Is thorium about to change the world?

 Here's a video from Matt Ferrell's YouTube channel, Undecided.  In it, he talks about Copenhagen Atomics' thorium SMR, and explains how it works and how it will be superior to conventional uranium-fired power stations.

It all sounds good, but nuclear proponents keep on making the case that new nuclear, whether it's Copenhagen Atomics, or NuScale and Bill Gates's Natrium reactor, or even Rolls-Royce's SMR, will be as cheap as chips, but keep on missing their target costs.   And the fact that nuclear waste from thorium reactors is only dangerous for 300 years compared with 10,000 years (or more) from conventional uranium reactors doesn't terribly reassure me.

In the sunbelt, between latitudes 35 or 40 north and south, wind, solar and storage will be enough to power our grid.  In high latitudes, north of 50 degrees, we will probably need nuclear, unless we build enough expensive long distance HVDC lines to bring power from sunnier/windier places. 

So is thorium about to change the world?  As my Scottish friends used to say, "I hae me doots."  But we'll see.

NuScale isn't dead

In January last year, NuScale's contract with Utah Associated Municipal Power Systems for the first SMR built in the US, was cancelled because of big cost overruns.  In 2015, the costs of the nuclear power station for UAMPS was estimated at $3 billion.  This was increased to $4.2 billion in 2018, $6.1 billion in 2020, and finally $9.3 billion in 2023, before being cancelled.  

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. (Source: Utility Dive)

When NuScale's project was cancelled, I thought that that was probably the end of SMRs (Small Modular Reactors).  This was a new technology and a new way of delivering nuclear power.  Without sales, how was NuScale to fund further research?

But it seems I was too pessimistic.  Even though NuScale lost that contract, it has won others.

It has a project on the go in Romania (pérmitting stage).

An announced six units for Polish mining giant KGHM

Has been in talks with Ukraine, and has signed a memorandum of understanding.

Has an agreement with Ghana to build a NuScale plant

(However, the last two may not survive the Trump régime, since they were being subsidised by Biden's 'IRA' legislation.)

I still have serious doubts about SMRs.  The logic behind their introduction is that they can avoid big-project bloat by commoditising the manufacture of nuclear reactors.  Make them small, and build lots of them so you can get economies of scale.  That way, unlike with the giant nuclear projects which have been so expensive and so delayed, you have control.  You don't, for example, have huge cost overruns on wind or solar farms, because you can buy each unit "off the shelf".   But that requires mass production, and we're still a long way from that.  All the same, NuScale has survived.  As I've said before, if nuclear proves necessary to stop the climate catastrophe, then I will support it.  Through gritted teeth.  

Renewables costs rise .....

 .... but so do coal and gas costs. 

It seemed as if Lazard had stopped producing their famous LCOE (levelised cost of electricity) calculations when they released no estimates in 2021 and 2022.  This was a great pity, because although there are others (e.g., BNEF, IRENA) who produce estimates of the cost of electricity from renewables, Lazard has been doing it on a consistent basis for 15 years.  But all at once they came out with their latest estimates a few weeks ago.  There have been some small changes in format and some additional data.  For example, they now release the LCOEs of wind and solar with and without four hours of storage.  Four hours storage is enough to take us to 80-90% renewables on a mixed grid with a blend of wind and solar.  

To reach 100% requires seasonal storage for times when it is windless, cloudy, and cold, called (who knows why?) "dunkelflaute" (pronounced doonkelflowta, which is, mysteriously, German for "dark flute")  To put it differently, there are rare occasions (10 to 20 days a year) when renewables output, even with 4 hours of storage, will not keep the grid going in the face of high demand and low renewables output.  We might only need a couple of weeks of long-term storage and only use it a few times a year, but that is prodigiously expensive using li-ion batteries (it may be much cheaper using vanadium-flow batteries, which don't suffer from "vampire drain").  

Michael Liebreich here mentions green ammonia as a fuel for long-duration storage.  I've talked about using the Sabatier process before to produce green methane, for the same purpose.  But making green ammonia is easier, because it is much easier and cheaper to extract nitrogen from the atmosphere than to extract carbon dioxide.  Lazard does not cost green ammonia for long-duration storage, so I haven't included it.  I have however estimated a wind+solar system with 10% peaking gas, in effect using natural gas as long-term storage.  Actual green methane (synthetic natural gas) or ammonia would be at least twice as expensive.   On the other hand, most of the cost of peaking gas is capital cost, because the plant and equipment has to be ready to go at all times, but it's only used for 10% (or less) of the time.  In that context, fuel cost is less important.

Lazard no longer provides an estimate of the cost of CSP (concentrated solar power), presumably because the company now developing it is in Australia.  That company, Vast Solar, is cagey about the plant’s LCOE, but describes it as "competitive".  It will provide 10 hours+ of storage, which means it's not competing directly with wind and solar with just 4 hours of storage, but with long-duration storage, which is more expensive.  $140/MWh? That's what Lazard was estimated for CSP 5 years ago.  

In addition, I have added a column for NuScale's small modular reactor, assuming 80% wind and solar and 20% SMR nuclear, and using the most recent data for its LCOE.    As the percentage of wind and solar increases in the grid, the need for long-term storage increases, especially at high latitudes, so that's where nuclear may be needed to reach 100% carbon-free generation.   Unlike the giant old-fashioned nuclear plants, the NuScale SMR can be ramped up and down (by 40% per hour), which would make it easily fit in with a mostly renewable grid.  Given the costs of long-duration storage, the NuScale SMR would be cost-effective, provided NuScale can prevent any further rise in its LCOE, which like all other LCOEs has risen sharply in response to supply chain difficulties.

