ML21225A712
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| Person / Time | |
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| Issue date: | 03/11/2021 |
| From: | NRC/EDO |
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| NRC-1420 | |
| Download: ML21225A712 (66) | |
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Official Transcript of Proceedings NUCLEAR REGULATORY COMMISSION
Title:
33rd Regulatory Information Conference Technical Session - TH25 Docket Number: (n/a)
Location: teleconference Date: Thursday, March 11, 2021 Work Order No.: NRC-1420 Pages 1-61 NEAL R. GROSS AND CO., INC.
Court Reporters and Transcribers 1323 Rhode Island Avenue, N.W.
Washington, D.C. 20005 (202) 234-4433
1 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
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33RD REGULATORY INFORMATION CONFERENCE (RIC)
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TECHNICAL SESSION - TH25 ECONOMICS OF NUCLEAR POWER AND IMPACTS ON THE FUTURE OF NRC
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THURSDAY, MARCH 11, 2021
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The RIC session convened via Video Teleconference, at 1:30 p.m. EST, Darrell Roberts, OEDO, presiding.
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2 PRESENT:
DARRELL ROBERTS, Deputy Executive Director for Materials, Waste, Research, State, Tribal, Compliance, Administration and Human Capital Programs, OEDO/NRC JOHN PARSONS, Associate Director, Center for Energy and Environmental Policy Research, Sloan School of Management, Massachusetts Institute of Technology MATTHEW CROZAT, Senior Director, Strategy and Policy Development, Nuclear Energy Institute JACKIE KEMPFER, Senior Policy Advisor, Climate and Energy Program, Third Way NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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3 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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4 CONTENTS Introductory Remarks Darrell Roberts, Deputy Executive Director for Materials, Waste, Research, State, Tribal, Compliance, Administration, and Human Capital Programs, OEDO/NRC.......................4, 39 Speakers John Parsons, Associate Director, Center for Energy and Environmental Policy Research, Sloan School of Management, Massachusetts Institute of Technology................................8 Jackie Kempfer, Senior Policy Advisor, Climate and Energy Program, Third Way.......16 Matthew Crozat, Senior Director, Strategy and Policy Development, Nuclear Energy Institute....................28 Questions and Answers.............................40 Closing Comments Darrell Roberts, Deputy Executive Director for Materials, Waste, Research, State, Tribal, Compliance, Administration, and Human Capital NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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5 Programs, OEDO/NRC..........................61 P R O C E E D I N G S 1:31 p.m.
MR. ROBERTS: Good afternoon. I am Darrell Roberts, Deputy Executive Director for Materials, Waste, Research, States, Tribal, Compliance, Administration, and Human Capital Programs in the NRC's Office of the Executive Director for Operations.
I am very happy to serve as the Chair for this technical session on the economics of nuclear power and impacts on the future of NRC.
I am pleased to be joined by some very knowledgeable panelists in the field of nuclear power economics that will help break down some of the biggest challenges and opportunities for the future of nuclear power in the United States.
I'm also pleased to note that, at last check, we had about 1200 registrants for this session.
So, there's obviously a lot of interest in this topic.
Now many of you, especially past attendees at the RIC, will probably recognize that nuclear power economics is not a topic normally covered in this forum. So, let me be very clear that NRC's focus is NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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6 on safety, not on economics or profitability of the industry. At NRC, we do not promote nuclear power.
We strive to be an independent regulator to serve the American people towards our mission of licensing and regulating the nation's civilian use of radioactive materials to provide reasonable assurance of adequate protection of the public's health and safety, and to promote the common defense and security, and to protect the environment.
So, why delve into the broad topic of nuclear power economics at the RIC? Well, for one, we recognize that, while safety issues impact the future of the industry, the business and economic issues do have an impact. So, in order to efficiently satisfy our mission, it is important for NRC to develop a better understanding of what the future looks like, so that we can prepare to do our part to ensure adequate safety.
The current nuclear energy landscape looks very different than how it looked just 10 to 15 years ago. NRC went from having applications for 28 new reactors during the supposed renaissance of the 2007-to-2010 timeframe to now having just the two new Vogtle units, Units 3 and 4, which are scheduled to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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7 come online later this year and in 2022.
Large quantities of inexpensive shale natural gas became available, and falling natural gas prices have put more economic pressure on nuclear power. We also live in a time where more and more states have increasingly aggressive decarbonization goals, and nuclear power serves as a critical component of the energy mix if states will be successful in hitting those targets.
And while prospects are challenging for large light water reactors, as evidenced by premature retirements of those reactors, NRC is also seeing one of the most diverse sets of technologies in the application and pre-application pipeline, including various non-light water reactor technologies and microreactors. Will these technologies shape the future of the nuclear industry, and therefore, the future of the NRC? And will improvements to artificial intelligence and machine learning have the potential to change the industry forces?
