- NextEra Energy is exploring the reopening of the Duane Arnold nuclear plant amid rising data center interest but remains cautious on the viability of small modular reactors.
- SMRs, though promising in terms of smaller size, lower fuel needs, and modular design, face significant challenges.
- High production costs for HALEU, estimated to reach up to $25,725/kg, pose a substantial financial hurdle.
A week ago, renewables utility company NextEra Energy (NYSE:NEE) delivered a healthy third-quarter earnings report. During the third quarter earnings call, CEO John Ketchum told investors that the company is currently evaluating the possibility of reopening its Duane Arnold nuclear power plant in Iowa amid growing interest from data center companies.
According to Ketchum, Duane Arnold’s boiling water reactor makes it easier to restart and operate economically compared to other nuclear power plants. However, Ketchum said he was “not bullish” on small modular reactors (SMRs), adding that the company’s in-house SMR research unit has so far not drawn favorable conclusions about the technology.
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“A lot of [SMR equipment manufacturers] are very strained financially,” he said. “There are only a handful that really have capitalization that could actually carry them through the next several years.”
Ketchum might have a valid point.
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Small modular nuclear reactors (SMRs) are advanced nuclear reactors with power capacities that range from 50-300 MW(e) per unit, compared to 700+ MW(e) per unit for traditional nuclear power reactors. Given their smaller footprint, SMRs can be sited on locations not suitable for larger nuclear power plants, such as retired coal plants. Prefabricated SMR units can be manufactured, shipped and then installed on site, making them more affordable to build than large power reactors. Additionally, SMRs are supposed to offer significant savings in cost and construction time, and can also be deployed incrementally to match increasing power demand. Another key advantage: SMRs have reduced fuel requirements, and can be refueled every 3 to 7 years compared to between 1 and 2 years for conventional nuclear plants. Indeed, some SMRs are designed to operate for up to 30 years without refueling.
Related: New Survey Shows Grim Outlook For Oil Markets
The U.S. Department of Energy has so far spent $1.2B on SMR R&D and is projected to spend nearly $6B over the next decade. Last year, the U.S. Nuclear Regulatory Commission (NRC) certified NuScale Power Corp.(NYSE:SMR) VOYGR 77 MW SMR in Poland, the first ever SMR to be approved in the country.
But there’s a big problem here because the fuel required to power these novel nuclear plants might be really expensive.
Three years ago, U.S. Nuclear Regulatory Commission (NRC) approved Centrus Energy Corp.’s (NYSE:LEU) request to make High Assay Low-Enriched Uranium (HALEU) at its enrichment facility in Piketon, Ohio, becoming the first company in the western world outside Russia to do so. A year later, the U.S. Department of Energy (DoE) announced a ~$150 million cost-shared award to American Centrifuge Operating, LLC, a subsidiary of Centrus Energy. HALEU is a nuclear fuel material enriched to a higher degree (between 5% and 20%) in the fissile isotope U-235. According to the World Nuclear Association, applications for HALEU are currently limited to research reactors and medical isotope production; however, HALEU will be needed for more than half of the SMRs currently in development. HALEU is only currently available from TENEX, a Rosatom subsidiary.
Centrus estimates that a full-scale HALEU cascade–which involves scaling-up its 16-centrifuge cascade at the Piketon plant to 120 centrifuges–could produce ~6,000 kg/y of the fuel. However, the company says that ramp-up will require “sufficient funding and offtake commitments.” Still, it represents a fraction of the 40 metric tons of HALEU the DoE estimates will be required by the sector by 2030. A 2023 survey by the Nuclear Energy Institute on U.S. advanced reactor developers estimated that the total market for HALEU could reach $1.6 billion by 2030 and $5.3 billion by 2035.
Last year, the Nuclear Innovation Alliance (NIA) published a report wherein they discussed production costs for HALEU. Here’s an excerpt from the report:
‘‘Calculated HALEU production cost for uranium enriched to 19.75% is $23,725/kgU for HALEU in an oxide form and $25,725 for HALEU in a metallic form under baseline economic assumptions but could be higher.’’
The report claims that a SWU (Separative Work Unit) is going to cost a lot more in a HALEU enrichment cascade compared to a standard LEU (Low-Enriched Uranium) enrichment cascade. SWU is the standard measure of the effort required to separate isotopes of uranium (U235 and U238) during an enrichment process in nuclear facilities(1 SWU is equivalent to 1 kg of separative work). NIA estimates that a LEU SWU will cost $150 but that a HALEU SWU will cost $1,000. According to the NIA, to save money, you’d make low-enrichment uranium first, then use the produced LEU as the feed for a HALEU enrichment cascade.
Source: Energy From Thorium
NIA reckons it might cost ~$2000/kgU to make HALEUF6 into HALEUO2, and as much as $4000/kgU to make HALEUF6 into HALEU-metal. At the end of the day, you’d end up with HALEU with 28 times the fissile content of natural uranium at over 100 times the price. In an interesting blog, Kirk Sorensen, founder of Flibe Energy, has worked out that it would cost anywhere from $10-$20/MWh on fuel costs alone to generate electricity from HALEU, multiples higher than for standard nuclear plants where fuel costs account for a small part of the overall electricity bill.
But, don’t give up on SMR tech just yet: Centrus’ shares have tripled over the past five weeks after the company signed a nuclear fuel supply deal with Korea Hydro & Nuclear Power (KHNP). The purchase commitment from KHNP covers a decade of deliveries of Low-Enriched Uranium (LEU) to help fuel Korea’s large fleet of reactors.
Source: Seeking Alpha
By Alex Kimani for Oilprice.com
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