Could the municipal utility members of Utah Associated Municipal Power Systems (UAMPS) that have committed to the NuScale small nuclear reactor project save significant money by dumping the unproven nuclear technology and sign up for available and new geothermal-generated electricity from local investor-owned utility, NV Energy?
That’s the case made in a recent paper from energy analyst (and my former colleague) Dennis Wamsted at the Institute for Energy Economics and Financial Analysis (IEEFA). UAMPS, a state-created municipal utility joint action agency that includes 50 electric distribution systems from Utah, Arizona, California, Idaho, Nevada, New Mexico and Wyoming. UAMPS and 27 of its members have a contract with NuScale Power, currently the leading developer of small (under 300 MW), modular nuclear reactors (SMR). The NuScale technology, which has U.S. Nuclear Regulatory Commission approval, is yet unproven.
Under the current contract, NuScale plans to build six 77-MW units of its light-water reactor technology on a federal government-owned site at the Department of Energy’s Idaho National Laboratory, for a total of 462-MW, at a newly-adjusted-upward cost of $89/MWh. The joint UAMPS-NuScale endeavor is named the “Carbon Free Power Project (CFPP).”
The CFPP has struggled from its 2015 beginning, even with a $1.355 billion cost-sharing agreement with the DOE. Originally, it would have consisted of 12 NuScale-designed reactors at 50-MW each, for a total of 600 MW. Then, facing estimated escalating costs, NuScale said it would upgrade the reactors to 60-MW (economies of scale for SMRs?), for a 729-MW project. In mid-2021, it again resized the units, this time to 77-MW each, but would only build half of the original dozen.
In the meantime, UAMPS utility members, including some of the largest in the system, were dropping out of the project as its costs increased. And the DOE commitment proved to be hollow, as the department has no authority to make the deal binding. It will depend both on the views of the Biden administration, and Congress.
As the lEEFA analysis noted, UAMPS has a limited time window to escape from the deal, and, says Wamsted, now may be the time. “The 27 UAMPS members that have signed on to the NuScale SMR project will be contractually bound to pay for their share of the final costs—no matter what that number is—if they remain involved,” says the paper. “But the project includes off-ramps allowing participants to back out of the agreement at certain points. The latest off-ramp period has just started, and backers should use it or risk saddling their communities with potentially ruinous future power costs.”
Despite the problems with the project, UAMPS and NuScale repeatedly cite the virtues of reliable, non-fossil technology. But there is more than one way to achieve those goals, as the IEEFA analysis notes. Las Vegas-based, Berkshire Hathaway subsidiary NV Energy has offered UAMPS new geothermal power at what would be a considerable savings over the NuScale deal. The company last year asked state regulators for a green light on two projects, totaling 140 MW of capacity, with 120 MW coming from Ormat Technologies conventional hot rocks projects at $69/MWh and a 20-MW advanced, closed-loop system at $70/MWh.
Wamsted wrote, “The discrepancy is likely to grow even larger, given that the geothermal proposals are flat-rate contracts while the NuScale SMR figure is simply the current estimate of final project costs, even though the reactor licensing process is not complete and construction has not begun.”
In testimony to the Public Utilities Commission of Nevada, NV Energy offered an additional environmental benefit to the carbon-free, reliable geothermal projects. They would support the utility’s plans to retire a two-unit, 524-MW coal-fired plant “by providing around-the-clock renewable replacement capacity, energy and ancillary services.”
NV Energy says the Ormat 120-MW project will generate 1050 million MWh a year. The 27 UAMPS members currently signed up for the CFPP would purchase 112 MW from the NuScale nuclear project. At an assumed capacity factor of 95%, the project would generate 932,000 MWh annually.
The Ormat offer – 60 MW of baseload power from four existing units and another 60 MW from four new wells. The advanced, closed-loop geothermal project, being developed by the Canadian firm Eavor (pronounced “ever”) would be able to follow load, something not in the cards for the NuScale SMRs.
The economic calculation for the UAMPS CFPP is not a comparison of nukes versus intermittent wind and solar, where the reliability advantage is real. Rather, it appears, the competition is between baseload nuclear and baseload and dispatchable geothermal.
–Kennedy Maize
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