To dig into these and many other issues deeper, I welcome our panelists John Parsons, Jackie Kempfer, and Matthew Crozat, who I will now introduce.
We will first hear from John Parsons. Dr.
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8 Parsons is a senior lecturer at the Sloan School of Management at the Massachusetts Institute of Technology. He is currently an Associate Director of MIT's Center for Energy and Environmental Policy Research, and a Co-Director of the MIT Energy Initiative's Low Carbon Energy Center, focused on advanced nuclear generation. Dr. Parsons was a Co-Director of the recent MIT study on "The Future of Nuclear Energy in a Carbon-Constrained World".
Next, we will hear from Jackie Kempfer.
Ms. Kempfer is a Senior Policy Advisor with Third Way's Climate and Energy Program and a Senior Fellow at the Atlantic Council. She designs and advocates for policies that will drive innovation and development of clean energy technologies with a focus on advanced reactors. She also advocates for the continued safe operation of the United States existing fleet of nuclear reactors.
And finally, we will hear from Matthew Crozat. Mr. Crozat is the Senior Director for Strategy and Policy Development at the Nuclear Energy Institute. He is responsible for directing NEI efforts to identify policy initiatives that will improve the economic viability of operating plants and NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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9 enhance prospects for new plant construction. He examines market operations and proposed policies to assess their impact on nuclear energy, and also, oversees analyses of nuclear industry costs, performance, and trends. Before joining NEI in 2015, he was a Senior Policy Advisor in the United States Department of Energy's Office of Nuclear Energy.
Thank you in advance to John, Jackie, and Matthew for joining us today and for sharing your perspectives and your research and your analysis.
After our speakers complete their talks, we will move into the question-and-answer portion of our session, and we invite you to submit questions through the RIC website. And we will try to cover as many of those questions as we can during our allotted time.
And as a reminder, the views expressed by our panelists are their own. They do not represent in any way the views of the Nuclear Regulatory Commission.
Again, thank you all for joining us, and I hope you enjoy this session.
And now, we will hear from our first speaker, Dr. John Parsons.
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10 And I believe you might be muted, John.
MR. PARSONS: Yes, indeed.
Thank you very much for that introduction.
It's a great pleasure to be here at this RIC, and I'm very much looking forward to the conversation with the other panelists and with the audience's questions.
So, as Darrell mentioned, I participated in the MIT "Future of Nuclear Energy" study that was released a couple of years back. And what I am going to do today is really just take a couple of perspectives that I got out of my experience in working on that project to frame how I think it's important to approach the economic problems facing nuclear and conversations about the economics of nuclear.
So, I have said I have two tips to give you at the beginning of this conversation. And we can advance to the first slide, to the next slide.
Yes, the first tip is that cognitive dissonance is your friend. I put down here on this slide, I found myself in many conversations where there were so many different types of nuclear -- as Darrell indicated, the existing plants, new builds of large light water reactors, advanced reactors -- and NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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11 too many people try to make broad generalizations applying to all of them.
If go to the next slide, one example is this slide says both of these things are true: some reactors are prohibitively expensive while others are crazy cheap.
On the lefthand side, I have that picture of the VC Summer Plant in South Carolina that's now mothballed because of the cost overruns and the delays in construction.
On the righthand side, I have one of the two existing plants still operating in New England, the Millstone, Connecticut plant, where if we, the State of Connecticut and New England in general, are going to meet our carbon targets, keeping that plant open is the cheapest step towards maintaining any target you want to achieve.
So, I think you've got to really be ready to look at the particular situation you're facing and the differences between these kinds of situations, and not overgeneralize.
Will you advance the slide?
I think the same thing is true looking towards the future. I've got here two more NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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12 propositions that sound contradictory, but I think are true together. I called it, "It makes no economic sense to build a reactor." But what I mean by that is, if you're trying to decide the next unit of power that you want to put on a system, and the new unit of low-carbon power that you want to put on a system, renewables have become crazy cheap. Most states have not put on anywhere near the amount of renewables that their systems will need, and encouraging installations of new renewables is the next step you want to take in your power system.
But we're not trying to just take the next step. We're trying to go to net zero. And, you know, our study, when we looked at how we would do that, we looked at different regions of the United States and we looked at other countries as well. I put up a chart here of New England, one region that we studied.
And as we drive the emissions down in New England, what the chart is saying is, if you keep emissions where they are, there's no reason to build nuclear power plants in New England. They are too expensive.
But if you want to get to a low-carbon system, you will need a little bit of nuclear power in the mix in order to fill certain roles of providing NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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13 generation, dispatchable generation, when renewable resources are not available. And the lowest-cost resource mix for New England includes some nuclear.
