There are several pilot programs underway in the U.S., notably a plant in Idaho expected in 2030 and a unit that Nucor, a mini-mill steel company, is studying with NuScale, a leading SMR developer. Other SMR developers include GE Hitachi, Holtec, Last Energy, NanoNuclear, and Rolls-Royce. By way of scale, if half of the planned 100,000 MWe of coal plant closures were replaced with SMRs, we would need 650 of the above-mentioned 77 MWe units over the next few decades.
A quick glance at planned power plants in the U.S., however, puts on display the disparity in proven (and government supported) wind and solar technologies versus new nuclear projects.
U.S. Planned Wind, Solar, and Nuclear Plants
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The Small Modular Reactor (SMR) projects being monitored by FactSet (indicated by purple dots above) are currently overshadowed by the prevalence of wind and solar projects (depicted by blue and yellow dots). Nevertheless, this situation has the potential to change significantly within the next ten years. A 12-module SMR facility has the capacity to produce up to 924 MWe and can be constructed on a mere 0.05 square miles, whereas generating a similar output through solar and wind installations would necessitate vast areas of land, approximately 17 square miles and 94 square miles, respectively. Moreover, repurposing abandoned coal plant sites has been considered a viable option due to their existing connectivity to power infrastructure.
Undoubtedly, the adage "time is money" holds true. The duration required for approval and construction, not solely for the initial module but also for a sufficient number of modules to replace coal or gas plants emitting pollutants without mitigation, along with considerations regarding suitable locations and the generalised apprehensions surrounding nuclear technology, all present challenges that the SMR technology must surmount. Nonetheless, the demand for clean, continuous electricity generation that this technology promises is anticipated. As more entities contemplate pilot initiatives and receive governmental backing, we are on the cusp of gaining a more comprehensive understanding of whether a new era in U.S. nuclear power, characterised by the adoption of SMRs, can be successfully launched.
Source: FactSet