As always, Lazard covers only the US.  But these markets are global, except for gas, which is much cheaper in the US than in the rest of the world.

The rise in LCOEs of renewables is mostly due to supply chain difficulties, caused by Covid and the war on Ukraine.   I suppose we can assume that these difficulties will gradually disappear, and the trend of steady declines in costs will continue.  Even as they stand, however, new-build wind and solar, with 4 hours of storage, remain cheaper than new-build coal, and comparable to new-build baseload gas (remembering that gas is a lot cheaper in the US than in Europe)  Lazard also comments that a large gap has opened up between large and small projects, with larger projects located at the bottom of the costing columns in the chart below.

All these data are before tax and subsidy and also a price on carbon emissions.

Observe that even the marginal costs (i.e., ignoring capital costs, depreciation, debt repayment and interest rates)  of coal are on average above the total costs of brand-new wind and solar farms.   A mere 10% fall in the costs of new-build wind and solar with 4 hours of storage would make them cheaper than new-build baseload gas, even in the US.  

The rise in the renewable percentage is likely to continue, even though costs have temporarily risen,

Nuscale SMR costs jump to $119/MWh

From IEEFA

Last week, NuScale and the Utah Associated Municipal Power Systems (UAMPS) announced what many have long expected. The construction cost and target price estimates for the 462-megawatt (MW) small modular reactor (SMR) are going up, way up.

From 2016 to 2020, they said the target power price was $55/megawatt-hour (MWh). Then, the price was raised to $58/MWh when the project was downsized from 12 reactor modules to just six (924MW to 462MW). Now, after preparing a new and much more detailed cost estimate, the target price for the power from the proposed SMR has soared to $89/MWh.

Remarkably, the new $89/MWh price of power would be much higher if it were not for more than $4 billion in subsidies NuScale and UAMPS expect to get from U.S. taxpayers through a $1.4 billion contribution from the Department of Energy and the estimated $30/MWh subsidy in the Inflation Reduction Act (IRA).

It also is important to remember that the $89/MWh target price is in 2022 dollars and substantially understates what utilities and their ratepayers actually will pay if the SMR is completed. For example, assuming a modest 2% inflation rate through 2030, utilities and ratepayers would pay $102 for each MWh of power from the SMR—not the $89 NuScale and UAMPS want them to believe they will pay.

The 53% increase in the SMR’s target power price since 2021 has been driven by a dramatic 75% jump in the project’s estimated construction cost, which has risen from $5.3 billion to $9.3 billion. The new estimate makes the NuScale SMR about as expensive on a dollars-per-kilowatt basis ($20,139/kW) as the two-reactor Vogtle nuclear project currently being built in Georgia, undercutting the claim that SMRs will be cheap to build.

NuScale and UAMPS attribute the construction cost increase to inflationary pressure on the energy supply chain, particularly increases in the prices of the commodities that will be used in nuclear power plant construction.

For example, UAMPS says increases in the producer price index in the past two years have raised the cost of:

• Fabricated steel plate by 54%
• Carbon steel piping by 106%
• Electrical equipment by 25%
• Fabricated structural steel by 70%
• Copper wire and cable by 32%

In addition, UAMPS notes that the interest rate used for the project’s cost modeling has increased approximately 200 basis points since July 2020. The higher interest rate increases the cost of financing the project, raising its total construction cost.

Assuming the commodity price increases cited by NuScale and UAMPS are accurate, the prices of building all the SMRs that NuScale is marketing—and, indeed, of all of the SMR designs currently being marketed by any company—will be much higher than has been acknowledged, and the prices of the power produced by those SMRs will be much more expensive.

Finally, as we’ve previously said, no one should fool themselves into believing this will be the last cost increase for the NuScale/UAMPS SMR. The project still needs to go through additional design, licensing by the U.S. Nuclear Regulatory Commission, construction and pre-operational testing. The experience of other reactors has repeatedly shown that further significant cost increases and substantial schedule delays should be anticipated at any stages of project development.

The higher costs announced last week make it even more imperative that UAMPS and the utilities and communities participating in the project issue requests for proposal (RFP) to learn if there are other resources that can provide the same power, energy and reliability as the SMR but at lower cost and lower financial risk. History shows that this won’t be the last cost increase for the SMR project.

The problem with this analysis is that renewable costs have also risen (see chart from Lazards' latest LCOE calculations below).  Supply chain difficulties because of Covid, the Ukraine War, China's Covid lockdowns, "onshoring" (returning manufacturing to your own country, to reduce supply chain difficulties) and rising interest rates have increased wind and solar costs for the first time in decades.   And, presumably, as we improve the supply chain, these costs will fall.   Also, if more NuScale's SMRs can be built, unit costs will fall, in a classic learning curve feedback loop.

We may well need SMRs at high latitudes, while SMRs even in lower latitudes will add to grid security, because the more different sources of electricity available to the grid, the more balanced and secure it is.  It would be a pity not to at least try NuScale's SMRs, given the strong possibility that component prefabrication will cut costs compared to the hugely expensive giant nuclear power plants which are a decade behind schedule everywhere.  

I have said before that if nuclear is necessary for de-carbonising the world's electricity grid, I would grit my teeth and support it, because the climate emergency is so severe.  But the problems with nuclear remain:  expense and delay.  This SMR will only start operating in 2030, if there are no further delays.  By then, if we are to avoid an increase in global temperatures since pre-industrial times of more than 1.5 degrees C, we will need to have increased the share of renewables in the grid to 80%.  The last 20% will be the hardest to de-carbonise.   SMRs may be necessary for that.   

Source: Lazards
Click on graphic to see clearer image