And if you're going to get there -- some of us want to get there by 2035; some want to get there by 2050 --
but any of those paths that you want to get there need you thinking about it now. Even if it's not the next piece of equipment that you're going to install, if you truly have a plan to bring yourself to net zero, you're going to be including nuclear.
So, those two things are both true. It's not the cheapest form under the current situation, but it is a contribution to a cheap portfolio of power.
Can we advance it?
And now, I also think it's very important not to become -- you know, when you do kind of policy analysis like some of us do, it can sound like you're forecasting future and you're making pronouncements of how things are. But, as I put on this slide, the future is what we make it. We have choices to change how things are.
So, clearly, in the United States and in Western Europe, we have had a lot of new nuclear build projects that have had large cost overruns and NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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14 construction delays. We have to confront that fact and accept it as a reality, but we have to confront it because we can fix it. And the study that we produced, and lots of people at this conference, have been talking about various technical ways to change things. So, I just wanted to avoid falling into the trap of pronouncing how things are forever and always.
Next slide.
Moving on to the second tip, I want to make a distinction about bad markets and bad politics, especially these days where many nuclear plants are having difficulties in making profits and they're challenged to stay open. And also, all of these plans, which Darrell referenced, for building new nuclear plants have been on the shelf. It's quite popular to allege that the markets are the problem.
And I think it's really a case that the politics are the problem. And I'm going to explain and give a couple of examples how I mean that.
But, first of all, I think a lot of people who've forgotten how things were when we were talking about that nuclear renaissance mentioned -- we were talking about that nuclear renaissance, actually, in a world where we had liberalized electricity markets.
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15 If we can go to the next slide?
I have a picture here of New York's power system from 1992 to 2017. This is the mix of generation in their power system. You can see on the bottom right the dark black is coal -- excuse me --
the bottom left, the dark black is coal. And as you move to the right to 2017, coal is disappearing; oil-fired generation is disappearing.
That black line with the marks on it is carbon emissions. Between 1990 and 2017, New York cut its carbon emissions by 50 percent. How did it do that? Of course, eliminating coal was one of the things. You can also see the light gray there is expanded natural gas.
But what people forget is that orange, which is expanded nuclear during that period of time.
Nuclear was expanded by making investments in better operations and, also, in uprates. New York added 500 megawatts, one large power plant, in capacity to its existing nuclear plants. And the nuclear expansion in that period is responsible for more than one-half of all of the drops in emissions. That happened in a liberalized wholesale electricity market when people thought they could count on the prices in the market.
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16 But we know that things have changed. So, let's talk about what's changed. Can we advance the slide?
Nuclear's revenues problems, as Darrell mentioned at the beginning, stiff competition from natural gas generation. All well and good if you're in a competitive world and there's a cheaper source of fuel, but we know that natural gas has carbon emissions. So, if we're going to allow gas to compete without penalty for carbon emissions, then we're going to give up dealing with climate change.
There's also lots of support for renewables because they are a carbon-free resource, but that excludes nuclear, or had until recently. And so, the market is not providing revenues because policymakers chose to provide revenues outside the market, the tax incentives and other supports for renewables, and then, the market was left to be for, so to speak, the residual emissions. So, the market is not providing revenue for capacity to be installed.
As soon as New York decided to pass its zero emission credits, suddenly power plants, nuclear plants that were otherwise going to close, decided to be kept open. And you can see that globally. It's NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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17 countries making decisions about whether they want nuclear or not less than it is the market making decisions about whether we want nuclear or not.
So, finally, I'll just quickly close. We can advance the slide. One more, please. I'm just going to close off here.
The future is coming at us fast. These zero emission targets that people are advancing, that's basically tomorrow. But, also, as the rest of this conference has discussed, there are enormous innovations going on in nuclear.
So, you have this combination of things happening at the same time. The drive to go to zero emissions is going to force the electricity system to change dramatically, and it's going to force the electricity market and policies to change dramatically. And we have to figure out how to structure that future. And then, simultaneously, new technologies are coming along, and we have to figure out how to structure the market and the policies to fit and enable those technologies.
I'll leave it there. Thank you very much for having me.
MR. ROBERTS: Thank you, John Parsons.
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18 And now, we will go to our next speaker, Jackie Kempfer.
Jackie?
MS. KEMPFER: Great. Thank you so much, Darrell. I am really excited to be here today and talk to everybody.
And I just want to start off by sort of grounding the conversation and expanding the context around the economics of nuclear power within the context of the Biden Administration's ambitious climate agenda.
President Biden's Build Back Better plan sets a goal of achieving net-zero emissions economywide by no later than 2050, and in the power sector by no later than 2035. And having an ambitious plan from the White House to tackle the climate threat is a huge relief, but it doesn't leave much room for error.
