Future of small reactors at stake as NuScale deal flops

A controversial, high-stakes project that was arguably the most promising attempt to connect a small nuclear reactor to the U.S. electrical grid has been scrapped.

The Utah Associated Municipal Power Systems’ project using NuScale Power’s small modular reactor (SMR) design has been terminated because it couldn’t secure enough subscriptions from utilities in the Western U.S. to make the project work financially, according to a release and NuScale’s third-quarter 2023 earnings report. UAMPS is a collection of 50 municipal and regional utilities across seven Western states.

Slated for a site adjacent to a Department of Energy lab in Idaho, the ​“Carbon Free Power Project” had been set to serve as a flagship of sorts for the supposedly forthcoming U.S. fleet of advanced nuclear long heralded by the industry and DOE. NuScale developed the first and only SMR ever to receive U.S. Nuclear Regulatory Commission certification. The Idaho deployment was once widely predicted to be not only the first of its kind to be completed, but the next nuclear reactor to be built in the U.S., period.

Project plans had called for one 77-megawatt unit to begin operation in 2029. However, signs of trouble began brewing earlier this year, well before a shovel would strike soil. In January, NuScale revised its estimated project costs from $58 per megawatt-hour to $89 per megawatt-hour due to higher materials costs, high interest rates and inflation. (See Canary’s recent reporting on how these variables are also wreaking havoc in the fledgling U.S. offshore wind industry.)

Though the U.S. gets just under 20 percent of its power from nuclear, few new projects have been completed in recent decades because of discouraging economics, negative public sentiment and pushback from environmental groups.

The compressed size and mass-production potential of SMRs have been touted as a remedy to the budget overruns that have plagued large U.S. reactors, such as Georgia’s almost-completed Vogtle plant. Theoretically, SMRs’ smaller footprint allows for more cost-effective off-site construction with fewer custom components, leading to lower total project costs. But so far, only NuScale has managed to convince regulators that its reactor design is viable after investing more than a decade of work and hundreds of millions of dollars in the approval process.

In 2020, the UAMPS project in Idaho received $1.35 billion from the U.S. Department of Energy as a cost-share award. It is unclear how much of that sum has already been spent or will have to be repaid. The SMR-maker has agreed to pay UAMPS a termination fee of $49.8 million, according to Bloomberg.

On its earnings call yesterday, NuScale reported cash and equivalents of $196.6 million ($79.1 million of which is restricted) and no debt. The company had revenue of $7.0 million and a net loss of $58.3 million for the third quarter of 2023.

NuScale’s stock price has taken a hit, tumbling from a high of $14.87 in August 2022 to $2.08 at the time of this article’s publication.

“NuScale will continue with our other domestic and international customers to bring our American SMR technology to market and grow the U.S. nuclear manufacturing base, creating jobs across the U.S.,” said NuScale CEO John Hopkins, in a statement. The SMR hopeful still has a sales pipeline with signed agreements to deploy SMR plants across North America, Europe and the Middle East.

The news of this project’s collapse is yet more evidence that the future of U.S. nuclear remains unsettled. For all of their hypothetical benefits, small modular reactors are now even further from proving themselves where it matters most: in the power system.