Shakeup for 720-MW Nuclear SMR Project as More Cities Withdraw Participation

At least eight cities have now dropped shares in the Carbon Free Power Project (CFPP), a 720-MWe NuScale Power small modular reactor (SMR) project proposed by Utah Associated Municipal Power Systems (UAMPS). Despite the Department of Energy’s (DOE’s) Oct.16–announced $1.4 billion, 10-year award to fund one-time costs for the first-of-a-kind project, four Utah cities withdrew this week alone, and the decisions of at least three others are pending. 

On Oct. 28, Utah-based Heber Light & Power voted to withdraw its 10-MW share in the project. On Tuesday, the city of Bountiful, Utah, withdrew its 5-MW share, and the city of Beaver, Utah, pulled its 2.1-MW share.

These developments come on the heels of decisions by the city of Idaho Falls, Idaho, to halve its 10-MW share to 5 MW on Oct. 22. The city of Murray, Utah, also voted on Oct. 20 to exit the CFPP. 

The city of Payson, Utah, was scheduled to weigh its 5-MW share on Wednesday night, as was the city of Enterprise, Utah, for its 600-kW share. The city of Parowan, Utah, is expected to vote on a resolution to withdraw its 3-MW share at 11 a.m. on Oct. 29. POWER will update this story as it receives news on how those cities voted.

In September, three Utah cities—Lehi, Logan, and Kaysville—voted to withdraw from the project. On Oct. 1, notably, a new Nevada public utility, the Wells Rural Electric Co., joined UAMPS and is expected to participate in the CFPP.

The flurry of activity among UAMPS members is expected to intensify as more potential participants seek approval from their city councils to financially commit to the $6.1 billion project ahead of the first of three “off-ramps” on Oct. 31, which will mark the end of the CFPP’s first phase. 

In the next phase, beginning on Nov. 1, UAMPS will prepare an application for submittal to the Nuclear Regulatory Commission (NRC) to build and operate the 12-module nuclear project proposed for a site at an Idaho National Laboratory (INL) in Idaho Falls, Idaho. The next off-ramp will likely be in April 2023, when UAMPS is expected to submit the application. The final off-ramp would be in December 2025, before the start of the construction period. UAMPS earlier this month told POWER it expects the first of the 12 NuScale modules will be operational in 2029 with the other 11 modules operational in 2030. 

Costs a Major Consideration 

The withdrawing cities have cited a long list of reasons for their reluctance to commit to the project, but costs—which could increase for remaining subscribers as more prospective participants bail—appear to lead their concerns. 

The CFPP is currently estimated to cost $6.1 billion, and UAMPS expects to shoulder $4.76 billion of that figure, which is based on a Class 4 estimate and could decrease by about 10% or increase by 30%. 

As the Bountiful, Utah, city council staff suggested in an Oct. 27 report, an emerging concern may be rooted in an official change in the DOE’s “Joint Use Module Plant” (JUMP) program. As originally envisioned in December 2018, the DOE announced it would use one of the 12 modules at the CFPP strictly for research, development, and demonstration activities under JUMP. In July 2019, UAMPS was in negotiations with the DOE and Batelle Energy Alliance to lease and operate the first unit for 10 years, the report says. “This contract was intended to have DOE pay the entire capital cost or 1/12 of the capital costs along with the operational costs for one of the units [for] ten years.” 

But as UAMPS revealed to its members in an Oct. 21 email (made public by Bountiful city council staff in its resolution documents), the CFPP is no longer pursuing the JUMP lay-off power sales agreement.

That means, as Bountiful staff explained, “DOE is planning on putting in additional funds for the project [through the recent award], but will not be signing the [JUMP] contract and will not be operating the first unit for the first 10 years.” For UAMPS participants—substantially all of which chose to have additional entitlement shares in the CFPP “based on their understanding that the capacity and energy from the JUMP Entitlement Shares would be sold to the U.S. [DOE] for the term of the Lay-Off Power Sales Agreement”—that essentially means that their JUMP entitlement shares, a total of 46 MW, have been eliminated.  

“The JUMP program was replaced by the $1.355 billion DOE award, which is more valuable to the project and better helps the project meet the LCOE target levels,” UAMPS spokesperson LaVarr Webb explained to POWER. “The JUMP program would have contributed only one-twelfth of the cost of developing and building the project. But the DOE award is contributing one-fourth the cost of the project.”

Under the JUMP program, the DOE would have essentially paid the costs of developing the first module and then used that 60 MW–module at INL for research and development] purposes for 15 years, Webb said. But after those 15 years, that 60 MW would have been available to project participants at a reduced cost “because the capital costs of the module would already have been paid for,” he said.

“A number of participants signed up to take portions of the 60 MW after the JUMP program would have expired, around 2045,” Webb said. “With the cancellation of JUMP, the 60 MW previously allocated to JUMP have been vacated, although some participants may increase their subscription to stay at those levels.” 

However, whether participants can rely upon the DOE’s funding has also been questioned. “The U.S. Department of Energy cooperative agreement with UAMPS is not a grant but rather a funding vehicle that could raise up to $1.4 billion over 10 years. But that will be subject to yearly appropriations and there is currently no Congressional authorization of any funds for out years,” said Scott Williams, executive director of environmental group Healthy Environment Alliance of Utah, on Oct. 29.

