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Biden Expected To Continue Trump Support For U.S. Nuclear Energy Exports

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By most accounts, President-elect Joe Biden will continue President Trump’s nuclear energy legacy—to aggressively develop U.S. technology for export to the international market within five to seven years.

In August, a senior Energy Department official told Forbes maintaining U.S. nuclear energy facilities and expanding U.S. technology abroad is a matter of national security and could be a strong diplomatic lever to thwart Chinese hegemony and Russian expansion in the global market.

Over four years, the Trump administration moved expeditiously. And the private sector has mobilized.

“In terms of policy, nuclear has gone too far and made too much progress to go back,” said Jennifer Gordon, Managing Editor and Senior Fellow, Global Energy Center at the Atlantic Council. “It’s almost unstoppable.”

But getting into new markets, especially developing and emerging ones, may require a major change in the way the U.S. builds, installs and finances nuclear technology, according to industry sources and a new study released by a group of MIT scientists and engineers.

Cost overruns and delays associated with large gigawatt plants have plagued nuclear power development for decades. But that could be averted by building plants in factories and then installing them on site.

Andrew Paterson, former senior advisor to the U.S. Energy Department, now principal at Environmental Business International, told Forbes, “We need to build reactors like airplanes, not just for cost, but for financing and ramping human resources. You can never achieve progress on cost by building one here, one there. If we stay with the giant more than $20 billion plants and stick with building reactors onsite, the U.S. will be condemned to another 20 years of tinkering.”

In a news release, MIT said, “excess costs were associated with delays caused by the need to make last-minute design changes based on particular conditions at the construction site or other local circumstances, so if more components of the plant, or even the entire plant, could be built offsite under controlled factory conditions, such extra costs could be substantially cut.”

SMRs or Bust

“I think the days of building large nuclear power plants are really in the past,” said Retired Rear Admiral Michael Hewitt, CEO of Allied Nuclear and its parent IP3.

Allied Nuclear is a U.S.-based global nuclear energy adviser, a start-up that helps international governments procure U.S. nuclear technology and tailor financing and assists countries in starting nuclear energy programs.

Hitachi walked away from a major UK power plant project after spending $2 billion. Where does that leave us? SMRs,” Hewitt said.

SMRs, small modular reactors, are advanced reactors that range in size, but are usually 10 to 100s of megawatts, ideally under 200 MW, and can be used for power generation, process heat, desalination and industrial uses. In an SMR, light water can be the reactor coolant or coolants can be natural gas, liquid metal, or molten salt.

The key is to get SMRs to production.

“Once they’re at production, they can compete internationally,” Hewitt said.

“Instead of constructing [SMRs], you’re assembling [them on site in country],” Hewitt said. “It’s a repetitive model” that gives investors a better handle on cost and cost overruns, he said.

The MIT study said nuclear plants could be built in factories and trucked to the site. SMRs could be completely self-contained and delivered to their final site with the nuclear fuel already installed.

“Numerous such plants could be ganged together to provide output comparable to that of larger plants, or they could be distributed more widely to reduce the need for long-distance transmission of the power,” MIT said.

The Electric Power Research Institute (EPRI), a U.S.-based global research and development organization for the electric sector, is conducting research to shorten the timeline and reduce the deployment risks for construction of new power plants.

“Advanced manufacturing is an area of EPRI research that shows promise for reducing the lead time for fabrication of nuclear components,” said Neil Wilmshurst, Senior Vice President for Energy System Resources at EPRI, which is immersed in collaborative research to develop technologies that reduce costs and time associated with manufacturing reactor vessels.

“These new technologies will also support development of a more resilient nuclear supply chain by providing alternatives to traditional manufacturing approaches,” Wilmshurst said.

Path to Investment

One more thing, Hewitt said, “You have to get an order book.”

Hewitt cites the UK government’s plan to help Rolls Royce develop a fleet of SMRs as a good model.

“I wish we were doing that in the U.S. It puts a demand signal [on the technology],” and it becomes “an investable private sector-focused solution for clean energy.”

“Only way to invite private capital is to go to an SMR program because it will show the kinds of returns the capital markets would want to see to invest in nuclear power,” Hewitt said.

“It’s not about investing in technology, it’s about investing in projects themselves, projects that DFC and EXIM are already investing in,” he said, referring to the U.S. Development Finance Corporation and the U.S. Export-Import Bank.

In his first term, President Obama boosted funding for SMRs, but he kept legacy policies which restricted U.S. development banks from investing in nuclear projects overseas and did little to secure U.S. domestic fuel supply.

