Small Modular Reactor Insights

				Small Modular Reactor Insights No. 1 July, 2011

PROJECTS

B&W Has Letter of Intent from TVA on Six SMRs

Generation mPower LLC (GmP), a majority-owned subsidiary of Babcock & Wilcox Nuclear Energy, Inc., has signed a letter of intent with the Tennessee Valley Authority (TVA) that defines the project plans and associated conditions for designing, licensing and constructing up to six B&W mPower small modular reactors (SMRs) at TVA's Clinch River site in Roane County, Tenn. The project is expected to include joint development and pursuit of a construction permit from the Nuclear Regulatory Commission (NRC). The project would also include engineering, procurement and construction (EPC) activities leading to receipt of an operating license from the NRC, assuming certain preconditions are met.

GmP is a company formed by affiliates of B&W and Bechtel Power Corporation to design, license and build the world's first commercially viable Generation III++ small modular nuclear power plant based on B&W mPower SMR technology.

Christofer Mowry, Chairman of GmP and President of Babcock & Wilcox Nuclear Energy, Inc., said, "We believe the energy industry needs the complementary skills of a capable, integrated nuclear supplier team and an experienced nuclear operating utility to successfully deploy the game-changing clean energy solution that B&W mPower represents. Together, TVA and GmP can meet this challenge and capture the promise of SMRs. We have a common interest in seeking to successfully deploy this advanced nuclear reactor, which is based on substantially proven technology, by the end of this decade."

Bill McCollum, TVA's Chief Operating Officer, said, "We recognize the unique benefits that small modular reactor technology can present to the nuclear industry in the areas of economics and safety. Successful deployment of small reactor technology will increase the options available for clean, reliable and safe power generation."

GmP remains on track to deploy the first B&W mPower reactor by 2020 at TVA's Clinch River site. The B&W mPower Integrated System Test facility in Virginia is expected to begin a three-year project later this summer to collect data to verify the reactor design and safety performance in support of licensing activities. TVA plans to submit a Construction Permit Application to the NRC in 2012, and GmP plans to submit a Design Certification Application to the NRC in 2013.

"We have been working with TVA for some time to evaluate the technical and regulatory requirements associated with constructing B&W mPower SMRs at its Clinch River site," said Ali Azad, GmP President and Chief Executive Officer.

The letter of intent specifies the division of responsibilities between GmP and TVA for the preparation and NRC review of a construction permit application. The letter also describes the timing of the project's activities for successful completion of major EPC milestones.

B&W SMR Test Facility to Be Operational Later This Year

In July 2010, the Babcock & Wilcox Company started the project for locate mPower™ Integrated System Test (IST) facility in Bedford County, Va., at the Center for Advanced Engineering and Research (CAER), currently being constructed at the New London Business & Technology Center.

The IST facility will include a scaled prototype of the B&W mPower reactor that will undergo extensive testing. All of the technical features of the B&W mPower integral reactor are included in the IST, although the source of energy is electricity rather than nuclear.

This three-year initiative will collect data to verify the reactor design and safety performance, supporting B&W's licensing activities with the Nuclear Regulatory Commission. The program is supported, in part, by a grant from the Virginia Tobacco Indemnification and Community Revitalization Commission.

Installment of plant process equipment began in early April 2011. The IST facility is expected to be operational later in 2011.

Shidaowan HTR-PM could be Operating by 2015

A demonstration high-temperature gas-cooled reactor plant, with twin reactor modules driving a single 210 MWe steam turbine, was initially approved in November 2005, to be built at Shidaowan in Weihai city, Shandong province, by Huaneng Shidaowan Nuclear Power Company Ltd (HSNPC). It will be part of the Rongcheng Nuclear Power Industrial Park project. The HSNPC joint venture is led by the China Huaneng Group Co. Huaneng Power International is investing CNY 5 billion in the project, which received environmental clearance in March 2008. Site work is largely complete, but no NNSA licence has been issued. Huaneng wants to commence construction as soon as possible, for commercial operation in 2015. The EPC (engineering, procurement, construction) contract was let in October 2008, and involves Shanghai Electric Co and Harbin Power Equipment Co. A simulator contract signed in May 2010 was between HSNPC, Chinergy and CGNPC Simulator Co. After three years of negotiation, in March 2011 a contract was signed with SGL Group in Germany for supply of 500,000 machined graphite spheres for HTR-PM fuel by the end of 2013. In November 2010 Huaneng Group signed an agreement with US-based Duke Energy to train nuclear plant staff.

