Michael Shellenberger used to be a prominent environmentalist.
Now, after what he describes as a kind of conversion experience, he calls himself an ecomodernist and heads the Breakthrough Institute, a California think tank that views technology as the solution to the world’s environmental problems.
On Aug. 20 he was in Corvallis, speaking to more than 200 like-minded souls gathered for a fancy dinner in the main ballroom of Oregon State University’s CH2M Hill Alumni Center for an exposition on nuclear energy sponsored by NuScale Power, a local company working to develop what it hopes will be the first small modular reactor approved for use in the United States.
Over plates of steak and scallops, Shellenberger painted a picture of a golden future in which human suffering and environmental degradation could be overcome with the aid of affordable, plentiful, carbon-free energy — if only we can get past what he called our irrational bias against nuclear power.
“Saving nature in the 21st century,” he said, “is going to require that we confront our fears.”
It was a theme that came up over and over again during NuEx, a two-day trade show and networking extravaganza that reinforced NuScale’s status as the frontrunner to win the first Nuclear Regulatory Commission certification for a small modular reactor or SMR, a next-generation technology touted as cheaper, safer and more flexible than traditional large-scale nuclear power plants.
Some 230 nuclear industry representatives, investment bankers, political operatives and journalists descended on Corvallis for the event, where they were wined and dined, heard market forecasts and inspirational speeches, toured NuScale facilities and discussed possible business deals with the up-and-coming company.
The first day’s lunch speaker, Forbes environmental writer James Conca, laid out an argument for nuclear power as an environmentally friendly means of generating electricity.
Coal, he said, remains the world’s fastest-growing energy source, despite its well-documented health effects and climate-altering greenhouse gas emissions. Natural gas is cleaner but also contributes to global warming, he noted, while hydroelectric dams harm fish runs. Solar and wind, he pointed out, are intermittent energy sources that can’t be used to provide baseload power, and both technologies come with environmental costs of their own.
“It’s not intuitive,” Conca acknowledged, “but nuclear actually has the lowest environmental and health impact versus the amount of energy it produces.”
The second day’s speakers included Oregon state Rep. Dallas Heard, a Roseburg Republican who co-sponsored a bill in the 2015 Legislature that would have overturned Oregon’s restrictions on building nuclear power plants, and Washington Sen. Sharon Brown, who is pursuing the same goal in her state.
Rebecca Casper, the mayor of Idaho Falls, Idaho, talked about all the reasons she hopes NuScale will follow through on its plans to build its first operating reactor in her community.
And Dan Lipman, vice president of the Nuclear Energy Institute, said the trade association is working hard to build more support for small modular reactor technology.
“I think SMRs are the beginning of a new chapter for nuclear,” Lipman told NuEx attendees.
“We think the contributions being made here by NuScale are just phenomenal,” he added. “I can’t overstate the importance of what’s going on here.”
NuScale’s design is based on technology developed at OSU by Jose Reyes, who co-founded the company and serves as its chief technology officer.
Each 50 megawatt reactor module could be operated individually or in arrays of up to 12 units for a total generating capacity of about 600 megawatts, compared to about 1,000 megawatts for a conventional nuke. The reactors and their cylindrical containment vessels would be small enough (76 feet long by 15 feet across) to build in a factory and ship by truck, barge or rail to their final destinations, where they would be installed below grade level in a large pool of water. The design uses natural convection currents to circulate cooling water, a “passively safe” approach that eliminates the need for an elaborate network of pumps, pipes and valves that can fail in an emergency.
Founded in 2007, the Corvallis-based startup emerged as one of the leaders in the race to be first to market with an approved SMR design in late 2013, when it was awarded the second of two Department of Energy grants worth up to $217 million toward design and certification costs. NuScale vaulted into first place when the other grant recipient, a consortium led by established reactor maker Babcock & Wilcox, announced it was scaling back its SMR development effort.
NuScale is pumping about $13 million a month into the drive to complete engineering and testing for the company’s 12,000-page design certification application, which it hopes to submit to the Nuclear Regulatory Commission late next year. Some 600 employees and contractors — roughly two-thirds of them in Corvallis — are involved in the effort.
While the NRC review process likely will take several years, NuScale is pushing ahead with plans to build its first nuclear generating plant at the Idaho National Laboratory in partnership with a pair of regional public utilities, Energy Northwest of Washington and Utah Associated Municipal Power Systems. That plant, which would have 12 NuScale power modules, is slated to be completed in 2024 at a cost of about $2.8 billion (the price tag is expected to come down to $2.6 billion for future “12-pack” plants).
Of course, those plans could be derailed if the NRC finds any significant shortcomings during the design review. But NuScale executives say they’re confident nothing like that will happen.
“In terms of what’s out there that could be gotchas, we don’t see anything at all,” said CEO John Hopkins.
There are a number of other American firms working on small modular reactor designs of their own. Besides Babcock & Wilcox, other contenders include Westinghouse and Holtec, but all of those projects lag well behind NuScale in the licensing pipeline.
Internationally, Russia, South Korea and Argentina all have relatively advanced SMR development programs. China does as well, but unlike other governments working on their own SMR designs, it has shown a willingness to let foreign manufacturers into the fold.
NuScale is counting on having the first SMR design licensed by the Nuclear Regulatory Commission — widely considered the gold standard for excellence both at home and abroad — to give it a major advantage in the global marketplace.
How big is the market potential? The numbers are breathtaking.
