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Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.
Welcome to episode 329 of the energy talks podcast. I'm energy and climate journalist, Markham Hislop. Small modular reactors using 4th generation nuclear technology are being touted as the answer to greenhouse gas emissions and the need to quickly electrify economies as part of the energy transition. SMRs, however, are hugely controversial. Critics argue that the technology is unproven, and efforts to to now don't show that SMRs are any better than 3rd generation reactors when it comes to cost per megawatt hour or building them on budget and on time.
Markham:David Schlissel, director of resource planning analysis for the Institute For Energy Economics and Financial Analysis, is here to discuss a new report, Small Modular Reactors, still too expensive, too slow, and too risky. So welcome to the interview, David.
David:Thank you. It's a pleasure to be here.
Markham:Well, thank you very much for coming, and and, thank you for being patient with my mispronunciate mispronunciation of your last name. But I'll get it right next time.
David:I have 77 and a half years of experience of being patient with with people mispronouncing my name.
Markham:Oh, good. I'm I'm not I'm not the first then.
David:That's You're not the first, and I imagine, and hope there will be
Markham:a long line of others after you who mispronounced my name. Fair enough. Well, look. Thank you very much for, for joining us today. And I wanna put a little context around this because yesterday's episode was also about nuclear reactors, but in the Canadian context.
Markham:And here in Canada, there is a lot of interest from in SMRs from, well, Alberta, Saskatchewan, New Brunswick, and, of course, Ontario. And 1 of the arguments that's made is that nuclear enable is basically a drop in replacement for thermal, for coal and and gas. Therefore, you don't have to change the, the grid much. You don't have to invest in a lot of storage or digital controls or demand response or any of the other, I don't know, dozens of new technologies that are required to accommodate intermittent wind and solar. And so if you're a conservative grid planner, SMRs are great.
Markham:That's a solution to all your problems. The issue here, I think, is that well, there's a couple. I mean, 1 is they may not live up to their promise, but at the very best, it appears that they might they probably aren't gonna be available in any scale till the mid 20 thirties, maybe the early 20 forties. So what do you think of that argument about, you know, drop in replacement, for coal and thermal and enabling existing power grids to expand without investing in new technologies?
David:It'll be too expensive, and it'll take as you just laid out, it'll take too long to get them in place. We need to take actions yesterday to reduce the world's greenhouse gas emissions, relying on a technology, an alternative, that won't be available for a decade or longer is asking for a disaster.
Markham:What are we when we're talking about too expensive, nuclear reactor, like the 3rd generation, the big ones, like Vogtle in in Georgia, it would and they were delayed and went way over budget. What kind of a price per megawatt hour of electricity are we talking about, potentially, anyway, with, SMRs?
David:Well, there are a couple of estimates. My ballpark is that for 1 of the designs, NuScale, They were initially thought to be the leading design, but now no 1 knows if any of their prop plants will ever get built. Their capital cost is just about the same in 20, 20 4 year dollars as Vogtle. So it's reasonable to expect that the $160 per megawatt hour that's been estimated for the price of power from Vogtle, we'll we'll be in the same ballpark for NuScale. For a nuclear plant, the cost of a nuclear plant is directly related to what its capital cost is.
David:The price of the power directly related to the capital cost of building. That's because most of the costs of nuclear power are tied up when the in construction costs and other fixed costs.
Markham:1 of the 1 of the arguments I've heard from the advocates of new hydro, and we see this in BC Hydro with their controversial site c hydroelectric dam, is how long are, utilities allowed to amortize those costs? So for instance, I think I interviewed somebody from, Iifa, your organization, a couple of years ago, and they were saying that the the longest period should be the the longest length of time you can get a bond. You know, like a 40 year bond is the maximum and that's how long that should be the amortization period. That then would boost site c costs well up over, a 100 meg a 100 megawatts an hour. Now BC Hydro, on the other hand, wants to amortize it over a 100 years, which then brings it down to, I don't know, like, 25 or $30 a megawatt hour.