This will be the demonstration plant for a further 18 modules at the site, which would total 3,800 MWe.

Saudi Arabia has Small Reactor Initiative with Argentina

Saudi Arabia has signed a nuclear energy cooperation deal Argentina. Argentina's Atomic Energy Commission and technology firm INVAP have a simplified pressurized water reactor design aimed at small-scale electricity generation and water desalination projects, which are both urgent needs for the oil-rich Kingdom.

"Saudi Arabia is very pleased to have entered into a cooperation agreement with Argentina, a country that has exhibited continued leadership in the transfer of technology, the sharing of best practices, and the safe operation of atomic reactors," said Hashim bin Abdullah Yamani, president of the King Abdullah City for Atomic and Renewable Energy.

"With Saudi Arabia's local power demand expected to nearly triple in the next 20 years, it's critical that the Kingdom use atomic and renewable energy technologies to meet this growing demand in a safe, sustainable and clean manner."

Saudi is struggling to keep up with rapidly rising power demand, especially for energy intensive seawater desalination, and wants to build nuclear reactors to cut gas and oil burning in the power generation sector. It has signed similar agreements with several other countries with experience in nuclear energy. INVAP has built research reactors in Algeria and Egypt.

NEWS

SMR Market Could Top $153 billion by 2030

There will be a real market for Small Modular Reactors and all the components. When you include all the projects smaller than 300 MW you include the very small projects which are already underway. With the projects in China and the US at the 125 MW scale slated for operation between 2015 and 2020 there is already significant revenue generation. One of the outcomes of the Japanese nuclear disaster is a shift in interest from large plants to small ones. Therefore the revenue stream projections for small plants may be more predictable than for the large ones.

Revenues for consultants and engineers start in the preparation phase and run through startup. Steel and other raw material revenues would be highest during manufacture and construction. Purchased components should be on site prior to construction. So revenues for pumps and valves would peak a year or two before startup. Some pump and valve revenues are generated when an order is placed and the stream continues through shipment. Additional revenues are generated to assist in start up. There may be an amount withheld until performance guarantees are demonstrated. So this could be well after startup.

Here is the timeline for the B&W Clinch river project and the goal for typical projects once commercialization has been established.

Segment	Clinch River	Goal in years prior to start
Preparation	2011-2014	4
Manufacturing	2014-2018	2
Construction	2016-2019	1
Startup	2019-2020	o

Argentina’s plan to install a 25-megawatt SMR prototype in 2014 is on schedule. Rosatom Corp, a Russian nuclear company, has said it will sell nearly three SMR equipped barges in 2011. A demonstration high-temperature gas-cooled reactor plant, with twin reactor modules driving a single 210 MWe steam turbine, is slated for startup in 2015 at Shidaowan in China. The B&W Clinch River start is slated for 2020.

There are a dozen or more consortia working on developing SMRS, so even the demonstration plant revenues will be significant. The B&W prototype is close to start up. So there is modest revenue now. The revenues will likely increase substantially in following years.

If the initial projects prove successful and demonstrate the cost advantages of SMR, then the revenue streams could rise rapidly starting in 2017 when manufacture of vessels and components slated for 2020 startup will peak.

Plate and structural steel could be 8 percent of the total cost. The peak revenues would occur during the manufacture phase. So the suppliers would be receiving $96 million in revenues in 2012 rising to $480 million in 2020. In the same time frame suppliers of pumps and valves would enjoy revenues of $72 million in 2013 rising to $360 million in 2020.