And one of the most important things we can do to hit these targets is to keep our existing nuclear power plants online for as long as possible.
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19 helps avoid additional fossil generation that would replace their lost electricity. It also lets us put every last kilowatt hour produced by new renewables projects toward pushing dirty power off the grid, instead of using it to pick up our entire nuclear plants' slack. This is why losing a nuclear plant is such a big, unforced error that puts climate targets in jeopardy.
So, John touched on this a little bit, but why are nuclear plants closing? And this is largely due to the topic of the day that we're discussing here, these economic factors. It has nothing to do with their age or ability to operate. And, in fact, thanks to technological developments that let plants run more efficiently than ever before, the NRC has begun approving license renewals that allow some nuclear plants to continue safely providing carbon-free power for up to 80 years.
As I said, the real concern is fierce competition from low-cost natural gas plants, combined with power markets that don't reward nuclear plants for their climate benefits. Because of these financial challenges, nuclear plants are closing long before they would otherwise need to.
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20 In 2018, Third Way called attention to the uncertain future of America's nuclear power plants.
And at that time, studies projected that between 55 and 66 percent of our existing plants were at risk of premature closure. We knew then, even with the continued growth of renewables, a loss this great would set clean energy progress back by more than 10 years.
Now, with an ambitious goal of reaching net-zero emissions in the power sector by 2035, we simply can't afford to forfeit any more of our existing carbon-free resources. We need to grow the total amount of zero-carbon power we are producing, not shrink it. With nuclear energy contributing over half of our clean power today, keeping these plants running for as long as possible should be the baseline for setting the U.S. on a path to zero emissions.
Now my colleague Matt is going to get into the details of sort of the state of play today a little bit more in a minute, but I just wanted to touch on a few things.
The U.S. has lost 11 reactors since 2013.
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21 York and Illinois to protect those nuclear power plants. But we can't count on states to come to the rescue in time every time, especially when steep competition from cheap natural gas continues to threaten the economic viability of many operating nuclear power plants. In just the last three years, we have seen five nuclear power plants close prematurely. In their last year of operation, these plants collectively provided 30.7 billion kilowatt hours of carbon-free electricity, preventing an estimated 19.5 million tons of carbon each year. The emissions avoided are roughly equivalent to taking 4 million cars off the road. The loss of these carbon-free generators has dealt a serious blow to climate efforts. And that's just the beginning, if we don't find a way to value our biggest source of carbon-free power.
There's an additional five nuclear plants scheduled for early retirement over the next three years, and several more are likely on the horizon.
The sheer amounts of carbon-free electricity we are poised to lose in just a few years is staggering. In some states, the nuclear power plants scheduled for early retirement provide more clean electricity than NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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22 all of their solar and wind installations combined.
In August of 2020, plans were announced to retire two Illinois nuclear power plants, the Byron and Dresden plants, in the fall of 2021, just around the corner. The loss of these two plants alone would cause a 20-million-ton increase in annual CO2 emissions from the electricity sector, sacrificing half of the total progress that the State has made in meeting its commitment to reduce overall GHG emissions by at least 26 to 28 percent by 2025. That's just the damage with the plants that have been officially announced for closer. Two additional Illinois nuclear power plants are considered at risk of shutting down prematurely in the near future.
So, at Third Way, we're calling on Congress to step in. Now the best way to ensure nuclear plants remain economically competitive and able to stay online is to value the carbon-free power they contribute to the grid. A broad federal climate policy such as a clean energy standard would effectively reward nuclear and other low-carbon technologies, but its political feasibility in the immediate future is highly uncertain. Until something like a CES is put in place, we need stop-gap policies NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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23 to keep at-risk nuclear power plants online. With two nuclear power plants in danger of shutting down as early as this year, Congress really can't wait to take action. Now I'm going to run through three potential policy solutions currently under consideration in Congress that they could pursue and go over some pros and cons worth taking into consideration for each one.
The first is a targeted production tax credit for at-risk nuclear power plants. Now Congress could vote to establish a production tax credit to compensate for the emissions-free power provided by nuclear power plants. One nuclear PTC proposal currently under development would allow existing nuclear power plant operators to earn up to a $15-per-megawatt-hour credit. This would ensure that cost-effective, carbon-free generation is preserved, but would also come with measures that ensure plant owners don't get paid more than they need to remain economically viable.
Now a targeted PTC for nuclear power would be among the lowest-cost policy solutions being proposed to reduce emissions. For instance, the cost of applying the PTC to nuclear power plants scheduled for early retirement would be, at most, $1 billion per NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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24 year after adjusting for inflation, and would prevent an estimated 38.5 million tons of carbon per year.
That's less than $30 per metric ton of emissions prevented, much lower than the per-ton cost of most climate policies. Now the con here is that, while a PTC program has been proposed and is being vetted by different congressional offices, the bill has not yet actually been introduced.