Markham:I mean, so how you how you do that, how you, play with the numbers, gives you very different costs. Does that kind of calculation, you know, manipulation, does that figure into how we think of nuclear and SMRs?
David:Well, yes. That kind of calculation. Because if you're gonna talk about a 100 years, there's gonna be a lot of what are called operating capital expenditures. Modifications that will be needed over time, repairs and replacement of major equipment will be needed. So it's not like you spend $10, 000, 000, 000 tomorrow to build an SMR or any reactor.
David:You're gonna be paying out money for maintenance and also capital expenditures related to maintenance. So the longer it runs, you have to include costs of relicensing of, making sure, again, that the equipment is as up to date and up running as possible.
Markham:I interviewed a company out in New Brunswick that was working on molten salt reactors, which would be 1 of the 4th generation technologies. And 1 of the the the big arguments in favor of that project, according to the company, was that they were able to burn spent fuel from the CANDU reactors. And that seemed like a major advantage because then you render that waste much less radioactive. So you you you get over 1 of the big objections to to nuclear that way and lower costs fuel costs at the same time. How does that play into your calculations?
David:Well, it it doesn't. I mean, we don't look at, we don't include waste costs. They're important to consider, but in when when you're looking at the construction cost of an SMR, it doesn't fit in. But the question is, and to be honest, I'm not an expert on nuclear waste issues, doesn't do does burning the waste in a molten salt reactor, in fact, reduce the total volume or radioactivity of the waste. In other words, you get the same amount of radioactivity just in a in a smaller volume.
David:That's been an argument here about some of the designs like Nu Scale and the other SMR designs. And there was a paper out of Stanford University, I think, 2 years ago that said that the SMRs would have the same or even higher amounts of nuclear waste. So you gotta look at the numbers carefully with experts. And, again, I'm not an expert on the radioactivity of nuclear waste.
Markham:Could you maybe give a tell us a story of NuScale briefly, because that I remember the the headlines at the time saying that this was probably the end of SMRs in in the United States. And so maybe give us a a bit of an overview.
David:Well, the the history of NuScale can be summed up in 1 phrase. The project hasn't lived up to the hype. They were going to, I mean, originally have reactors in place, if not today, but soon in the future. What tripped them up well, 2 things. 1 is they were trying to have their first project be out in Utah in the US, and the customers were gonna be a bunch of small cities.
David:And each of those cities had a power board, and they had public meetings. So when the estimated cost of the New Scale project, went up, the public could learn about it, and people like me could write about it. And that scared potential customers because they were seeing that they were being asked to write a blank check for a project for which there was no fixed cost. There was no cost cap. And the history of nuclear is whatever you think it's gonna cost, it's gonna cost more.
Markham:Are are we talking, in the order of magnitude of, 2 to 3 times more? Or
David:Well, the NuScale reactor, its cost was 5, 300, 000, 000, I believe, in 2022 or 2021. Year, year and a half later, it was 9, 300, 000, 000. And this was what you've gotta keep in perspective is this was an estimated cost for by until the end of 2030. So there's plenty of time for the cost to continue going up.
Markham:I think 1 of the things that we've, discovered in North America, and it's certainly the case in Canada, we've got we've had a couple of oil and gas pipelines that, you know, the the cost for the Trans Mountain expansion pipeline went up from about $5, 000, 000, 000. And I think at the end of the by the time they got it finished, it was $35, 000, 000, 000. And the Coastal Gas Link, if I remember correctly, was originally 8, 000, 000, 000 and wound up costing 30, 000, 000, 000. So it seems like these days, China, you know, which doesn't have the issues around public opinion and permitting and and so on, seems to be able to build nuclear reactors on budgeted on time and everybody else not so much.