Once the approach is fully commercialized the market could grow rapidly. Variables will include

With an optimum outcome of the above variables the growth could be 50 percent per year over the 2023-30 time frame.

With a relatively poor outcome of developments relative to the above variables the growth could be 10 percent per year. With the optimum outcome revenues would reach $153 billion/yr in 2030. The manufacturing revenue would be two years ahead or 2028 in the above chart.

The poor outcome of just under $13 billion in revenues in 2030 is by no means the worst outcome. If developments relative to several of the variables are very negative the market could evaporate. If an accident of significant magnitude or several accidents of modest magnitude would occur the market would be greatly impacted.

There is the possibility of a market which is even bigger than the $153 billion. The reason is that even with the optimum scenario the SMR installed capacity will only be a few percent of the total world electrical capacity. The present installed generating capacity is 4,000,000 MW. An additional 2,000,000 MW will be added to world generating capacity by 2030. In addition, another 2,500,000 MW of capacity will be replaced.

Hence, net additional capacity over the 2011-30 period will be 4,500,000 MW. The optimistic scenario only assumes that 2.5 percent of this additional capacity will be SMR. There is the potential for revenues far beyond the forecast if SMR were to become the preferred energy generation option.

Cost Could Be Less Because Revenue Generated Faster and Interest Could Be Lower

In the past, utilities have preferred very large nuclear reactors—over 1,000 megawatts—to take advantage of economies of scale. But large reactors have a long lag time between when funding is raised and when the plant starts generating revenue, and this creates a problem, says Andrew Kadak, a former professor of nuclear engineering at MIT and a consultant at Exponent Failure Analysis. When the cost of interest is figured in, smaller reactors look more attractive. Lenders are typically willing to charge less interest on smaller loans, and the plants can be expected to start generating revenue faster. TVA's are projected to take three years to build, as opposed to five or more for conventional plants. Smaller reactors also avoid the need for expensive transmission upgrades to link them to the grid.

Modular Construction Will Result in Cost Reductions

SMRs lend themselves to standardization in manufacturing, so that if contracts for reactors come in, leaning-by-doing should rapidly take place. This is the thesis of Daniel Kammen of the World Bank. The value in this standardized production and replication is that cost declines would be expected to rapidly take place. In many mass-produced technologies, the cost declines are dramatic: about a 20 percent decline for each doubling of production. This means that if the cost per megawatt of, say, a 200 MW small reactor is comparable to large reactors then just to build a "standard" 1,000 MW nuclear power plant, five more units worth of experience and cost declines should result while the traditional reactor industry produced just one unit.

While large reactors are built on site, a process that can take five years, the mPower reactors would be manufactured in Babcock & Wilcox's factories in Indiana, Ohio or Virginia and transported by rail or barge. That could cut construction times in half.

Because they could be water-cooled or air-cooled, mPower reactors wouldn't have to be located near large sources of water, another problem for big reactors that require millions of gallons of water each day. That could open up parts of the arid West for nuclear development.

The first units likely would be built adjacent to existing nuclear plants, many of which were originally permitted to have two to four units but usually have only one or two.

Why SMRs are Safer

In the United States, Nuclear Regulatory Commission regulations require that every plant be built to survive an earthquake larger than the strongest ever recorded in the area. And when the NRC does finally produce a regulatory regime governing SMRs, the same rule will likely be put in place. But what happens when a major earthquake and tsunami event not only prevents a nuclear power plant from operating properly but also prevents the emergency back-up systems from operating properly, or at all? In the case of SMRs, because of the size of the reactors and the passive cooling systems used, a loss of back-up power or access to fresh water would be irrelevant.

"They are smaller, so the amount of radioactivity contained in each reactor is less," writes John Wheeler at This Week in Nuclear. "So much less," he writes, "that even if the worse case reactor accident occurs, the amount of radioactive material released would not pose a risk to the public."

Not only do smaller reactors contain less fuel, which slows down the progression of reactor accidents, most SMRs are small enough that they cannot over heat and melt down.