President Trump’s DOE, through its blueprint to transform the U.S. nuclear industry, Restoring America’s Competitive Nuclear Energy Advantage, tacitly instructed DFC to remove those legacy policies that prevented it from investing in international nuclear power projects.

DFC said it would “prioritize support of advanced nuclear technology in emerging and frontier markets that adheres to the highest safety standards.”

DOE also cited a role for EXIM Bank.

Last November, Republican and Democratic lawmakers agreed to President Trump’s request to reauthorize the country’s export credit agency. EXIM Bank is chartered to finance and facilitate the sale of U.S.-made products for export. Forbes reported extensively on the long-term value of the reauthorization, proving useful for global nuclear energy.

Hewitt said that’s still not enough.

Because most countries’ energy systems are operated by state-owned enterprises, financing U.S. technology overseas can be tricky, Hewitt said.

Public-private partnerships are critical, but the U.S. government could make SMRs an asset class to make them more attractive to institutional investors typically looking for long-term reliable streams of income, in this case through electricity rate base.

“Without private investment in new nuclear power, we think we’re going to continue to struggle,” Hewitt said of U.S. technology companies aiming to export. “We’re addressing those roadblocks and reducing the barriers to entry for our western technology providers.”

Pooling resources already pouring into the nuclear energy market could give U.S. technology fertile ground overseas. “You don’t decarbonize by buying tanks and weapons systems,” Hewitt said.

It’s soft diplomacy, creating long-term relationships with our allies through our energy sector, he said. “The roots of instability are water shortages, food shortages…the only way to add stability is to ensure these countries have baseload power,” Hewitt said.

In an Atlantic Council Issue Brief, Gordon writes, “Building new reactors and bringing first-of-a-kind reactors to demonstration involve high capital costs and financial risk, for the purchasing party as well as the vendor. If the United States is to play a role at all in building new nuclear plants, it must address the challenges inherent in financing new nuclear builds; one mechanism to do this is through partnering with close US allies to co-finance new nuclear projects.”

“If the United States and its allies fail to make their nuclear exports competitive, they will likely cede the mantle of global leadership in that area to Russia and China, where nuclear companies are state owned, easily able to finance nuclear exports, and already exploring emerging markets for nuclear exports,” she said.

“We need consortium models that allow us to compete,” Hewitt said. “The only way to solve climate change is to make [clean energy technology] attractive to the capital markets. You’re not going to subsidize and legislate your way to climate change.”

Legislative, Regulatory Support Lines Up

But support on Capitol Hill is definitely lining up, bridging an otherwise divided legislature in an area of refreshing collaboration.

Gordon said, “Whether it’s streamlining the process for getting nuclear licenses, [or] exports, [nuclear energy] enjoys such a high level of bipartisan support. I can only see this continuing.”

Last year, Congress passed the Nuclear Energy Innovation and Modernization Act, driven by the likely incoming Chairman of the Senate Energy and Natural Resources Committee, John Barrasso, R-WY.

The new law revises the budget and fee structure of the Nuclear Regulatory Commission and requires the NRC to develop new processes for licensing nuclear reactors, including staged licensing of advanced nuclear reactors.

In 2018, President Trump signed into law the Nuclear Energy Innovation Capabilities Act which removed some of the financial and technology barriers to nuclear energy innovation. 

In the summer of 2020, Chairman of the Senate Energy and Natural Resources Committee Lisa Murkowski R-AK and Democratic Senator Cory Booker from New Jersey assembled a bipartisan group of lawmakers to pass the Nuclear Energy Leadership Act through the National Defense Authorization Act for Fiscal 2021.

The act opens the doors for the Defense Department to work closely with the Energy Department to deploy microreactors to remote regions of the world. While President Trump focused his rationale of nuclear energy expansion as a way to counter Chinese hegemony and Russian expansion in the market, a Biden administration is likely to use climate change and the President-elect’s clean energy goals as the rationale.

“Cory Booker is a major champion of nuclear [energy],” Gordon said.

This month, Booker joined Senators Barrasso, Sheldon Whitehouse (D-RI), and Mike Crapo (R-ID) to introduce the American Nuclear Infrastructure Act of 2020 through the Senate Committee on Environment and Public Works. That bill would preserve the American nuclear fuel supply chain, reduce carbon emissions, and strengthen U.S. economic, energy, and national security, the committee said.

Most notably, the Act would codify policy that removes regulatory and financial barriers to nuclear energy deployment and export to world markets. The bill also gives NRC authority to deny imports of Russian and Chinese nuclear fuel on national security grounds.

Hewitt told Forbes in August in Trump Administration Pivots to Nuclear Energy, Finds Lever Against China, Russia that his company wants to help global allies “stay clear of ‘debt traps’ and national security risks posed by China’s Belt and Road Initiative investments.”

