What Prospective New Nuclear Project Owners Need to Know About Modularization
Category: Thought Leadership
Many prospective nuclear power plant owners are feeling jittery right now.
On one hand, federal financial support and growing sentiment in favor of new nuclear projects are providing tailwinds for the industry. The recent announcements from COP28 that major industrial countries have signed on to tripling nuclear capacity certainly have added to the rosier outlook.
On the other hand, public setbacks cloud that outlook for new nuclear projects. NuScale and Utah Associated Municipal Power Systems (UAMPS) recently pulled the plug on a long-planned nuclear project.
The two new units at Georgia Power’s Vogtle plant have also been a mixed bag. The project has been celebrated as the first advanced reactor built in the U.S. to begin operations, but it’s also been plagued by enormous cost and schedule issues.
It’s important to keep this all in perspective. Ups and downs aren’t an indictment of the effort; they’re part of the process. To commercialize promising new nuclear technology and build something of the scale needed to meet our future energy needs, we will need to face, learn from, and overcome the inevitable challenges.
New nuclear on the horizon
The Department of Energy’s Pathways to Commercial Liftoff: Advanced Nuclear report points out that many of the issues that have plagued nuclear projects are megaproject issues, not specific to nuclear. And they are surmountable. The report traces issues at Vogtle, for example, back to a set of root causes, most of which “are within project leadership’s control and could be avoided effectively in future projects.”
We know what we need to do.
But the hesitation is still there. For nuclear technology developers, getting new projects off the ground requires committed customers. Yet many customers are understandably wary of being the first to sign on.
Owners and developers both face significant opportunity—and significant risk—when stepping out into this brave new world. Acknowledging and guarding against the risks associated with first-of-a-kind projects is critical for moving these projects forward.
There are things that owners should understand and steps they can take to move forward with confidence. This post is the first in a series about what owners should consider. This time, we’re focusing on modularization.
Why modularization?
Every discussion of new nuclear projects begins and ends with the subject of cost and schedule overruns. With new reactor designs, modularization is the linchpin in the strategy for getting cost and timeline under control, for several reasons:
- Building many copies of identical, smaller components in a factory environment is more efficient and cheaper than building massive, one-off elements. It gives constructors more control over quality, and it’s easier to do.
- Reducing the size and variability of the components reduces the cost of transporting and installing them. No more spending millions of dollars on machines or infrastructure purpose-built to handle a single enormous component.
- Modularization allows different parts of the project to happen concurrently, reducing the overall time. The more pre-assembled elements, the better for staying on schedule. Of course, the pre-assembled parts all have to fit, requiring very predictable design for both the parts and the overall project.
- Tightening the schedule also reduces the financial impact of the project by reducing financing costs. Project delays can cost millions in accrued interest. In fact, the DOE estimated that financing costs over the delayed Vogtle project contributed 21% of its cost increases.
Ultimately, smaller, modularized projects enable the industry to produce new projects faster, reduce overhead and financing costs, and reduce risk.
What do owners need to do?
How can owners make the promise of modularization a reality in their own projects? After all, the Vogtle project was a modular design.
Again, it’s important to realize that issues with this project weren’t a failure of the concept of modularization; they were issues with execution.
“Poor module-delivery performance was a result of a few factors. Some of the designs sent to fabricators were incomplete and changed after fabricators started. In some cases, it was unrealistic to construct the modules as designed. In other instances, the required quality-assurance paperwork was lacking, so modules could not be shipped. Finally, site management eventually gave up on the module fabricator, and the modules were shipped incomplete for finishing on location,” the DOE said in its report.
We’ve learned a great deal from this and other past efforts. They’ve provided lessons we can take away for owners to think about as they’re evaluating developers and their technologies:
Require a plan. Modularization requires significant upfront planning, as well as an understanding of what is truly modular and what is not, from nuclear technology vendors. Some are well prepared for this reality—even already having a factory and a workforce—but some are not. They should be able to share a sound plan for what they will modularize and how.
Make sure the design is essentially complete. Modularity requires that a significant portion, if not 100%, of the design is complete. If you’re going to gain any efficiency by breaking components into subparts and designing processes to create many copies of those subparts, you can’t also be designing and redesigning them on the fly.
Understand the distribution of setup costs. New developers must put a lot of new infrastructure into place, and that will cost a lot of money. Owners need to know how much of the overhead they’ll be expected to absorb. You wouldn’t charge the first Tesla owner the billions of dollars it took to build the factory. Developers will need to be prepared to take some business risk themselves, and to assure early adopters that they won’t be footing the entire bill.
Conclusion
For this enormous undertaking to work, developers will need to be completely transparent about their plans. The potential harms of getting it wrong go right to some of the key risks—including financial—associated with large nuclear projects.
Owners should expect details about these risks to be identified as part of the selection process when they evaluate different vendors.
And vendors need to plan to give owners appropriate information. If they want to win the business, they should be prepared to answer the questions.