According to feasibility study released last year by the United Kingdom’s National Nuclear Laboratory, global demand for SMR energy generation could be 55 to 75 gigawatts by 2035 (excluding Russia, which is assumed to be closed to foreign suppliers).
That equates to between 1,100 and 1,500 NuScale power modules, the company’s chief financial officer, Jay Surina, told the audience at NuEx. Assuming a 25 percent market share and a 10-year deployment time frame, he predicted the company could be turning out 28 to 38 modules a year.
Over the next two decades, that would work out to an installed value of $300 billion to $400 billion.
Sharing the wealth
No one has more to gain from NuScale’s future success than Fluor Corp., which rescued the Corvallis company from disaster in 2011 after NuScale’s chief investor, Venezuelan-American hedge fund manager Francisco “Pancho” Illarramendi, was indicted on federal charges of securities fraud.
Even though NuScale was never implicated in any wrongdoing, it went into financial freefall when the court froze millions of dollars in assets as part of a plan to compensate Illarramendi’s victims. The company was in a death spiral until Fluor swooped in with a $30 million investment, becoming NuScale’s majority owner and freeing it from court-ordered receivership.
Fluor has proved to be a powerful ally, upping its stake to $300 million to fuel NuScale’s NRC certification push and boosting the small startup’s credibility with its own financial stability and global reach. Headquartered in Dallas, Fluor is a major player in the international heavy construction market, with extensive experience in building nuclear power plants. It ranked No. 136 on the latest Fortune 500 list, has more than 43,000 employees, maintains offices on six continents and had $21.5 billion in revenue last year.
If NuScale is successful, its corporate parent will not only reap a share of those profits but will also have exclusive rights to provide engineering, procurement and construction services for NuScale’s power plants.
But according to Biggs Porter, Fluor’s chief financial officer, the two companies could be in line for a role reversal.
“NuScale has the potential,” he told the audience at NuEx, “to be larger than Fluor is today.”
A lot of other companies stand to gain as well, and many of them sent representatives to staff information booths at the NuScale expo. Some already have business relationships with the Corvallis company, and the rest appeared to be working on it.
Bob Troyer, a sales manager with ATI Forged Products in Milwaukee, Wisconsin, said it will take a number of suppliers to provide all the precision manufacturing capabilities NuScale will need to produce its modular reactors in a factory, something that’s never been done before. His firm (which also has a metal refinery in Millersburg) is putting together a bid to produce forged steel sections for the reactor and containment vessels.
He’ll have to sharpen his pencil to win that business from NuScale, which he said is “by far the market leader” in the emerging SMR field.
“There’s no question NuScale will be able to acquire very competitive pricing,” Troyer said. “The potential of this program is good enough that they will be able to get attention in the marketplace.”
Another company, Areva, has a consulting contract to develop and test reactor fuel assemblies for NuScale and hopes to win a long-term deal to supply all the company’s fuel needs once it achieves NRC certification and goes into production. The French nuclear industry titan even brought a finished fuel assembly to NuEx, complete in every detail except for the uranium pellets.
“In the U.S., as the market slows for traditional reactors, this is an opportunity for us to move into SMRs,” said Bob Freeman, Areva’s vice president for U.S. nuclear fuel contracts and services.
NuScale, he added, looks like an excellent bet to become a high-volume customer.
“We think they’re going to be very successful,” Freeman said. “We’re hopeful the marketplace will embrace them. We’re here to help push them over the finish line.”
Precision Custom Components is another NuScale consultant that hopes to land a long-term deal.
The York, Pennsylvania company makes reactor components. For conventional nukes, that’s basically a custom fabrication process, but factory reactor production could mean a steady stream of repeat orders.
“We do a lot of one-of-a-kind things, two-of-a-kind things,” said Jim Stouch, Precision Custom Component's vice president for business development and sales. “This is a game-changer.”
Rich Schlude, the company’s design and support engineering manager, said there’s little doubt at this point that NuScale will be able to mass-produce reactor vessels in a factory environment. But when pressed, he also sounded a cautionary note.
“Can we get people behind nuclear again? That’s probably the biggest (obstacle), to be honest,” he said.
Hearts and minds
NuScale executives understand that.
Distrust of nuclear power remains widespread in the United States and abroad, with memories of the disasters at Fukushima, Chernobyl and Three Mile Island still fresh in the public mind.
Led by well-organized environmental and social justice groups such as Greenpeace, Friends of the Earth and Physicians for Social Responsibility (mocked as Physicians for Social Irresponsibility by some NuEx speakers), anti-nuclear activists question the claims of safety improvements by SMR proponents and point out that the problem of radioactive waste disposal remains unsolved.
At the same time, however, public concern is rising over a different kind of environmental threat: global warming.
The Obama administration recently announced a sweeping new policy aimed at cutting greenhouse gas emissions from power plants, putting pressure on utilities to shut down coal-fired generating stations and replace them with “clean” energy sources. Seen in that light, nuclear power may begin to look like an environmental boon.
“We are a baseload source of electricity that does not generate any carbon emissions,” argued NuScale’s chief commercial officer, Mike McGough. “If you’re just trying to get off of carbon, the way to do that is to put in nuclear.”
The challenge for nuclear power proponents, he acknowledged, is to get ordinary citizens to embrace an energy source that is still widely viewed with suspicion.
“Ultimately, the public has to decide if they value clean air — if they believe, as Michael Shellenberger said, that in order to preserve the planet, we need to use as little of it as possible,” McGough said.
“That’s a story the public really hasn’t come to grips with yet, and that’s a story we as an industry have to do a better job of telling.”