“Infrastructure development and energy security should not come at the expense of a country’s national sovereignty or financial interest,” Hewitt said.

China and Russia have entered the developing world, already thirsty for baseload power, with “heavily-subsidized power plant offers that come with insidious ‘build-own-operate’ terms and predatory financing.” 

A new paper, Twenty-First Century U.S. Nuclear Power: A National Security Imperative, published by two University of Georgia professors—David K. Gattie, and Joshua N.K. Massey—revealed that since 2000, 96 nuclear reactors have been connected to the grid in 13 countries. Of these, 45 were constructed in China and 12 in Russia. An additional four Chinese-designed reactors and seven Russian-designed reactors were deployed in five other countries.

That means 71% of reactor deployment is associated with China or Russia either by domestic location or by reactor design, the professors said in the paper.

Currently, 54 reactors are under construction in 20 countries. Of these, 13 are Chinese designed (11 in China, 2 outside of China), and 16 are Russian designed (4 in Russia, 12 outside of Russia). Thus, 54 percent of reactors under construction are associated with China or Russia, they said.

“Energy animates a country’s economy and underpins the technological capacity to protect itself and defend its interests. It has a value proposition beyond that of a market commodity as it defines and shapes geopolitical relationships and international stature,” the Gattie and Massey said.

The Developing World of Nuclear

Though nuclear power is currently generated and consumed largely by the developed world, a promising market for U.S. nuclear technology is the developing one, where more than 1 billion people live with limited or no electricity.

In August, Forbes reported, the U.S. and France consumed most of the world’s nuclear power, about 45% collectively. China and Russia are the next two largest consumers; China and Russia consumed more than 12% and 7% respectively.

Meanwhile, France and Sweden derive most of their power generation from nuclear energy. France generates nearly 71% of its electricity from nuclear energy, and Sweden about 40%.

Emerging economies want in.

The World Nuclear Association says about 30 emerging economies and developing countries “are considering, planning or starting nuclear power programs.”

About 20 more have expressed interest in nuclear energy technology.

Russia has positioned itself before 26 of those countries to provide finance and fuel services. China is in discussions with five.

West, central and southern Africa are interested in nuclear power and remain open to U.S. technology. Others like Thailand, Indonesia, Kazakhstan and the Kingdom of Saudi Arabia have plans, but have not made commitments on technology and fuel providers, another potential U.S. market.

“This is definitely bipartisan. It’s only a good thing for the US to export nuclear energy,” Gordon said.

Start-ups are driving the nuclear renaissance, pouring billions of dollars into an effort to bring variations of the carbon-free energy technology to market.

In October, the Energy Department awarded Bill Gates’ startup, TerraPower, and Maryland-based X-energy $80 million each to build two advanced nuclear reactors that can be operational within seven years. Both projects would enhance safety and be affordable to construct and operate. Both companies’ technologies could be used domestically and be deployed to the international market.

TerraPower would demonstrate the Natrium reactor, a sodium‐cooled fast reactor that leverages decades of development and design undertaken by TerraPower and its partner, GE‐Hitachi. DOE said X-energy would deliver a commercial four-unit nuclear power plant based on its Xe-100 reactor design, a high-temperature gas-cooled reactor to provide flexible electricity output and process heat for industrial heat applications, such as desalination and hydrogen production, DOE said.

Bill Gates also joined Mukesh Ambani, Jeff Bezos, Michael Bloomberg, Richard Branson, Jack Ma, and Masayoshi Son to invest $1 billion into Breakthrough Energy Ventures, to fund a broad range of clean energy ideas, including nuclear.

In its October 2018 report, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) said nuclear energy must be part of the global energy mix in order to keep the increase in global temperatures to less than 1.5 degrees Celsius above pre-industrial times.

In July 2020, the Nuclear Energy Institute released a study conducted by UxC LLC, a nuclear market research and analysis firm, which concluded that global nuclear power capacity must come up to 840 GWe by 2050 to achieve IPCC carbon reduction targets. Based on planned shutdowns of current nuclear facilities, the industry must add 640 GWe of new nuclear capacity between 2020 and 2050 to achieve the 840 GWe by 2050.

All of this could cost the U.S. nuclear energy industry $8.6 trillion in capital and operating costs, a substantial part of the global investment—$67.7 trillion—the International Energy Agency says we’ll need for a future global clean energy system.

But it could mean a $1.9 trillion opportunity for U.S. nuclear companies to sell its reactor designs, fuel and decommissioning services for old reactors, UxC said.

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