The second I want to talk about is the emissions avoidance program and credit option that's included in a bill called the American Nuclear Infrastructure Act, ANIA. ANIA would establish a program to evaluate nuclear power plants projected to cease operations due to economic factors and award financial credits to qualified reactors on a dollar-per-megawatt-hour basis, based on a facility's operating loss over a four-year period. Qualification for financial credits will be dependent on good safety records, and it must be determined that carbon emissions would increase if the reactor ceased operations.
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25 tenuous to base multiyear business decisions on, and may not, ultimately, enable it to keep plants open.
And even if ANIA passes early in 2021, this complex program would likely not be set up or funded through appropriations in time to save the nuclear plants slated to retire before the end of this year.
Finally, I'll talk about the Nuclear Powers America Act, which includes an investment tax credit for nuclear power plants. Now the U.S.
currently has investment tax credits available for geothermal, wind, solar, and combined heat and power facilities. The Nuclear Powers America Act would extend this benefit by providing up to a 30 percent investment tax credit that carbon-free nuclear power facilities could apply toward refueling costs and other qualified capital expenditures. So, a 30 percent ITC would make a big contribution towards investments in upgrades and efficiency improvements, especially for plants that are applying for license extensions.
Now, while both the PTC and the ANIA bill Reverse Auction Program are targeted for at-risk nuclear power plants, the ITC would apply to all nuclear power facilities, even those that don't really NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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26 need it. And an ITC would likely only apply to fuel costs and capital expenditures, not operating costs.
And according to my colleague Matt's organization, the Nuclear Energy Institute, fuel and capital accounts are approximately 40 percent of a nuclear power plant's total generating costs. So, for profitable plants making large capital investments ahead of license renewal, a 30 percent ITC would have a significant economic benefit. But, for struggling plants that are not pursuing large upgrades, an ITC alone would likely not be enough to prevent closure.
Now I wanted to turn briefly to talk about advanced reactors and the impact of these new technologies on the NRC. The developers are working to create reactors for simpler designs, as many of you know -- modular construction, scaling, and other innovations -- to be cost-competitive with fossil fuels. A number of other potential benefits of these new designs also contribute to lower overall costs, including passive safety systems, increased time between refueling, and improved reliability.
Some of the significant cost reductions come from standardized design and modularization of the plants. And according to an EIRP report, the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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27 levelized cost of electricity for these plants can be as low as $37 per megawatt hour, with an average of
$60 per megawatt hour. This is significantly less than the $97 per megawatt hour of traditional nuclear plants and is competitive with other types of energy generation also.
Recently, the U.S. Department of Energy announced the selection of two teams to receive $160 million in initial funding under the new Advanced Reactor Demonstration Program. Both TerraPower and its partner, GE Hitachi, and X-energy were selected for cost-shared awards that will deliver to two licensed and operational advanced reactors within seven years. The U.S. Senate and House both voted to increase the funding for this program and the respective bills for FY 2021.
Now the NRC is making progress modernizing its processes for next-generation reactors. In June, the Commission accepted the first-ever combined license application for a non-light water reactor for the Oklo Aurora microreactor, and in August, NuScale received the first-ever standard design approval from the NRC for its small modular reactor design.
Recently, Third Way, in collaboration with NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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28 the Energy for Growth Hub, released our first-ever map, an analysis projecting the potential global market for advanced reactor technologies. We found that global electricity demand will likely more than double by 2050, with 90 percent of this growth in emerging markets. We also found that many of these same fast-growing, emerging markets are ready, ordinarily ready, for advanced nuclear technology to help meet our future energy demand.
Now many countries from every region and every income group in the world have expressed interest in purchasing advanced nuclear designs sometime in the next 10 to 20 years. The path to commercialization for U.S. designs depends immensely on the important work of the NRC, including international cooperation and licensing harmonization efforts.
Now the NRC continues to move forward with rulemaking that will impact the future of all advanced reactor designs that will navigate the Commission's licensing process. In October of this year, the Commission approved a proposed approach for developing the regulatory infrastructure to support the licensing of advanced nuclear reactors, with a final rule set to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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29 be released in 2024. These are important milestones, as we are expecting to see a steady stream of next-gen designs knocking on NRC's door over the next few years.
Now it is likely that the first designs to navigate the NRC licensing process, including the two demos selected for the ARDP, will opt for either Part 50 or Part 52. So, while we won't see reactors making their way through the new Part 53 process until later this decade, the Commission will certainly have a lot of different things to juggle in the meantime --
leadership and staffing, improving the regulatory framework, and international cooperation or harmonization, to name a few -- to ensure that progress to enhance any opportunities for advanced reactor technologies are part of a clean energy portfolio.
That said, with the right sources, talent, and coordination, there's no reason the NRC can't manage all of these tasks simultaneously. The Commission has proven to be pretty good at juggling when determined to succeed.
With that, I'll stop there, Darrell.
Thank you.
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30 MR. ROBERTS: Thank you, Jackie. I appreciate your remarks.
And now, we will go to our third panelist, Matthew Crozat, Senior Director for Strategy and Policy Development at NEI.
Matthew? Or Matt? Sorry.
MR. CROZAT: They both work. Thanks, Darrell. I appreciate it.
It's a great pleasure to follow my compatriots, John and Jackie, and I kind of want to drill into some of the points they've touched on, but, hopefully, not be overly repetitive.
Let's go to the next slide and dive right in.
We'll start with a foundational observation, which is the nuclear fleet has been operating at a remarkably high level for quite a while now. The capacity factor of the nuclear fleet has been over 90 percent for two decades now, which I think is really kind of remarkable since, as recently as 1989, the capacity factor had never been as high as 65 percent. So, we've seen a pretty significant change in how the fleet is run.
Let's go to the next slide.
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31 Jackie mentioned the total generating cost, and I want to touch on this a little bit, which is the categories of costs that we're trying to cover here: the fuel, which is about 20 percent; the capital investment, about 20 percent, and about 60 percent is operations, often labor.
This isn't everything that goes into deciding if a plant is going to be profitable and will continue investment, but it's the base starting point.
And the reason why I'm bringing it up is because it allows us to make comparisons over time.
Take me to the next slide then.
What we've seen over the last eight years or so has been a significant decline in the cost of operating nuclear plants. About 30 percent since 2012 has been the scale, which leads me to what's been a bit of a mystery from where I sit some days. Which is, if the plants are operating really efficiently and costs have fallen, why is it that so much of my attention is on preventing plants from closing?
Let's go to the next slide.
What we've seen to date is, if I go back to about 2013 or so, we have seen 11 reactors close, which comprises about 8,000 megawatts of capacity, a NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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32 little more, which works out to about 60 or 70 million megawatt hours of electricity on an annual basis, with just the ones that have already closed. I have another eight that have been scheduled for closure, including five this year. Those also add up to another 8,000 or so megawatts and another 60 or 70 thousand or so million megawatt hours.
And my point is that this is a big problem. For comparison, in 2019, all of the utility-scale solar energy was about 70 million megawatt hours. Now the point isn't that solar is small.
Actually, it's always been a pretty big deal. But these closures are also a big deal, and that's, I think, part of what's driving the policy discussion.
And I want to take a look at where they are. I mean, we have a couple of outliers hanging out in California and Florida, but most of the attention here is in the upper Midwest and the Northeast. And I'll come back to that in a moment.
Let's go to the next slide.
As bad as this has been, and it is ongoing, it could have been worse. If I look beyond the states that Jackie mentioned, there have been a total of five that have taken action to prevent NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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33 closures. All in all, that's been about 16 reactors, exactly 16 reactors that are still in operation that would have otherwise closed. And again, I'll point to the geography here, the upper Midwest, the Northeast.
And let's go to the next slide because this is where I want to kind of get into a little more of the depth, which is the role of electricity markets. And John mentioned this a bit, and I want to build upon his observations and make sure we have a grounding of why these markets are important in telling the story.
So, over the last 20 years, we have seen the evolution of markets not only in the Midwest and the Northeast, but predominantly there and into Texas as well, which I'm sure we'll touch on a little bit.
Let's go to the next slide because these markets don't necessarily conform with state boundaries. So, I've created a simplified one that does a better job of showing where the nuclear plants are in these markets.
And what we see here is about two-thirds of the reactors in the U.S. operate in some form of a market. Each one of these works differently, sometimes quite differently. But these markets all NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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34 started from a philosophy of trying to find incentives to ensure that the power plants in operation in these markets were being used efficiently.
Prior to these markets, the utilities had a strong incentive to build new things, power plants or infrastructure, but there was less emphasis on ensuring that those items were operated as efficiently as possible. And so, the question was, could you design markets that created those economic incentives to say, if I have a resource, can I get the most out of it?
Now I want to harken back to my first slide for a moment. Because, remember, I kind of oddly pointed out the role of 1989 because I want to set up a comparison. It turns out in 1989 the nuclear fleet in the U.S. had about 98 gigawatts of capacity, which in 2019 we had about 98 gigawatts of capacity.
However, in 2019, we produced 50 percent more electricity from those 98 gigawatts.
Now this is a pretty extreme example of the kinds of behaviors that the market is trying to create, which is giving the incentive to ensure that what is being operated is being operated as efficiently and regularly as possible. Now I'm not NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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35 saying that caused the increase in capacity factor.
