DOE Releases $900M to Spur Gen III+ Nuclear SMR Deployment, Targets Two 'First Mover' Projects
A $900 million funding opportunity released by the Department of Energy (DOE) on Oct. 16 seeks to spur “first mover” teams that could deploy the first two Gen III+ light water small modular reactors (SMRs) in the U.S. It will also provide funding for “fast follower” deployment support by addressing critical gaps that have long hindered the nuclear industry.
Applications are due by Jan. 17, 2025, for the funding opportunity created by the Consolidated Appropriations Act of 2024. The funding opportunity will use funds from the 2021-enacted Infrastructure Investment and Jobs Act (IIJA). The funding opportunity announcement (FOA), managed by the DOE’s Office of Clean Energy Demonstrations and the Office of Nuclear Energy, is structured in two tiers.
The bulk of the funding is designated for Tier 1, which will provide up to $800 million to two “first mover” teams of utility, reactor vendor, constructor, and end-users/off-takers committed to deploying a first plant “while facilitating a multireactor, Gen III+ SMR orderbook.” Under the 10-year award duration, Tier 1 teams will have the opportunity to work with the National Nuclear Security Administration (NNSA) to incorporate safeguards and security by design into the projects, the DOE said.
Tier 2 will provide up to $100 million “to spur additional Gen III+ SMR deployments by addressing key gaps that have hindered the domestic nuclear industry in areas such as design, licensing, supplier development, and site preparation.”
Focus on ‘First Mover’ Projects
The DOE’s $900 million funding award focused on Gen III+ SMRs distinctly champions the development of single-unit light water reactors (LWRs) with power outputs of between 50 MWe and 350 MWe as part of a single-unit or multi-unit plant (with no restrictions on total power plant output). Gen III+ SMRs typically maximize factory fabrication approaches and include “significant improvements compared to reactors operating on December 27, 2020,” the DOE says.
The funding pathway follows the DOE’s $4 billion 2020-initiated Advanced Reactor Demonstration Program (ARDP) for Gen IV technologies. The ARDP program has doled out multiple awards. It is currently fostering two significant advanced nuclear demonstrations: TerraPower’s Natrium Kemmerer 1 project in Wyoming, and X-energy’s four-unit 320-MWe Xe-100 advanced nuclear reactor facility at a Dow chemical materials manufacturing site in Seadrift, Calhoun County, Texas.
According to the DOE’s FOA released on Wednesday, eligible Tier 1 applicants must include a U.S. commercial utility as the lead organization, teamed with a Gen III+ SMR technology vendor and an engineering, procurement, and construction (EPC) contractor. The projects must aim to complete final design and licensing approvals by the early 2030s.
To qualify for funding, projects must demonstrate technological maturity for their designs at a Technology Readiness Level (TRL) of 6 or higher, indicating they should be closer to finalization and ready for procurement and construction activities. Projects must also be capable of securing community and regulatory support, completing critical licensing steps with the Nuclear Regulatory Commission (NRC), and providing a strategy for financing the reactor project. The FOA, notably, underscores the need for applicants to demonstrate substantial progress in pre-application engagement with the NRC to ensure the project will proceed smoothly through the necessary permitting, certification, and construction phases.
The DOE said funding will be allocated in phases based on milestones: $200 million in fiscal year 2024, $300 million in fiscal year 2025, and up to $300 million in fiscal year 2026. More funding “plus possible in-kind support” will be based on milestones and funding splits between the awards.
Tier 2 funding will have an award duration of up to five years, with $100 million split between multiple awards, and focuses on three key areas: site selection and preparation, supply chain development, and project improvement.
Tier 2.1 seeks to support “planned U.S. owners or utilities” in reducing risks associated with Gen III+ SMR siting by conducting site characterization, feasibility studies, or obtaining Early Site Permits. Tier 2.2 targets domestic entities aiming to enhance the nuclear supply chain’s capability, capacity, and cost competitiveness, including efforts to acquire necessary certifications and expand modular fabrication capabilities. Finally, Tier 2.3 focuses on improving the accuracy of project cost and schedule estimates for SMR deployments. Project teams must submit detailed cost estimates and schedules for independent review.
The DOE said it expects its award contribution to “never exceed 50% of total project cost.” At every point in time from the initiation of the award, “the applicant must have contributed at least 50% of the total project costs incurred from the time of award. The DOE requires that applications include proposed milestones with defined work scope and related milestone payments and to include in their application a project spend plan that shows the total anticipated project cost at the time of each milestone completion.” The agency expects to review and evaluate the applications to ensure that the requested milestone payments adhere to the requirement.
A Concerted Effort to Alleviate Hurdles for New Nuclear
According to the DOE, the solicitation will create a “credible and sustainable pathway to fleet-level deployment of Gen III+ SMRs.” The push for SMRs comes amid DOE estimates that the U.S. will need “approximately 700-900 GW of additional clean, firm power generation capacity to reach net-zero emissions by 2050.”
“Designed with a variety of capabilities, sizes, and deployment scenarios in mind, SMRs can be used for power generation, process heat, desalination, and more,” it said. “In particular, SMRs offer the potential for greater modularity, more factory-style construction, and the ability to be matched with loads and scaled to meet demand. Additionally, Gen III+ SMRs may be able to revitalize and leverage the expertise, workforce, and supply chains supporting the existing fleet of large light-water reactor designs, thus providing a near-term path for new nuclear deployments and operation.”
Despite these advantages, the DOE outlines several key hurdles that must be addressed before SMRs can be widely adopted. Cost reliability is a major challenge, given that past nuclear projects have suffered significant cost overruns and, in some cases, non-completion. Cost concerns have “constrained nuclear energy relative to competing baseload technologies, such as natural gas,” the DOE said.
In addition, the domestic nuclear supply chain faces capital flow constraints, “where the return of capital and return on capital are on time horizons that inhibit investors and significantly impact an owner’s credit rating,” it said. The U.S. domestic industry also lacks full capabilities for project development, integration, and management. “There is no leading constructor for new nuclear projects, and the lack of integrated project delivery models has constrained prior projects,” it underscores.
Another crucial challenge involves building up a manufacturing and supply chain. “The current domestic nuclear supply chain faces severe bottlenecks on long-lead procurements for major project components. This lack of resilience in capacity, capability, and cost competitiveness is forcing procurements overseas,” the DOE said. In addition, “The limited number of nuclear-qualified workers, such as welders and plant operators, presents a challenge to scaling nuclear deployments,” it said.
Finally, licensing uncertainty poses a major hurdle. “The risk of licensing new technologies, including the timeframe and cost associated with receiving NRC approval of new nuclear designs, drives hesitancy for potential adopters,” the DOE said.
Efforts to resolve this are underway across the board. While President Biden recently enacted the ADVANCE Act—sweeping legislation that will ensure the NRC does not “unnecessarily limit” the use of nuclear energy or the benefits it could provide for society—the White House has pursued a suite of new measures, aimed at slashing risks associated with new nuclear reactor development and construction.
According to the DOE, funding applications will be selected based on expectations to address key hurdles. “Priority will be given to projects with (1) the highest probability of a successful deployment, (2) the greatest potential to develop a Gen III+ SMR orderbook, and (3) the greatest potential contribution to the resilience of the domestic nuclear industry,” it said.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).