How Electricity Deregulation is Shaping Advanced Nuclear Reactor Designs
A deregulated market discourages decarbonization, and shapes what kind of reactors are likely to be built.
The electricity generating system we build will depend on what incentives we create for the people who build them, along with what technologies are available and what other generators are present on the system. Overall, the grid is a bit like a crowded dance floor; some people may prefer ballroom, others square dancing, and others the Macarena, but at a very minimum, the dancers are going to have to take account of what each other is doing.
What are the implications for advanced nuclear plants?
There are several, profound and varied.
One is that construction times have to be reduced, to allow the prospective builder to make a shorter-term bet; investors will be more comfortable with a project that requires a five-year prediction rather than a 10- or 12-year prediction.
That is one reason for the interest in small modular reactors. For plants now running, construction was sequential. Builders constructed the foundations, buildings, and other civil works first, then built a big reactor inside the building. If a reactor could be built in a factory, with a handful of parts, it could be fabricated at the same time as the buildings and other civil works so that construction would be parallel. Then the reactor could be trucked to the site and bolted together promptly. That only works with reactors that are substantially smaller than what is running today, so some new nuclear energy plant designs call for twins, quadruplets, or even a dozen reactors on a site.
Another implication is the need for operating flexibility. In the past, grid operators watched as demand changed over the course of the day, and reacted by adjusting the output of plants burning coal or oil, or fossil gas. But increasingly, they see generators that they cannot “dispatch” (that is, order to start or stop) producing severe effects on the grid. The solution may be flexible reactors.
NuScale Power, for example, wants to install small modular reactors in clusters of between 4 and 12. Each reactor can cut its output by dumping steam instead of sending it to spin a turbine, which turns a generator to make electricity. But if an output cut is needed for more than a few hours, it can also shut down individual reactors.
The Natrium reactor, which is a partnership between GE-Hitachi and TerraPower, Bill Gates’ company, would be connected to a big tank full of salt, heated to liquid form. This design pushes heat into the tank all day and all night at a steady rate, getting full use out of the reactor.
A second system uses a heat exchanger to pull heat out of the tank and make steam, which goes on to make electricity. But the hot salt sits between the two, like a shock absorber. On a sunny day, plant operators can let the tank heat up by withdrawing only a little heat to make electricity, say, 100 megawatts. When the sun goes down, they can pull more heat out of the tank and make 500 megawatts. The concept is somewhat like attaching a reactor to a lithium-ion battery, but the heat battery is much bigger and less expensive. The idea is to store energy while electricity prices are low and sell it when prices are higher.
Another prominent company in the advanced reactor field, X-Energy, has a reactor with an inherently flexible design, using a kind of fuel that is more tolerant of temperature swings. Its initial plan is for a cluster of four reactors that will make electricity, but its longer-term market is likely to include industries that need steam for process heat, and who want to get that energy from non-emitting sources. The electric sector is not the only one that has to be decarbonized.
A third implication is that plants that don’t hit the ground running will be a financial drag on their owners. Under the old system, ratepayers paid no matter how well, or poorly, a plant performed. In a market system, a merchant plant earns money only if it is producing. That is a strong incentive for a builder to be the second buyer, after some other company has worked the bugs out of the hardware and operating procedures. Some industries have a “first mover advantage,” meaning that the first company to produce a new product reaps an economic reward. That was true of mobile phones with cameras and internet browsers built-in, or personal computers that came with a new tweak, like WiFi or CD drives. There is no such advantage in the utility field; in fact, there is arguably a first mover dis-advantage. (This is another way that we’ve told the utilities not to decarbonize.)
A fourth implication is that a would-be reactor builder needs confidence that the price of natural gas isn’t going back down to $1.92 per million BTU, and dragging the clearing price down with it. That is a difficult bet because the technology of fossil fuel extraction continues to advance. Investors could guess that in the future, policymakers would put a penalty on carbon-emitting generation, but that is far from certain.
A potential reactor builder today might look at the utility landscape and see it the way a soccer player looks at a baseball diamond. Yes, it’s a flat, open space, with seating for spectators and even a parking lot for players and fans. But it’s not set up to suit the soccer player.
In that context, the Biden administration’s recent stimulus bills (The Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act of 2001) and the Energy Department’s Advanced Reactor Demonstration Program are all welcome bits of assistance for advanced nuclear. Technology innovation holds the prospect of moving the electric system in the direction we need it to go.
But there may be more market tinkering ahead.