“That will require Hill approval, as well as the agreement of the future Energy Departments. DOE is also courting other so-called ‘advanced’ nuclear projects so there will be stiff competition for any future appropriations. So rather than UAMPS having a $1.4 billion ‘sure thing,’ this is at best a sketchy IOU,” he said. 

Timing Also an Issue

As he made his case to the city of Murray on Oct. 20, Blaine Haacke, general manager of Murray Power, meanwhile, outlined concerns about an all-in project cost increase from $4.3 billion to $6.1 billion. Asked by POWER for a clarification on that increase, UAMPS’s Webb said: “The escalation, inflation and financing costs increased when the period of time to reach commercial operations date was extended.” 

However, Webb added: “While these cost categories have increased and the commercial operation date is later, UAMPS would rather have a conservative construction/completion schedule as well as being able to develop the project in a phased manner that poses the least risk to its members.” 

POWER last week provided an in-depth clarification on the project’s total costs, citing both NuScale and UAMPS. The clarification stems from a widely circulated, erroneous cost comparison that the project’s costs had increased from $3.6 billion in 2017 to an estimated $6.1 billion. Webb last week told POWER the $3.6 billion figure involves “overnight” costs of the plant—“in other words, if it was built tomorrow. It did not take into account inflationary costs of materials and labor over the next 10 years, or financing costs, or decommissioning costs,” he said. “The $6.1 billion is the all-in costs of the plant over 40 years, including inflation, financing and decommissioning.”

The “most important number,” however, is the estimated levelized cost of energy (LCOE) over 40 years, Webb said. Under the $4.3 billion estimate, the LCOE was an estimated $65/MWh, whereas the LCOE under the $6 billion case is only $55/MWh, he said. “The decrease in the LCOE is attributable in large part to the additional output being generated—the original design had a total gross plant output of 600 MW and the current projected gross output is 720 MW. The DOE cost-share award also helped improve the LCOE. The $6.1 billion includes all costs cradle-to-grave for a LCOE of $55/MWh for 40 years,” he said. 

A LCOE of $55/MWh “makes the price of electricity to UAMPS member ratepayers very affordable and comparable to other forms of firm, dispatchable energy like combined-cycle natural gas,” said Webb. “Electricity from the CFPP, blended with electricity from renewable wind and solar projects (which the CFPP will complement and enable), will keep electrical rates affordable for members,” he explained.

SMR Technology Is ‘Extremely Promising’

It’s also important to note that most cities, even those which withdrew, appear confident about the technology. “I love the technology. I trust in the operations and safety of the plant,” said Murray Power’s Haake last week. “I just don’t like the feel of the subscription level,” which he suggested then stood at 185 MW. 

Bountiful highlighted that without JUMP, entitlements stood at 117.8 MW. “Developing new power resources is critical for the long-term stability and affordability of Bountiful’s power system. But the new resources must also be affordable for Bountiful’s rate payers,” staff wrote. “The technology developed by the CFPP is extremely promising, but the financial risks to the City may be too great, particularly as less than 30% of the project is subscribed currently (and has only increased by 1 MW in the last year).” 

How remaining members will act remains to be seen. Bountiful wasn’t optimistic. “The current subscription estimate for October 31, 2020, is 134 out of the 720 MW for the project. If Bountiful stays at its current rate, we would be 5.198% of the project. This includes the 60 MW’s for the Jump program. UAMPS is continuing to work on new subscription, but we are not seeing more than 15–20 MW’s in the next year or two,” staff wrote.

Pushback by groups opposed to the project may also make an impact. UAMPS had originally slated the first off-ramp in September, but as that deadline approached, the Utah Taxpayers Association this August urged city and town councils to pull out of the project, citing a “likely potential for delays and cost overruns on unproven technology that continues to be less and less competitive than other clean energy alternatives.” 

UAMPS ultimately delayed the deadline for the first off-ramp to Oct. 31 “to give members more time to work through their internal decision-making processes and to be certain the DOE award was made,” Webb said. 

UAMPS: ‘Vast Majority’ Want Project to Move to Next Phase

But as Webb told POWER in an email late on Wednesday night, despite the recent withdrawals, UAMPS remains committed to the project. “With 29 members going forward, as of today, the project remains totally viable. Twenty nine participants is a very high participation rate for any UAMPS project,” he said. 

He emphasized: “The project is not dependent on the decisions of just a few members. The vast majority of participants want to move into the next phase. The number of participants, the individual subscription numbers and the total subscription level are not particularly relevant at this point in the project. It was always anticipated that the UAMPS member allocations would constitute a minority share of the total project. Other utilities will need to join the project or execute power purchase agreements to reach the full subscription level.” 

For now it means UAMPS will continue to pursue plans to move the project into the next phase, which will involve preparing the application to the NRC to construct and operate the plant. “It will also involve working with many utilities that have expressed interest in the project to ensure that the project will be fully subscribed before construction begins,” Webb said. 

—Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine).