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The first nuclear power project in the U.S. featuring a small modular reactor has been canceled after a 53% surge in costs.
The company behind it, NuScale Power Corp., was building the reactor in partnership with the Utah Associated Municipal Power Systems.
Initially, the cost of the electricity produced in the small modular reactor was calculated at $58 per megawatt-hour but over time this rose by 52% to $89 per megawatt-hour, according to energy NGO the Institute for Energy Economics and Financial Analysis, as quoted by Bloomberg.
The news outlet earlier this year reported that soaring interest rates and inflation were swelling the price tag of Nuscale Power’s project and other small modular reactor projects.
“With higher interest rates to deal with and inflation pushing up the cost of steel, copper wire, and just about everything else that goes into building an SMR, we know that even the most promising projects are having to tell their investors and buyers that prices have risen substantially,” the director general of the International Atomic Energy Agency, Rafael Grossi said in June.
The appeal of small modular reactors lies in their faster construction and installation, which makes the final price tag of a new power plant much lower than traditional reactors. As a result, the electricity generated from such reactors is also cheaper.
Per Bloomberg, in June U.S. nuclear power cost an average of $373 per megawatt-hour, versus $50 for onshore wind and $60 for solar, according to BloombergNEF estimates although these probably excluded the cost of maintaining baseload backup from power sources including said nuclear.
Compared to the above-average for nuclear, NuScale’s small modular reactor appears to have been quite competitive. Yet the company failed to secure enough commitments from wholesale electricity clients of the Utah Associated Municipal Power Systems.
“The customer made it clear we needed to reach 80%[in purchase commitments], and that was just not achievable,” NuScale CEO John Hopkins said this week, as quoted by Bloomberg. “Once you’re on a dead horse, you dismount quickly. That’s where we are here.”
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com