What I will say is, if you had asked the economist who was working on the problem at the time, that's exactly the kind of behavior they would have expected. But, with this, it's also about how markets accomplish this.
Let's go to the next slide.
What we need to think about here are, what are the questions that the markets are trying to solve for me? Because there are a lot of problems in the world. I want to create incentives to help me sort out two problems.
I'm going to focus on the energy market first because all of those ones I showed on the previous slide, they all have an energy market which is, how do I determine which power plants I need to run and how much I should pay for them running?
When we're setting up a market, what we're trying to do is say, okay, I'm going to break apart those regions into smaller and smaller areas. I'm going to run an auction. I may run an auction every five minutes in all these places. And what we're going to do is ask all the power plants in that area, well, how much do you need to get paid to operate in NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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36 the next period of time? And the market operator is going to line them up from the cheapest to the most expensive and say, okay, I'm just going to keep picking those cheap ones until I've got enough to meet my demand. And whatever that last plant needs to be operational, that's the price that everyone's going to get.
So, what's happened now is I've created an incentive, that I'm going to use the less expensive operational plants more often, those with less operational cost more often, and use the expensive ones rarely. And that has a lot of merit to it.
And to be clear, when we talk with the challenges in markets, I echo John's thoughts. I don't know that there would be any of blaming markets that gets the focus wrong. Markets were designed to solve problems. And the problem they were trying to solve is how to incentivize the use of these lower-operation-cost plants more often.
But a second issue came up as well, which is, well, can I use this same kind of logic to figure out which power plants I should have in the first place, which ones I should retire, what I should build? And that's the invention of capacity markets.
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37 Now these are much more contentious. They're not nearly as widespread as the energy markets. In some places like ERCOT, it has chosen to avoid them entirely, which had some interesting implications after I submitted my slides. We'll come back to that.
But these capacity markets, then, are basically asking, if I need someone to be on hand to be able to provide power maybe three years from now, how much do you need to get paid to be available? And so, what happens is, I have a system that's now doing two things. On the energy market side, I'm trying to have more reliance on the low-operational-cost plants.
On the capacity side, I have more reliance on plants that have low overhead costs or low construction cost.
Now, coincidentally, natural gas tends to pop up in both of these categories. Natural gas tends to be the plant that is the last one selected. So, there's a tight connection between the price of natural gas and the wholesale market price for all power producers. And natural gas plants tend to be cheaper to construct, especially the simplified ones.
So, they often are relied upon to provide cheap capacity. So, as I bring this together, I can take a depiction of how things have evolved in the last 15-20 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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38 years.
Move to the next slide.
This chart is a little bit busy. What I have tried to do is take the power prices at a lot of different spots, largely from above Boston over to Chicago kind of in a straight line, and put it on the same chart. There is some variation in there. But what I want to point out is we've seen a pretty significant decline in the wholesale power prices across all these markets.
Darrell mentioned in his opening remarks the renaissance. Well, what this slide shows is, during that renaissance era, there was a really strong market signal to say, if you could build a plant with low operational cost, like a nuclear plant, the market would be very welcoming to that new addition.
Once you get the recession of 2008, the picture began to shift, and rather quickly at that.
The demand for electricity fell, especially relative to the expectations, and prices fell dramatically.
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39 I had created a great expansion in the availability of natural gas, and prices had fallen precipitously.
You remember I pointed out that natural gas prices tend to correlate very closely with power prices. And so, we've seen this decline over the recent years. The challenge that we're seeing in the marketplace has more to do with the fact that part of what we now care about isn't being priced in there.
Where I've spent three slides now talking about market philosophy, market design questions, and market history, I haven't once used the word "carbon". And that's what we've seen as the other element of this conversation that Jackie certainly hit on, and John as well, which is the role of policy.
Let's go to the next slide.
Jackie highlighted a couple of states.
When I look at the roster of all the states that have taken action, all five, I count 16 units that have been preserved through state action. Now, at the lynchpin of these has been state policies that are intended to reduce carbon emissions dramatically.
Take New Jersey. The State has a stated policy to be 100 percent carbon-free by mid-century.
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40 provide over 90 percent of its current carbon-free generation. So, as states have realized that plants were facing these pressures to close, they began to take action to say, if you're going to make these decisions about whether to stay in operation, I want you to also put a value on your carbon-free generation as well. The market is not doing that. Let me pass a policy that will do that instead.
Let's go to the next slide.
Because it's more than just the plants that are at risk where we're seeing these trends pick up speed. Jackie doesn't use slides, but I used one of hers to make this point that it's not just the Mid-Atlantic and upper Midwest that are acting. As well, we're seeing out West states pursuing clean energy standards that would create incentives for the long-term need for carbon-free power, and especially in a 100 percent carbon-free system. And nuclear has an obvious role there.