David:No. The Chinese had built 4 reactors similar in design to those at Vogtle, and it took just about as long to build them in China as it did in Georgia. And they were estimated to be built in roughly 4, 5 years, and it took them double that. So the Chinese didn't build it faster. As to doing it cheaper, who knows?
David:The Chinese give significant subsidies to nuclear. And when you hear people throwing around numbers for how much it cost to build a nuclear reactor in China, We don't know if that includes the subsidies. We don't know if it includes all of the subsidies. It includes some. So it's really like a black box in terms of what it actually cost to build reactors in China.
David:Because they just decide to do it, and then they do it. It's not if you look at our latest report, the 1, you mentioned before, SMR is still too expensive. An a new Chinese SMR that just came online, cost, what was it, 3 to 4 times what they estimated. So they don't do it they've run into the same problems as the rest of the world.
Markham:I've got a German study. I think it was done earlier this year or late last year, and it estimates that the Chinese are subsidizing their energy technology manufacturing, which presumably is, also includes nuclear, 4 to 9 times more than the West does depending on the technology and and who what you're comparing it to. So the, I mean, the this issue of China, sub subsidizing directly with money and then with many other ways, regulatory and and otherwise, the overcapacity of clean energy manufacturing, I I think, is becoming a big issue in in the west. And so, fair enough that, you point that out.
David:They do it for I'm sure they do similar subsidies for the nuclear.
Markham:Yeah. Right. Well, what about like, small modular reactors, my understanding is that the primary benefit, you know, the way they would get to lower cost is that they would be bought be built in factories, in modules. And so instead of custom fabbing everything on-site and custom engineering every different project, you you would have you know, basically, you'd churn them out in factories, assemble them on-site, and it would be less expensive. It'd be quicker, quicker to manufacture, quicker to build.
Markham:And any chance that the SMRs are living up to that hype?
David:We've not seen any. And let me if I might, tell you a little story about building reactors in factories. When Westinghouse was marketing the reactor design that ultimately was built at at Vogtle in Georgia and the southeast in US, 1 of their claims marketing claims was modular reactors built in factories will lead to much lower cost. That was at a time when they were estimating that the cost of building Vogtle would be $14, 000, 000, 000 Well, the final cost of Vogtle is somewhere north of 36, 000, 000, 000. I've seen people say I mean, let me say it this way.
David:My estimate estimate for Vogtle is roughly 36, $37, 000, 000, 000 So module building a modular reactor in a factory hasn't worked out so well for Vogtle. Now maybe it'll work out better for, some of the reactors like the BWRX 300 that are being, marketed, by Ontario Power and GE Hitachi. We'll have to see. But anyone who want any company, any any province that wants to build 1 has to recognize the risk they're taking. There's no sure thing.
David:If you look, you know, some of the proponents of of building reactors and factories say, look look at solar. Price of solar has gone down dramatically over the last decade. They built but the the number of solar cells is astronomical that's gone into the into that's been manufactured around the world and put into service, same with wind, in wind turbines. The number of reactors that are gonna be built is not gonna be astronomical. Will there be some cost savings if you build 20 at the same time?
David:Maybe. But I don't think it's gonna be anywhere near what proponents claim.
Markham:Yeah. That was a point that was made yesterday in my interview with Brendan Frank of Clean Prosperity, is that the learning curves for, SMRs, if there are any, in fact, will not be anywhere near the same as batteries and and wind and solar and and other,
David:There's no reason to expect that there would be any, as dramatic as wind, solar, and and, battery storage. You're not building enough.
Markham:Here's my issue with SMRs in in Canada, David. The more often than not, I think they're being used as a stalling tactic, because there there's a lot of pressure on, let's say, the oil sands in Alberta. Now that is the biggest industrial project in Canada. It might it might even be in North America. It is huge, 100 of 1, 000, 000, 000 of dollars and and very greenhouse gas intensively.