"Where operators in large reactors have minutes or hours to react to events, operators of SMRs may have hours or even days. This means the chance of a reactor damaging accident is very, very remote," writes Wheeler.

"They get all the cooling they need from air circulating around the reactor," writes Wheeler. "This is a big deal because if SMRs can’t melt down, then they can’t release radioactive gas that would pose a risk to the public."

In addition to not requiring access to electricity to support an active cooling system, SMRs are small enough that they can be built underground. Doing so certainly wouldn't protect them from the damaging effects of earthquakes, per se, but it would prevent them from being lifted off their foundations by a powerful tsunami.

Two Senate Bills Could Impact Outlook for SMRS

Two bills concerning small modular reactors (SMRs) have been introduced recently in the Senate Energy and Natural Resources Committee.

The first bill, S. 512, instructs the Department of Energy (along with private partners) to develop two standardized SMR designs. The intent is to obtain final Nuclear Regulatory Commission certification of the two designs by 2018, and to have an NRC construction and operating license (COL) for two actual plants by 2021. ANS president Joe Colvin testified before the committee in support of the bill.

The other bill, S. 1067, provides $250 million in funding over the next five years for research and development on how to reduce fabrication and construction costs for SMRs.

R&D toward reducing construction costs for SMRs (or nuclear plants in general) could be very productive, with up-front capital cost being the most significant impediment to the growth of nuclear power. Thus, S. 1067 should be beneficial, the only question being how much. My personal view is that it doesn’t go far enough says Jim Hopf, a senior nuclear engineer at Energy Solutions.

“Current policies provide financial incentives (such as tax credits and loan guarantees) to utilities to build and operate new nuclear plants. The main reason, however, for the recent escalation in new nuclear plant cost is the lack of a sufficient supply chain for large and/or nuclear-grade components. Therefore, it is possible that financial incentives to develop the supply chain would be an even more strategic investment than direct plant construction incentives, with respect to getting new nuclear deployed. How about tax credits or loan guarantees for fabrication plants and/or assembly lines to build whole reactors (in the case of SMRs) or large plant components (in the case of large reactors)? This should result in a significant drop in nuclear plant construction costs, which could make direct utility construction incentives unnecessary, at least over the longer term.

Hopf continues “As for S. 512, some believe that the choice of (only) two standard designs to promote will stifle competition and innovation. There’s probably some truth to that. promote will stifle competition and innovation. . For me, the bigger issue is the schedule (i.e., a COL by 2021). This seems to be rather slow. In fact, it appears that industry may achieve a shorter schedule all on its own, without any government support at all.”

For the two SMR designs that are simply scaled-down light-water reactors (i.e., NuScale and mPower), Hopf says “ I believe that the companies in question are planning to file COL applications in the near future. I certainly hope that the COL application will not take about 9 years! My understanding is that the (private) companies’ timelines corresponded to having the first modules actually in operation by about 2020. The Tennessee Valley Authority, which plans to deploy (mPower) SMR(s) at one of its existing nuclear sites, is planning on forgoing the COL process, and opting for the old reactor licensing process, so it they can get started on SMR construction even earlier. If the government is (supposedly) helping, why is its timeline (i.e., merely having a reactor licensed by 2021) even longer?

MATERIALS

Graphite is Key Material for Pebble Bed Reactor

Graphite use is expected to rise sharply due to its growing use in Pebble Bed Nuclear Reactors ("PBNR"). These reactors are small, modular nuclear reactors. The fuel is uranium imbedded in graphite balls the size of tennis balls. These reactors have a number of advantages over large traditional reactors namely including lower capital and operating costs. They use inert gases rather than water as coolants. Therefore, they do not need the large, complex water cooling systems of conventional reactors and the inert gases do not dissolve and carry contaminants. These reactors cool naturally when shut down. The reactors operate at higher temperatures leading to more efficient use of the fuel and they can directly heat fluids for low pressure gas turbines.

