US Department of Energy says new nuclear needs cheaper capital and a price on carbon

The US Department of Energy's Task Force on the Future of Nuclear Power has said that for advanced nuclear reactors to be deployed, capital costs must be reduced, there must be a "monetary recognition" of nuclear power's ability to reduce CO2 emissions, and energy market rules, which have "discouraged development and investment" must be standardised. The report said advanced reactors can reduce capital costs and improve thermal efficiency by up to 30%, and improve safety by a factor of 10. The report also called for the US to "design, development, demonstration, licensing and construction of a first-of-a-kind, commercial scale reactor".
The Department of Energy's Task Force on the Future of Nuclear Power, commissioned by Secretary Ernest Moniz in December 2015, has concluded that deployment of new technology “at a significant rate” in the period of 2030 to 2050 requires a competitive cost based on lower construction costs and a monetary recognition of nuclear power as a benefit to the country's goal of reducing carbon emissions.

“There are two key issues that must also be addressed for full cost competitiveness to be achieved for both existing and advanced U.S. reactors,” the task for said in a report adopted in late September by the Secretary of Energy Advisory Board. “First, nuclear overnight capital costs must decline, and electricity markets must recognize the value of carbon-free electricity generation based on the social cost of carbon emissions avoided,” said the report.

Second, the report said that energy market rules that vary around the country must be rectified. “Many aspects of the rules governing electricity rates and dispatch in different parts of the country make it challenging to value base load nuclear generation appropriately,” the task force said.

Regarding costs, the report said electricity markets could recognize the social value of nuclear power “by assessing a carbon-emission charge on electricity generation or, alternatively, by extending a production payment on carbon-free electricity generation of about $0.027 per kilowatt-electric-hour – $213 million for a 1,000 MWe reactor operating at 90 percent capacity – for a period of time.”

Concerning the variety of market policies, the report noted that examples included rate structures in wholesale capacity markets, preferential dispatch rules for renewable generation, and rates that are inadequate to assure recovery of investment. The report lamented: “These rules have led to early U.S. plant retirements and discouraged development and investment in new plants.”

To encourage new plant development, the Task Force recommended “in the absence of a national carbon-emission policy … a production payment of approximately 0.027/k/We-hr for carbon-free electricity generated for a period of time to be determined.” It also recommended that the country “undertake an advanced nuclear reactor program to support the design, development, demonstration, licensing and construction of a first-of-a-kind, commercial scale reactor.”

Advanced technology has an opportunity to lower overnight capital costs by as much as 30 percent compared with large light water reactors, the Task Force said. In addition, they have the opportunity of increasing thermal efficiency by 30 percent and improving safety by a factor of 10 when measured by the number of incidents per year. Other gains include higher-temperature operation and fuel utilization (perhaps a factor of 50 percent or greater for some advanced concept/fuel cycles).”

The Task Force recommended a four phase advanced nuclear reactor program. The first phase involves conducting development, engineering and systems analysis to establish technology readiness, estimated costs and LCOE (levelized cost of electricity) of candidate technologies. “Milestone 1 is the down select decision to proceed with one (or more) of the technologies,” the report said.

Phase Two involves subsystem development and reactor demonstration preparation. “Milestone 2 is the decision to proceed with the demonstration project,” according to the report.

Phase Three is devoted to construction and operation of a prototype plant. Phase Four consists of construction of a first of a kind plant. “This phase concludes with an explicit determination at Milestone 4 that private investors, banks, utilities and owner/operators of electricity generation plants will commit to a first wave of construction of these advanced nuclear plants.”