Markham:84 megatons a year was the last, for 2022, and it'll probably it might even hit a 100 by the time, this expansion of supply is finished. Okay. So the federal government is pressuring oil sands producers to to meet climate targets, and they're saying, look. We don't wanna do that. I mean, you know, we we'll use carbon capture and storage if you pay for it, basically, but we would really prefer to wait until, these SMRs are available because they do 2 things.
Markham:1 is they'll produce electricity, and we can electrify our operations to the extent that that's possible, but, also, they produce heat. And that's a big deal in the oil sands because, you know, bitumen is basically like peanut butter. You've gotta heat it up to make it flow. And right now, they're burning natural gas in boilers to make steam, and then steam gets pumped into the underground or it gets used in the in the processing of of mined bitumen. And if you could make, emission free heat and get electricity at the same time to the oil sands companies, that just seems like, you know, that's, utopia.
Markham:That's the best case scenario. And so they keep delay, delay, delay, but you get to the heart of the issue, which is risk. What happens if we agree to the that, though, that strategy, and then 2030 5 comes and SMRs aren't ready, and 2040 comes and SMRs aren't ready. And then how do you then decarbonize, the oil sands in a timely fashion with technology that you haven't bothered to develop because you were waiting for some the SMRs to be ready.
David:Yeah. Good argument. Also, what happens if you choose a design that has some flaw in it. I'm not talking about a that's gonna cause it to blow up or melt down. Just a floor that won't let it operate as efficiently as you would hope or if you're a promoter of nuclear.
David:Can be expensive to fix 20 or 30 reactors. The world's we've been through that with steam generator tubes, with reactor coolant piping and boiling water reactors, and it's expensive to to fix the flaws. You're certainly not gonna take the reactor apart and send it back to the factory after it's been radiated irradiated. So you've gotta factor that that in. It's it's it's all hype, and it's people thinking that they can the shiny object.
Markham:Let me give you the argument that I gave to Brandon yesterday, which is and I likened it to hydrogen 2 years ago because there's been a lot of hype around what hydrogen can do, and we've we've, you know, there's been talk of exporting blue hydrogen from Alberta to the West Coast and shipping it to Japan and specially designed ships and all sorts of And the, the renewables, proponents said, look. This is a waste of time and money. We we could take that money and put it towards, you know, wind and solar and reengineering power grids and the other things that need to be done. My argument at the time was that, we should explore it. I mean, we don't we don't know what the the the viable use cases are until we go out and explore those use cases or, you know, investigate them.
Markham:And some of them, you know, like l in in Alberta, Edmonton, the city of Edmonton, and the county of Strathcona, did a joint project where they got hydrogen buses and they the 2 of them, and the argument was that, it's too cold. Like, Edmonton last year, believe it or not, minus 57, David. I mean, it was that's a very unusual, But, nevertheless, you know, they have minus 20 and minus 30 all the time in the winter, which is wreaks havoc with with buses. But hydrogen, the argument went, would would be able to function in that in that kind of weather. Well, they gave up on it.
Markham:It just it didn't it didn't work out. Okay. Well, now we know that even hydrogen buses in a cold climate, are not up to not up to the task. Okay. That's a use case we can strike off off the list because we've investigated.
Markham:There's another 1 going on with long haul, freight trucking. In a year or 2, we'll know whether that's viable. And I I think that's a good use of public resources. I'm okay with that.
David:So am I. I agree totally.
Markham:So the question then becomes I said, should we be doing the same with nuclear? You know, invest can we make these these things work? Can we are there use cases for them that justify the cost and some of the the other problems? And or is it a a different animal altogether?
David:I don't think it's a different animal at all. I think that the strategy I would propose, which I think is essentially what you're proposing, is you do the cheap stuff first. You do this the the stuff, and I mean technologies, wind, solar, battery storage, that we know works and we already know is cheaper, we do that first. And we do research on the reactors. Now I've seen various numbers thrown around, but, generally, there's agreement that we can get somewhere 70, 80, maybe 90% of the way to net 0 without nuclear.
