| June 13, 2020 12:00 AM
A new Trump administration policy enabling U.S. government financing for nuclear energy projects abroad could help accelerate the use of smaller reactors, a budding technology that supporters see as a lifeline for the struggling industry.
“The U.S. will have a whole suite of technologies in different sizes available in the next couple of years, and that really changes the game in terms of this modernization of policy,” said Rich Powell, executive director of ClearPath, a conservative clean energy group.
The U.S. International Development Finance Corporation proposed this week to reverse an Obama-era ban that prevents it from funding civil nuclear projects overseas, a development first reported by the Washington Examiner.
The corporation’s press release announcing the policy change specifically touts how it can help promote advanced nuclear technologies, including small modular reactors and microreactors that “will have significantly lower costs than traditional nuclear power plants, and may be well-suited for developing countries.”
The United States has not built a traditional large nuclear reactor since the 1970s, with recent projects canceled or delayed because of mounting expenses. Existing plants are closing at a rapid rate due to competition from cheaper natural gas and renewables.
But the industry is banking on developing smaller, cheaper reactors. Policymakers in both parties support the technology as a zero-carbon alternative that can supplement intermittent wind and solar in the power grid of the future.
The U.S. is developing more of these new reactors than any country in the world, but analysts say they are still a decade or so away from being widely operational.
“The future of the nuclear industry, especially in the U.S., is going to be in next-generation reactors,” said Jackie Kempfer, a nuclear energy policy adviser at Third Way, a center-left think tank. “With the DFC policy change, we finally have momentum on all the moving pieces that we need to commercialize these technologies.”
Other nuclear powers such as China and Russia are investing in smaller reactors, too, with the advantage of being backed by state governments.
Developing countries in Africa, Asia, and Latin America have less sophisticated grids that are largely unable to accommodate large nuclear plants, but could make use of smaller reactors that are easier and cheaper to build, safer to run, and more flexible to use.
Smaller reactors can be used not just for electricity, the main use of nuclear today, but also in manufacturing and for process heating, so they can also serve an economic development function for poor countries looking to do more than just keep the lights on.
Todd Moss, the executive director of the Energy for Growth Hub, said the U.S. is at least two years behind Russia in its commercial nuclear diplomacy efforts, with the Kremlin already engaging in agreements with developing countries that see nuclear as a clean energy alternative.
“We are some ways out until we are breaking ground on SMRs, but right now, the Russians are aggressively selling their SMR models in a whole range of countries,” Moss said.
NuScale, the company racing to be the first to operate a small modular nuclear reactor, has agreements (memos of understanding) with companies in many countries, says its CEO John Hopkins. But deals take a long time to finalize. Hopkins said the new DFC policy would help his company overcome financing challenges in developing countries.
NuScale, based in Oregon, hopes this year to be the first company to obtain a license to operate a small reactor in the U.S. and expects to have its light-water reactors in commercial use by 2026.
“The proposed DFC changes would go a long way to help NuScale compete against companies that are foreign government-owned or supported,” Hopkins told the Washington Examiner, adding it would “significantly level the playing field.”
Simon Irish, the CEO of Terrestrial Energy USA, a company developing a molten salt advanced nuclear reactor, said the DFC policy change presents a “important financing option” that will make the U.S. more competitive.
The Export-Import Bank, the other big U.S. export financing authority, has not had a similar prohibition on nuclear projects, but it can only offer credit or lending.
Congress created the DFC in 2018 to serve as a counterweight to Chinese soft power in Africa and elsewhere. It provides companies operating in developing countries with direct equity financing, loans, and political risk insurance. It has a total investment limit of $60 billion, double what it was for the Overseas Private Investment Corporation, the agency it replaced.
“This DFC decision clearly shows that financing developments are keeping pace with the development of advanced nuclear technologies, which have great potential for job creation, economic growth, and as an effective clean energy alternative to fossil fuel use,” Irish told the Washington Examiner.
Some skeptics of small nuclear reactors argue the DFC policy change is happening too soon to make a difference and is unlikely to help the technology overcome existing regulatory and economic obstacles.
“We are really a long way from getting these things off the ground and making them a reality,” said Allison Macfarlane, a former chairman of the Nuclear Regulatory Commission who is now a professor at George Washington University. “I don't know if this is much of a game changer.”
The smaller reactors have lower capital costs and are built in multiples at a time in a standardized fashion at a factory, not on-site where the power will be generated.
But they produce less electricity than a traditional reactor, meaning they don't enjoy the same economy of scale.
Developing countries could prefer gas and renewables, which are cheaper, without having to deal with the baggage of safety concerns that has tainted public perception of nuclear power.
“It's like the first Tesla: The first one costs millions, but once you mass produce, you drive down costs and become competitive,” Moss said. “Every country will make their own decisions based on costs, availability, and the environmental footprint.”
Powell acknowledged nuclear, even in a smaller form, won’t be for “everyone” and said the DFC would look to partner on projects in countries with “some basic level of civil society accountability and a competent government.”
But the U.S, which built the civil nuclear energy industry in the 1950s, risks falling behind if its policies don’t keep up.
“We have a stronger commitment to nonproliferation than the Russians and the Chinese,” Powell said. “The question is not if developing countries go nuclear or not. We want it to be us who gives it to them.”