Small Modular Nuclear Reactors make no economic sense

Are Thousands of New Nuclear Generators in Canada’s Future?


Ottawa is pushing a new smaller, modular nuclear plant that could only pay off if mass produced.

By M.V. Ramana 7 Nov 2018 |

Canada’s government is about to embrace a new generation of small nuclear reactors that do not make economic sense. 

Amidst real fears that climate change will wreak devastating effects if we don’t shift away from fossil fuels, the idea that Canada should get deeper into nuclear energy might seem freshly attractive to former skeptics.

For a number of reasons, however, skepticism is still very much warranted.

On Nov. 7, Natural Resources Canada will officially launch something called the Small Modular Reactor Roadmap. The roadmap was previewed in February of this year and is the next step in the process set off by the June 2017 “call for a discussion around Small Modular Reactors in Canada” issued by Canadian Nuclear Laboratories, which is interested in figuring out the role the organization “can play in bringing this technology to market.”

Environmental groups and some politicians have spoken out against this process. A petition signed by nearly two dozen civil society groups has opposed the “development and deployment of SMRs when renewable, safer and less financially, socially and environmentally costly alternatives exist.”

SMRs, as the name suggests, produce relatively small amounts of electricity in comparison with currently common nuclear power reactors. The last set of reactors commissioned in Canada is the four at Darlington. These started operating between 1990 and 1993 and can generate 878 megawatts of electricity (although, on average, they only generate around 75 to 85 per cent of that). In comparison, SMRs are defined as reactors that generate 300 MW or less — as low as 5 MW even. For further comparison, the Site C dam being built in northeastern B.C. is expected to provide 1,100 MW and BC Hydro’s full production capacity is about 11,000 MW.

Various nuclear institutions, such as Canadian Nuclear Laboratories, Canadian Nuclear Association and the CANDU Owners Group are strongly supportive of SMRs. Last October, Mark Lesinski, president and CEO of CNL announced: “Small modular reactors, or SMRs, represent a key area of interest to CNL. As part of our long-term strategy, announced earlier this year, CNL established the ambitious goal of siting a new SMR on a CNL site by 2026.”

Likewise, the CANDU Owners Group announced that it was going to use “their existing nuclear expertise to lead the next wave of nuclear generation — small modular reactors, that offer the potential for new uses of nuclear energy while at the same time offering the benefits of existing nuclear in combating climate change while providing reliable, low-cost electricity.”

A fix for climate change, says Ottawa

Such claims about the benefits of SMRs seems to have influenced the government too. Although NRCan claims to be just “engaging partners and stakeholders, as well as Indigenous representatives, to understand priorities and challenges related to the development and deployment of SMRs in Canada,” its personnel seem to have already decided that SMRs should be developed in Canada.

“The Government of Canada recognizes the potential of SMRs to help us deliver on a number of priorities, including innovation and climate change,” declared Parliamentary Secretary Kim Rudd. Diane Cameron, director of the Nuclear Energy Division at Natural Resources Canada, is confident: “I think we will see the deployment of SMRs in Canada for sure.” Such talk is premature, and unwise.

Canada is a late entrant to this game of talking up SMRs. For the most part it has only been talk, with nothing much to show for all that talk. Except, of course, for millions of dollars in government funding that has flown to private corporations. This has been especially on display in the United States, where the primary agency that has been pumping money into SMRs is the Department of Energy.

In 2001, based on an overview of around 10 SMR designs, DOE’s Office of Nuclear Energy concluded that “the most technically mature small modular reactor designs and concepts have the potential to be economical and could be made available for deployment before the end of the decade, provided that certain technical and licensing issues are addressed.” Nothing of that sort happened by the end of that decade, i.e., 2010. But in 2012 the U.S. government offered money: up to $452 million to cover “the engineering, design, certification and licensing costs for up to two U.S. SMR designs.” The two SMR designs that were selected by the DOE for funding were called mPower and NuScale.

The first pick was mPower and, a few months later, the DOE projected that a major electricity generation utility called the Tennessee Valley Authority “plans to deploy two 180 megawatt small modular reactor units for commercial operation in Roane County, Tennessee, by 2021, with as many as six mPower units at that site.”

The company developing mPower was described by the New York Times as being in the lead in the race to develop SMRs, in part because it had “the Energy Department and the T.V.A. in its camp.”

But by 2017, the project was essentially dead.

Few if any buyers

Why this collapse? In a nutshell, because there is no market for the expensive electricity that SMRs will generate. Many companies presumably enter this business because of the promise of government funding. No company has invested large sums of its own money to commercialize SMRs.

An example is the Westinghouse Electric Co., which worked on two SMR designs and tried to get funding from the DOE. When it failed in that effort, Westinghouse stopped working on SMRs and shifted its focus to decommissioning reactors that are being shut down at an increasing rate, which is seen as a growing business opportunity. Explaining this decision in 2014, Danny Roderick, then president and CEO of Westinghouse, said“The problem I have with SMRs is not the technology, it’s not the deployment — it’s that there’s no customers…. The worst thing to do is get ahead of the market.” 

Many developing countries claim to be interested in SMRs but few seem to be willing to invest in the construction of one. Although many agreements and memoranda of understanding have been signed, there are still no plans for actual construction. Examples are the cases of JordanGhana and Indonesia, all of which have been touted as promising markets for SMRs, but none of which are buying one because there are significant problems with deploying these.

A key problem is poor economics. Nuclear power is already known to be very expensive. But SMRs start with a disadvantage: they are too small. One of the few ways that nuclear power plant operators could reduce the cost of nuclear electricity was to utilize what are called economies of scale, i.e., taking advantage of the fact that many of the expenses associated with constructing and operating a reactor do not change in linear proportion to the power generated. This is lost in SMRs. Most of the early small reactors built in the U.S. shut down early because they couldn’t compete economically.

Reactors by the thousands?

SMR proponents argue that they can make up for the lost economies of scale two ways: by savings through mass manufacture in factories, and by moving from a steep learning curve early on to gaining rich knowledge about how to achieve efficiencies as more and more reactors are designed and built. But, to achieve such savings, these reactors have to be manufactured by the thousands, even under very optimistic assumptions about rates of learning. Rates of learning in nuclear power plant manufacturing have been extremely low. Indeed, in both the United States and France, the two countries with the highest number of nuclear plants, costs went up, not down, with construction experience. 

In the case of Canada, the potential markets that are most often proffered as a reason for developing SMRs are small and remote communities and mines that are not connected to the electric grid. That is not a viable business proposition. There are simply not enough remote communities, with adequate purchasing capacity, to be able to drive the manufacture of the thousands of SMRs needed to make them competitive with large reactors, let alone other sources of power.

There are thus good reasons to expect that small modular reactors, like large nuclear power plants, are just not commercially viable. They will also impose the other well-known problems associated with nuclear energy — the risk of severe accidents, the production of radioactive waste, and the linkage with nuclear weapons — on society. Rather than seeing the writing on the wall, unfortunately, NRCan and other such institutions are regurgitating industry propaganda and wasting money on technologies that will never be economical or contribute to any meaningful mitigation of climate change. There is no justification for such expensive distractions, especially as the climate problem becomes more urgent. 

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