The first prototype is operating in China and the country has firm plans to build 30 by 2020. China ultimately plans to build up to 300 Gigawatts of capacity and PBNRs are a major part of the strategy.

Small, modular reactors are also very attractive to small population centers or large and especially remote industrial applications. Companies such as Hitachi are currently working on turn-key solutions.

Researchers at West Virginia University estimate that 500 new 100GW pebble reactors would need an estimated graphite requirement of 400,000 tonnes. This alone is equal to the world's current annual production of flake graphite. It is estimated that each pebble reactor will require 300 tonnes of graphite at start up and 60-100 tonnes per year to operate.

Stainless Cladding Used in Hyperion 25 MW Module

The Hyperion Power Module (HPM) offers a "distributed" independent energy solution for remote locations that are too difficult or expensive to reach with traditional electrical grid systems from one large, centrally-located power plant. Each HPM-based electric plant generates 25MW of electricity.

Electrical Output	25MW Electric
Coolant	Liquid Metal (Pb-Bi)
Fuel	Uranium Nitride (UN)
Fuel cladding	Stainless Steel
Enrichment	19.75%
Refueling cycle	10 years
Reactor size	1.5m x 2.5m < 50 tons
Sealed core	Yes
Transportable	Yes

In the NuScale design the nuclear fuel is contained in the reactor vessel which is housed in the containment vessel. The company says the high strength stainless steel containment vessel has ten times the pressure capability of conventional containment designs. A stainless steel refueling pool liner is independent from the concrete building. http://tef.tulane.edu/pdfs/2011/paul-lorenzini.pdf

Industeel Provides the Steel for Waste Transport, Storage Casks, Boilers and Tubes

Nuclear reactors, nuclear waste transport and storage casks all require high-purity nuclear-grade steels, often in great thicknesses. And for the steam turbines used to generate electricity from nuclear power, you need steels that retain their properties at high temperatures and over long periods of time.

In addition to steels for steam boilers and tubes, Industeel has extensive experience in nuclear-grade products and offers a wide range of sizes suited to nuclear power stations, primary looks as well as for both steel plate and formed parts that offer sufficient reliability to replace forged solutions. The company’s factories have been approved by all major nuclear certification organizations (ASME III, RCCM) and we produce all the steel grades required for nuclear applications. In addition, they have the necessary know-how to develop new and better steel solutions for both existing and future nuclear technologies.

B&W Will Fabricate All Key Components Except Pumps and Forgings

B&W has a very short, vertically integrated supply chain for a NSSS module, one that gives them significant cost and quality advantages over the traditional approach to constructing the nuclear island at the plant site. In fact, the only significant elements of the module that B&W will probably not manufacture itself are the internal pumps and the forgings. This is a very limited external supply chain, and one that they still would like to keep American.

In addition to the B&W mPower reactor NSSS module, they also plan to have the turbine generator manufactured as a complete module and shipped to the plant site, ready for installation. As such, they view the B&W mPower nuclear plant construction process more like that of a combined-cycle gas turbine power plant than a traditional commercial nuclear plant. This modular approach, with its significant use of factory assembled systems, allows the company to provide customers with the improved project cost and schedule certainty that they need to proceed with new build projects.

Start Year	2023	2024	2025	2026	2027	2028	2029	2030
MW High 1000	2250	3375	5062	7593	11390	17085	25627	38441
Revenues ($ millions)	$9000	$13,500	$20,250	$30,375	$45,562	$68343	$102,508	$153,764
MW Low 1000	1650	1815	1996	2196	2415	2656	2921	3213
Revenues ($ millions)	$6,600	$7260	$7894	$8683	$9660	$10,624	$11,686	$12,855

Start Year	2015	2016	2017	2018	2019	2020	2021	2022
Construct	2014	2015	2016	2017	2018	2019	2020	2021
Manufacture	2013	2014	2015	2016	2017	2018	2019	2020
MW	300	300	400	400	400	500	800	1500
Cost ($millions)	$1200	$1200	$1600	$1600	$1600	$2000	$3200	$6000