Factory-Built Nuclear Reactor Development Slows
Charlotte-based Babcock and Wilcox received a big boost when the Energy Department agreed to be a partner in the company’s development of a new, small nuclear reactor. But the project has since hit some roadblocks.
It was less than two years ago that the Department of Energy selected Babcock & Wilcox from a field of nuclear companies developing the new small modular reactors. Assistant Secretary of Energy Pete Lyons described smaller, cheaper, less powerful devices than traditional reactors, all made in the USA. They could replace retiring coal plants at home and be exported abroad.
“We’re trying to jumpstart a new U.S. industry,” Lyons said. “That’s my goal, a U.S. industry, U.S. jobs, clean energy.”
The department has invested more than $100 million to support the project since December 2012, with a promise of up to double that amount. Meanwhile, Babcock & Wilcox and its partners have spent $400 million. They have built a prototype in Lynchburg, Virginia, and were preparing to apply to the Nuclear Regulatory Commission for a license by the end of the year. But the company announced late last year it had hired JP Morgan to look into a majority sale. It failed to secure a buyer, then fired the project’s CEO this month, and later this year will cut spending by 80 percent from last year.
“Any new energy technologies run into bumps in the road, take time to develop, and take resources to develop,” says company Vice President Marshall Cohen. “So, we’re going to go about this in the right way, methodical, work closely with our partners. And, we think we can get there.”
Cohen expects the schedule will be delayed two or three years, if the Department of Energy remains a partner. The DOE did not respond when asked, but sent a statement that it continues to generally support the technology.
The agency has another horse in the race—it invested in Oregon-based Nuscale Power’s reactor last December. But, that investment was delayed nearly a year. Combined with the struggles at Babcock & Wilcox, it feeds into criticisms by opponents. Ed Lyman, the nuclear scientist for the Union of Concerned Scientists, has long argued the costs of small reactors do not add up.
“As you increase the size of an electrical generation plant, you decrease the unit cost of electricity. So, conversely, if you shrink a plant, you’re going to get higher cost electricity,” Lyman says.
Companies project to make up the cost through mass production—build them in factories and sell enough that the costs go down. Michael Carter, director of the Energy Group at financial analysis firm SNL Financial, says he believes that business model can work, but Babcock & Wilcox may have overestimated initial interest in an unproven technology.
“Everybody’s a little bit slow until somebody steps forward and actually builds one of these things, and sees what they look like; everyone’s a little bit slow to want to adopt,” Carter says.
The cycle Carter describes is a vicious one. The company wants investment to finish building the new reactors, but investors are hesitant to invest until the new reactors are built.