NEI’s Construction Best Practices Task Force: Building Confidence in New Nuclear Projects
Category: Thought Leadership
In a recent blog post, Nuclear Energy Institute’s (NEI) Hilary Lane shares details about the organization’s work establishing construction best practices (CBPs) for new nuclear power projects. She details the important work NEI is doing to bring greater certainty and predictability to the building of the next generation of nuclear power plants through its Construction Best Practices Task Force.
NEI is a powerful voice for nuclear power as a solution to our climate crisis. Its leadership in rethinking how to make a business case for the next wave of nuclear plants is addressing a crucial need in the industry.
And the time for making that business case is now. In his book Speed & Scale: An Action Plan for Solving Our Climate Crisis Now, John Doerr said, “Though we don’t yet know precisely how it will play out, a global farewell to coal-fired power is an idea whose time has come.”
Today, nuclear power plants in the U.S. provide the nation’s largest supply of carbon-free, baseload electricity – a supply that is needed to help ease that farewell to coal – but the current fleet is aging and there is no one-size-fits-all solution for how nuclear fits into the Net Zero equation. Nuclear developers are in a race to replace fossil fuel generation with climate-conscious solutions, and many promising new technologies are emerging as viable options.
“Nuclear power of course is the only carbon-free energy source we have that can deliver power day and night, throughout every season, almost anywhere on Earth. And it’s been proven to work at a large scale.” Bill Gates, in a speech to the Nuclear Energy Assembly
Nuclear developers appear to have a lot of momentum, but, as Bill Gates said in an interview with 60 Minutes last year, convincing people that a new reactor should be built is almost as hard as building it. While earning the trust of investors has never been more important, these technologies, ranging from scaled-down versions of existing nuclear designs to first-of-a-kind breakthroughs, face considerable headwinds before they can become reality.
For decades, the nuclear industry has faced concerns over safety, cost, waste and potential catastrophic accidents. Recent new nuclear projects in the U.S. and Europe have experienced significant budget and schedule overruns. The regulatory hurdles and start-up costs for new technologies present daunting challenges.
For investors to have confidence in nuclear power, the industry must directly confront its past and demonstrate that it has learned necessary lessons and is ready for the next wave of new projects.
IMPROVING CERTAINTY, BUILDING CONFIDENCE
As part of NEI’s task force, my colleague Jim Carter and I co-authored IG 01, the first of many implementation guidance documents NEI is developing to show the way to a future of new reactors built on time and on budget. It outlines a Phase Gate process that provides achievable goals and milestones for new nuclear projects.
Importantly, Hilary explains in her blog post that “the concept of ‘Phase Gates’ provides investors, executives, stakeholders, and the project team with a road map and clear criteria for when and how a project should progress to the next phase.”
Developing a new nuclear technology is a lengthy and expensive process with technical challenges in addition to its regulatory and political hurdles. It’s easy to lose track of the many steps these projects need to take, and the value of each of these steps on the path to project execution. However, each milestone these projects achieve reduces the risks and uncertainties in meaningful ways.
As we note in IG 01, “a well-structured Phase Gate process is advocated for planning a project as design maturity progresses (i.e., clarity on the details of the scope and project definition) increasing basis and confidence in the reliability of project estimates and schedules.”
The Phase Gate process outlined in IG 01 provides owners and developers with realistic, measured steps that can demystify how new technologies can mature and be better understood over time. This allows all stakeholders to have their eyes wide open to cost, schedule and risks throughout the process, increasing their confidence in the projects overall.
The Phase Gate process in NEI’s IG 01 provides a framework for owners and decision-makers to prudently evaluate and consider new nuclear with appropriate, built-in “go/no-go” decision points. This process helps project stakeholders evaluate key issues that impact the business case for new nuclear, including:
- Which of the emerging technologies is right for the particular purpose and location
- Size of the plant and how it fits within the owner/operator’s fleet
- Operational and waste concerns
As new nuclear technologies evolve, the cost can and will come down. What is now first-of-a-kind (FOAK) becomes tomorrow’s next-of-a-kind (NOAK). A recent MIT study of costs for new reactors concluded that “learning-by-doing is the best cost reducing strategy for new nuclear projects, and smaller plants, that are highly modularized, can most effectively leverage this strategy.”
Newer methods such as modular construction and repetitive design are critical to bringing down the cost and reducing the schedule duration for these new technologies, though assessing these benefits requires a lot of careful analysis. The Phase Gate process builds in critical assessments and vetting needed to reduce uncertainty into the project’s planning progression.
“Never has there been more money available for new ideas to become reality. This is fueling a dynamic landscape of innovation. … Engineers and scientists are working around the clock on how to decarbonize cement, steel, and plastics; shipping, trucking, and aviation; agriculture, energy, and construction. I believe the decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime.” Larry Fink, Chairman and CEO, BlackRock, in his annual letter to CEOs
Modus is proud to support the NEI’s Construction Best Practices Task Force. We encourage all current NEI members to review the task force’s work, and we urge all other stakeholders and investors who are interested in new nuclear developments to join in this critical work.