Commercializing Advanced Reactors: The Fast Follower Dilemma
Category: Thought Leadership
The scale of the effort needed to meet the Paris Agreement’s goal of net zero emissions by 2050 is enormous. The fact that the world is currently experiencing increasing effects of climate change underscores the urgency of electrifying our power generation.
While renewables like solar and wind will play a significant role in meeting the goal’s clean energy demands, they remain too variable to do the job by themselves. We will still need firm energy sources – sources that can help keep the power grid stable across seasons and are capable of operating 24/7.
In fact, in its Pathway to Commercial Liftoff: Advanced Nuclear report, the Department of Energy says, “decarbonizing the last ~20% of the grid would be very difficult and expensive without firm power.”
The good news is that advanced nuclear can fill the need. Advanced nuclear technologies offer solutions that can be built faster and more efficiently than large plants and can also provide other key benefits, like industrial high-pressure steam and hydrogen production. They use simpler, standard designs that leverage experience with conventional natural gas power plant construction, only with a non-carbon generator.
According to the DOE report, the U.S. has the capability to scale from providing about 100 GW of nuclear power this year to 300 GW by 2050. The reactor developers are moving along necessary regulatory paths and advancing their engineering work. And more than ever, the important players – government agencies, utilities, and the public – recognize the need to ramp up our nuclear capacity.
Unlocking this potential, however, is a significant challenge that requires coordinated effort across the industry to overcome a catch-22: suppliers are reluctant to ramp up their capabilities without committed orders. And the sure-to-be high initial cost – along with the risk of cost and schedule overruns – makes utilities and their ratepayers reluctant to commit to and invest in the suppliers’ new technology.
As an industry, we have to create an environment where all the parties can move forward together with confidence – and quickly.
From FOAK to NOAK
To meet the urgency of this moment, the nuclear industry needs to work together to create a solid foundation for success.
Nuclear Energy Institute (NEI) and Electric Power Research Institute (EPRI) recently published an Advanced Reactor Roadmap, which lays out a detailed plan for commercializing advanced nuclear – at the rate that is needed to meet the world’s decarbonization goals. The Modus team contributed to the development of this document, which identifies where and how the industry needs to focus its attention.
When we talk about commercializing new technologies, we often talk about how to support the first of a kind (FOAK) projects – the first movers. And, as the roadmap report acknowledges, those projects are important.
But in the limited time we have to meet the urgent demands for firm energy, we also need to focus on the needs of the what the roadmap refers to as “fast followers.”
“Enabling ‘fast followers’—those who proceed with projects soon after the first projects start and with reduced risks similar to having waited until the first project is completed—will allow the industry to meet the needs for clean energy between now and the mid-2030s, while also establishing the foundation for large-scale deployment through 2050,” the report said.
The unique position of the fast follower
The nuclear industry expects and is preparing for FOAK projects to be expensive and difficult, with inherent problems to be overcome.
However, another expectation is more problematic: the idea that the projects immediately behind the FOAK will automatically take advantage of the lessons learned from these first projects and will progress significantly better, faster, and cheaper.
The truth is that the fast follower advanced reactor projects will face their own unique challenges.
Timing is critical. As the roadmap points out, “If these followers wait until the first projects are completed, market adoption will be too slow to enable large-scale deployment of advanced reactors in the timeframe that the market needs to achieve national decarbonization goals.”
It’s becoming more obvious that fast follower projects are going to need to happen right on the heels of the FOAK projects – almost in parallel.
This has several impacts on first followers. First, the timing limits the opportunity that next-of-a-kind project owners would normally have to learn from those first-mover projects.
The compressed timeframe also constrains the fast followers’ licensing strategy. They will likely be unable to use a combined license application (Part 52), because the final, standard design might still be subject to revision from the first project.
And finally, fast followers will find themselves right in the thick of the catch-22 I mentioned earlier, which is inherent in the effort to scale advanced reactor production.
As I said, suppliers will benefit from multiple committed orders so they can confidently ramp up their manufacturing capabilities and refine their construction methods. Ultimately, as providers scale, costs for future projects will be reduced.
But the fast follower projects will be too early to receive all of the cost reduction benefits that will ultimately be available to late adopters. That, of course, assumes there will be late adopters.
There is no path to NOAK without those willing to go next in line. But the path from FOAK to NOAK will require some calculated decisions. Fast followers will need to decide where they want to be on this path.
Recommendations for fast followers
So, given these considerations, what should likely fast followers do?
- Moderate expectations. The reality is that fast followers will need to temper expectations about the level of cost and schedule improvements received from the FOAK projects. In other words: don’t plan on seeing significant cost reductions from the knowledge transfer. Instead, as you’re planning your own project, use the FOAK as a bounding case that improves confidence in the outer range of cost and schedule outcomes.
- Build relationships. Sharing information will help the FOAK and fast followers alike. The scale-up of the overall market will help bring down the cost of each of the projects. Forming owners’ groups with other developers of the same advanced reactor will help the transfer of information.
- Understand the level of transparency you can expect. Fast followers need a good understanding of the amount of information they will get from the FOAK projects and the developers who executed them. You will want to obtain as much information as possible through commercial agreements and industry associations.
- Co-locate. Fast followers should offer to contribute personnel to the FOAK project who can learn, observe, and bring knowledge from the FOAK to their own project. This can be a symbiotic relationship, as many advanced reactors will have multiple units within a single project, so real-time sharing of information can help everyone.
- Build a lessons-learned program. The ability to insert lessons in real time, married with continuous improvement, is one of the nuclear industry’s greatest strengths. Adapting these concepts to advanced nuclear projects is essential for success.
- Maximize the use of industry lessons learned. The DOE liftoff report actually suggests that more benefit will come from applying existing industry best practices than from applying the learnings from the FOAK projects.
We can’t afford to wait.
The challenges for fast followers in deploying advanced reactors are real. But they must be overcome. The NEI/EPRI report outlines the urgency of laying the foundation for the commercialization effort ahead.
“Waiting until the mid-2030s to deploy at scale could lead to missing decarbonization targets and/or significant supply chain overbuild. Rapidly scaling the nuclear industrial base would enable nearer-term decarbonization and increase capital efficiency,” the report says.
“If deployment starts by 2030, ramping annual deployment to 13 GW by 2040 would provide 200 GW by 2050; a five-year delay in scaling the industrial base would require 20+ GW per year to achieve the same 200 GW deployment and could result in as much as a 50% increase in the capital required.”
In other words, the time to act is now.