M.V. Ramana is the Simons Chair in Disarmament, Global and Human Security and Professor at the School of Public Policy and Global Affairs, at the University of British Columbia in Vancouver, Canada.
This past November, the Utah Associated Municipal Power Systems, or UAMPS, terminated what was to be “the first NuScale Power small modular reactor plant to begin operation in the United States.” This was a death foretold; the red flags have been obvious for years now. Although there were problems specific to that project, the financial challenges and cost trends witnessed in this case will afflict any small modular nuclear reactor project. In a rational world, no utility or government would invest another dime on these theoretical reactor concepts.
As announced in 2015, the UAMPS project initially involved constructing 12 reactor modules capable of generating 600 MW, with the aim of starting operations “around 2023,” and at an “overnight cost” of $3 billion. In 2018, NuScale announced a design modification with each module now producing 60 MW of electricity, or 720 MW for the whole plant, claiming this would lower the cost “on a per kilowatt basis from an expected $5,000 to approximately $4,200.”
The estimated costs of the project rose to $4.2 billion in 2018, then $6.1 billion in 2020, and finally $9.3 billion in 2023, after it was scaled down to 462 MW in 2021. In the end, the costs were clearly too high for UAMPS members to bear.
The engineers and accountants on the project were evidently unrealistic about the likely costs, or perhaps NuScale preferred to gently break the bad news about how immense the bill would be. Or both. NuScale also managed to retain members by claiming an unreasonably low cost of power from the project once operational, a cost derived using an opaque economic methodology without clarity over its assumptions. There is a lesson here: one just cannot trust initial cost estimates for nuclear reactors and their electricity.
The UAMPS project is no exception, and just adds one more data point to a long history of cost and time overruns for nuclear power projects. A 2014 academic study examined 180 nuclear power projects around the world and found 175 of them exceeded the initial budget by an average of 117% by the time they were completed. They also took, on average, 64% longer than projected.
More recent projects have fared worse. For example, the only reactor being constructed in France — the poster child for nuclear energy — is Flamanville 3 with an estimated cost of 13.2 billion euros (around $15 billion) — four times the forecast when construction started. The time anticipated has gone from 4.5 years initially to over 16 years.
These high costs translate to expensive electricity. In April 2023, Lazard, a financial firm, estimated that the unsubsidized levelized cost of electricity from new nuclear plants in the U.S. will be between $141 and $221 per megawatt hour. By comparison, a newly constructed utility-scale solar facility with some storage to provide power after the sun sets will produce power at an unsubsidized levelized cost of between $46 and $102 per megawatt hour, according to Lazard. Costs for these technologies have been trending in opposite directions: nuclear is going up whereas solar and batteries have become cheaper and are expected to decline further.
Small modular reactors are at an economic disadvantage. The lower power output of these reactors, less than 300 MW per unit by definition as compared to the roughly 1,000 MW for the typical reactors that have been constructed for over four decades, means less revenue for the owning utility. But the cost of construction is not proportionately smaller. Engineers call this economies of scale. In terms of cost per unit (megawatt) of generation capacity, SMRs and the electricity they produce will be more expensive than power from large nuclear plants currently under construction. As the Lazard estimates show, these large plants are themselves not competitive with renewables.
The lack of “economies of scale” is apparent for the UAMPS project. Its final cost was around 250% more than the initial per megawatt cost for the 2,200 MW Vogtle project in Georgia. But the phenomenon of higher costs for small reactors is general, and will plague all SMR proposals. On a per megawatt basis, the estimated cost of the CAREM-25 SMR project being built in Argentina is estimated to be between $17 million to $24 million, in the same ballpark as the UAMPS project. Historically, too, most of the early small reactors built in the United States shut down because of adverse economics.
Nuclear energy advocates point to the variable nature of renewables and argue that some form of nuclear power is necessary to keep the power system reliable. But grids have always had to deal with variable supply, including from supposedly reliable sources of power: nuclear plants have to be shut down unexpectedly for safety reasons (for example, Japan’s plants after the Fukushima disaster) and coal plants might not operate because their fuel supply is interrupted, for example, by the derailment of a train. Every French nuclear plant was, on average, shut down for 96.2 days, 115.4 days, 103.8 days, and 152 days in 2019, 2020, 2021, and 2022, respectively.
The variability of modern renewables can be addressed by a combination of increasing diversity in technologies and in geographical locations, providing incentives to consumers to shift their electricity use to periods when renewable energy is plentiful, and finally expanding investments into multiple forms of energy storage, from lithium-ion batteries to pumped storage of water. But even prior to all that is encouraging more efficient use of energy. This also helps address variability because, for example, a building that gains or loses heat more slowly can remain comfortable for longer periods of time, even during periods of reduced electricity supply. Nuclear plants are not needed to compensate for the periods when the sun is not shining or the wind is not blowing.
All of this also means that nuclear power is not needed to solve the climate crisis. Not only are nuclear reactors very expensive, they also take a very long time to build. And this is time we don’t have because the climate crisis is urgent.
When announcing the end of the UAMPS project, NuScale’s Chief Executive Officer said on a conference call: “Once you’re on a dead horse, you dismount quickly. That’s where we are here.” The dead horse, in reality, is all the SMR projects. The sooner we get off this misguided quest, the more we can focus on rationally dealing with our energy and climate challenges.
