Nuclear power plants represent an important zero emissions ‘baseload’ power source. The problem is that current generation plants take a long, long time to build. They can also be formidably expensive.

Construction of the 3.2 gigawatt (GW) Hinkley Point C nuclear power plant in England, for example, will cost between £21.5bn ($41.5bn) and £22.5bn, according to the latest figures.

However, don’t fall into the trap of thinking that all large-scale nuclear power plants are excessively costly, says Mike Young, managing director at uranium play Vimy Resources (ASX:VMY).

“Korea Hydro Nuclear Power are building four 1.4GW (5.6 GWe) units in the United Arab Emirates for $US25 billion,” he told Stockhead.

“That is just over $US5 billion per gigawatt. You simply cannot do that with renewables when you correct for capacity factor; that is, generation 24 hours a day, 365 days a year.”

When fully commissioned, this plant is expected to deliver up to 25 per cent of the UAE’s power needs; a nation of almost 10 million people, and the 30th biggest economy in the world.

Still, in Western countries nuclear power faces strong environmental opposition, so new builds are mostly happening in places like the UAE, Eastern Europe and China.

READ: China will drive ‘marginal’ global increase in nuclear capacity over next two decades

That’s probably why the buzz around cheaper, scalable and safe small modular reactors (SMRs) is growing.

“I think a lot of people have cottoned on to SMRs as a way of championing nuclear but foregoing an association with the ‘old’ technology,” Young says.

“A way of saving face, in the face of saving the planet.”


What is so great about SMRs?

Factory built SMRs would be manufactured in easy-to-transport ‘modules’ and then brought to site for assembly.

Like putting together a complex jigsaw puzzle.

SMR’s — used in ships and submarines for many years — will ultimately be much cheaper than gigawatt-scale nuclear power plants precisely because they are modular and easily scalable, Young says.

“Also, the remote applications are endless: think desalination in the Pilbara, hydrogen production for de-carbonised steel production, and mine site applications,” he says.

“These things can be made as small as 40MW (megawatts) up to 200MW.”

One of the real advantages is that they can be positioned at existing coal fired power stations, so all of the electrical retic is already in place, Young says.

Vimy chief nuclear officer Julian Tapp adds that these modular plants are far safer to run than their larger counterparts.

“One of the safety issues associated with nuclear reactors is their ability to dissipate heat quickly especially if something goes wrong – hence a meltdown,” he says.

“This is nowhere near the same size of problem as the scale shrinks and very small units can often be simply cooled using simple air circulation.

“This has add-on benefits as they cannot affect large areas when things go wrong (if they can’t meltdown) which means there are many more potential locations where they can be sited — as Mike alluded to, ‘shutting down coal plants’ being one.”

 READ: Vimy Resources’ Mike Young on the near-term catalysts that could set the stock alight


But they need to be commercialised first

Right now, there is a number of well-funded groups aiming to bring their own SMRs to market over the next decade or so.

The most advanced is US-based NuScale Power, whose first modular unit is expected to enter service in the US in 2026, with a further 11 in 2027.

NuScale’s first customer, the Utah Associated Municipal Power Systems, is planning a 12-module SMR plant in Idaho slated for operation by the mid-2020s.

NuScale says the estimated construction cost for its first 684MW plant will be about $US3bn.

NuScale is currently completing the final phases of the US Nuclear Regulatory Commission’s all-important design certification application (DCA) review process for its 12-module SMR power plant – the first SMR to do so.

The NRC on track to complete final review of NuScale’s design by September 2020.

Then out of left field comes luxury carmaker Rolls-Royce, which is leading a consortium of companies — ARUP, Laing O’Rourke, Nuvia and Wood Group — in what it calls “the UK’s largest-ever national engineering collaboration”.

A few years ago, it estimated that the global SMR market could be worth between £250bn and £400bn by 2035.

In early February, the $13bn market cap company told BBC Radio 4 that it plans to build, install, and operate up to 15 mini nuclear reactors in Britain, with the first set to go online in nine years.

They’ll look something like this:

Rolls-Royce believes its compact SMR design will provide 440MW of power for +60 years at a cost of just £1.8bn each, depending on the configuration.

They will also generate electricity that is at least as cheap (per megawatt) as power generated by today’s large-scale reactors – “potentially even cheaper when SMRs go into volume production”.

Also, GE Hitachi Nuclear Energy (GEH) — an alliance between General Electric and Hitachi — and electricity conglomerate ČEZ are now assessing the economic and technical feasibility of constructing a SMR in the Czech Republic.

ČEZ operates two nuclear power plants in the Czech Republic, which is planning to substitute its aging coal plants with new nuclear builds and renewables.

GEH believes that its 300MW SMR, called BWRX-300, can become cost-competitive with power generation from combined cycle gas plants and renewable energy platforms.


Will SMRs move the needle on uranium demand?

In the medium to long term — yes, they will.

“The outlook for uranium demand in the US [the world’s largest consumer] is pretty flat currently because nobody believes that anyone will build a new GW plant in the US anytime soon,” Tapp says.

“But if the NuScale deployment is successful — and potentially others — then the whole outlook changes and the US will probably see growth from 2030 onwards.

“This would then span out to other countries as commitments to curtail carbon emissions ramp up and we get closer to 2050 zero net emissions aspirations.

“Nuclear [will] prove to be cost effective, as well as being the technology with the lowest carbon emissions on a lifecycle basis and the only one that is 100 per cent reliable (dispatchable when required).”

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