David:Alright. Let's do research. Keep doing research. I'd even be in favor of the countries of the world getting the other to build 1, BWRX 300. See if it works.
David:See how expensive it is. See what lessons you've learned. But at the same time, do all these cheaper things that give you a bang for the buck in 2 years or 3 years. So you're now spending huge amounts of money and putting off the cheap things that we know will work. That's the strategy I support, but that's not what the world's doing.
David:The world is running around. It's like the seventies well, sixties seventies in the US with nuclear. It's, wow. We gotta build these nuclear power plants, and they're putting all this money or wanting to put money into, to nuclear. I should say that utilities in the US have not shown dramatic interest or much interest in spending money now.
David:Private investors are don't show much interest in spending their putting their money on the line. So I think it'll have to be governments. It'll be the provinces up in Canada and the federal government in Canada, the federal government in the US. They'll build some. But even as rich as the governments of Canada and US are, they can't I mean, how many Vogels can can a country build?
David:Right.
Markham:How many and and have the taxpayer pay for them.
David:And have the taxpayer you see, if I might I thought you were gonna go here. 1 of the things that concerns me is that Ontario Power neither Ontario Power or GE Hitachi admits to what the cost of the BWRX 300 could be. They're trying to keep it secret from the taxpayers and from ratepayers. That's because people's eyes will bulge out of their head when they see the cost go up. That's the lesson that the nuclear industry has taken from NuScale.
David:It's that don't tell the public. Don't let them know what this what these projects are gonna cost. Because if you do, they're not gonna wanna sign a blank check to pay from.
Markham:Yeah. This is a a point that, professor Mark Winfield of York University has made in a number of interviews that I've done with him. Because in addition to building the SMR, Ontario, OP and G, I think it's called, is is is retrofitting, refurbishing, its other reactors. 3 there are 3 of them. At Darling Connector.
Markham:Locations, number of number of reactions reactors. And and the cost, is like is high already, I think, in the 10 to $15, 000, 000, 000 per location. And and he says, well, you know, what are the odds that it's gonna stay there? You know, it's it's almost certainly low. Yeah.
Markham:Very low. So it's good. And then, you know, then the the Ontario government is going to have to underwrite a lot of that, and and it it just is looks like a disaster in in the making, financial disaster, in the making. But once the decision's been made, we won't know that number. We won't know what's going on, presumably, until the project is done, by which time it's too late.
Markham:And then we just
David:The only way the only way we could figure out for our recent report an estimated cost for the BWRX 300 was because the head of SaskPower said that building 3 or 4 of them would cost somewhere between $12, 200, 000, 000, 000 Canadian dollars. There's no no there g Hitachi have have learned not to put out any numbers. And the same story in the US, the same story anywhere in the world, pretty much.
Markham:See, SaaS power is not that in very many ways, it's very different than than Alberta in that, it's got a Crown Corporation that is a utility monopoly, and it, had a lot of coal, which it's not got rid of yet, but is is slow it's switching over to gas, has been very resistant to renewables. And a lot of this comes down to and I've had a chance to talk to grid operators, you know, grid planners who are working on this, and that is that they let's take Alberta as the example. They let's take Alberta as the example. Alberta now now has 14% wind and solar. So intermittent, inverter based resources.
Markham:And, of course, that takes that rotating mass of coal and gas out off the grid, which we use to balance it and and to keep the frequency where it needs to be. And so their frequency is dropped, And they're worried about frequency modulation and unreliability in grid outages. They've almost had a few, last winter, and they think that that'll get worse as time goes on, plus the low, low cost of of of renewables plays havoc with the economics of the utilities that are doing gas because they have a wholesale market much like the you know, a lot of your state, markets. And and so it's all of that uncertainty because, you know, you've been in this business a long time, David. Grid operators, planners, and utilities are cautious, conservative animals.
Markham:They don't like change. But if you're going to I think this is a point that IEA has made many times. If you're going to put a high percentage of renewables in your grid, the grid has to change. It just has to. That's the only way you could make it work and make it reliable and and low and low cost.
Markham:So if the old style conservative grid planners don't wanna do that, they resist, then incorporating a lot of renewables gets very, very difficult. It gets to be a big political issue as it has become in Alberta.
David:Sure. They throw the scare it's a scare tactic. The lights will go off. You know, the sun doesn't shine every day. The wind doesn't blow.
David:But there are there are ways to upgrade the grid, reconductor the lines to carry more power, put battery storage not out at some power plant that's 200 miles from the city, but put it close into the city because it doesn't pose any threat health or safety threat. So there are ways to redo the grid without spending tens or 100 of 1, 000, 000, 000 of dollars on either SMRs or more large reactors like Vogtle. And I I found utility engineers and grid operators. If they want to do something, they're extremely resourceful.
Markham:Yes. They are.
David:If they don't wanna do something, they're scratching their heads and wondering how it can be done. Look at the US. 1 of the main independent system operators in the US is called SPP, Southwest Power Pool. In fact, it's barely in the southwest. It's in the middle of the country in the heart of the wind.
David:Years ago and not so long ago, they were concerned. Well, how what how are we gonna operate if, we have 30% of our power coming from, wind? Now there are days when it's way over 50, even higher. I can recall, press releases from, SVP, it's called, touting, I think 80, 90% of its power at certain times coming from wind. Sure.
David:That's the that's the future of minimizing the it's not even a threat. The disaster that's upon us from climate change, That's the path to help their the world survive climatically?
Markham:Here at Energy Media, we actually, while while we acknowledge climate change and talk about greenhouse gas emissions, the focus of our energy journalism is actually the energy transition. The transition from fossil fuels over to electric economies, electric transportation, and so on as as an it's a as a it's better technology. It's lower cost technology, than the replacement. And we you know, energy transitions have been around for a long time, and doctor Vaclav Smil has been the the guru. So we know we know a lot about energy transitions.
Markham:So the argument 1 of the things we don't we don't spend enough time on is talking about EA Rogers adoption bell curve. And we all know the terms, the the innovators, the early adopters, the early majority adopters, late majority, so on. What we don't talk about is the folks at the other end, the right side of that bell curve, which are the laggards. And particularly in the power sector, you find jurisdictions for whatever reason, that are laggards. And it looks like a lot of the folks, the you know, that are touting SMRs, the utilities that are touting SMRs, the provincial governments, and even the state governments down in the US are essentially technology laggards.
Markham:They're worried about it. They're conservative. They're they they fear change. They don't wanna reengineer their grids on and on and on, and and so nuclear becomes like their, you know, their talisman. They hold it up and go, woah.
Markham:This is our this is our salvation here. So, anyway, that that's my argument.
David:I think it's a good 1. You leave out the fact that in some of those states, and I imagine provinces, the political power of the current oil and gas, nuclear and coal industries is very powerful, and they have sway in what what happens. And their goal is to maintain their profitability over the long term.
Markham:Yeah. Well, it'll come as no surprise to you that Alberta, all by its is a huge energy, oil and gas producer. It produces, 4, 000, 000 barrels of of oil a day, which is more than ExxonMobil does all around the world, and it produces 12, 000, 000, 000 cubic feet of gas a day, most of which much of which, I should say, goes down to the US as does its oil export.
David:Yes. I I've spent time looking at, the Boundary Dam coal plant and carbon capture
Markham:and Saskatchewan. Yeah.
David:Bell Quest project in Alberta.
Markham:Yes. Well, carbon capture and storage, and I grist for yet another conversation. Look, this has been this has been fascinating, and, you provided some insights, that I wasn't aware of. So thank you very much for this, and, we'll keep looking for AIFA's reports. Have you back, you know, at a future date.
David:I look forward to it. Have a good day.