Let's go to the next slide.
Even in states where we haven't seen actions yet, we've seen utilities taken some pretty dramatic steps. So, you're not supposed to read all the lines on the chart. What I'm showing is a NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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41 collection of all of the utilities that we've identified that have made commitments to reduce carbon emissions in the future and just stacked them up to see what that would equate to. And what we see is a pretty dramatic trend for where the industry is going with an eye towards a much lower-emitting future, which, then, comes back to the policy.
Go to the last slide.
And Jackie talked about this very much at the federal level. Oh, we can click through. So, on the first one, we have an appreciation that the nuclear fleet has been operating well.
Let's go to the next animation. Sorry about that.
And also, the market revenues have not been sufficient to recognize what the nuclear plants have been providing.
Finally, the next one.
Where this comes together is, will there be the policy framework that creates that market signal to ensure that what nuclear is providing that's not being valued in the marketplace is actually going to be factored into decisions about whether to keep plants or to build new ones.
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42 So, with that, I appreciate the opportunity, and I look forward to the discussion with my colleagues. Thank you.
MR. ROBERTS: Thank you, Matt. I appreciate all three of your presentations.
And I think I would be remiss if I didn't at least comment a little bit on what this all means to NRC. As you all might imagine, we are, obviously, monitoring the economic situation with nuclear, the nuclear power industry. We've developed over the last few years a number of indicators that we follow, including what we call signposts and markers that look at the economic condition surrounding nuclear. It looks at governmental factors, you know, the degree to which federal and state entities are favoring nuclear power with their policies.
And I say all of that because, obviously, this has an impact on the NRC from the standpoint of what our budgeting decisions are going forward to our staffing and hiring decisions with respect to the critical skills that we might want to focus on in terms of hiring for the different technologies that may be in play, as well as just our decisionmaking around things as simple as rent, right? So, for more NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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43 localized conditions where a regional office, for example, might be experiencing more difficulty in terms of the industry than other locations, it might factor into our rent planning or our space planning for our various facilities throughout the country.
So, there are a number of reasons that these factors are all important to the NRC. And I just wanted to point that out and kind of wrap that into a little bit of a bow here, as the session calls for.
So, with that, we have a number of questions that have already appeared here, and I would like to go right into those. There are at least a dozen so far, and we have about 28 minutes left. So, I'm going to jump right into the first that was provided.
It is, "Will the economic case for nuclear in a net-zero situation change if practical large-scale battery storage becomes a reality for use with renewables?"
And so, I'll direct that question to either of you, but, John Parsons or Matt, if you wanted to comment on that?
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44 question. And it's certainly true that there are always many different options for how to get somewhere. As different technologies like batteries become more inexpensive, they compete against other things.
I think batteries are great, especially paired with solar. They can handle the amount of time that you need to replace the solar over a day, for example, but batteries are actually even difficult to be economical for a lot of the variability of wind because there can be a week or two weeks without sufficient wind and the batteries get exhausted before you get to the end of that period. And seasonal storage is very important, and batteries have a difficult time with that. So, I don't think batteries are likely to be super-competitive against nuclear, except a little bit here and there on the margin.
MS. KEMPFER: Yes, if I can jump in on that one, too, Darrell, I would just kind of expand on that just a little bit. Firm electricity generation resources are available, like nuclear, are available on demand for any length of time, any season of the year, to some of the points that John just made. That makes them a critical complement to weather-dependent NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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45 wind and solar, as well as sources like batteries or strategies like demand flexibility that are best suited for massive bursts of use.
In other words, firm technologies complete the energy team, is what I would say. Wind and solar add value to the grid and can even be star players, I guess, if you will, but they aren't really cut out to win the decarbonization game all on their own. Why?
The variability challenge that John mentioned of renewables is greater than I think is generally appreciated. The problem isn't simply the setting sun and hourly dips in wind generation. The toughest challenge comes from, as John mentioned, the weeks, and sometimes months, when wind and solar production decline dramatically because of the seasonal factors or prolonged weather fronts.
To get through those lengthy periods, renewables-dominated systems have to be super-sized, installing three to eight times more power capacity at peak demand, so they can fill the void when solar and wind output is diminished. And that means they also produce way too much electricity when favorable conditions return. That excess is either wasted or stored, at a cost, for later use.
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46 And now, right now, storage technologies are not available to do the job cost-effectively at the scale we're talking about. And if such a system were to be built, it would feature, to be quite frank, a lot of poorly utilized, capital-intensive, brand-new solar and storage assets. So, unless the cost of those technologies falls to extremely low levels, we'll be forced to choose between clean energy and affordability.
So, clean power systems with a mix of fuels can much more easily match generation to demand and productively use all assets more often, and making these systems more economical overall to operate.
MR. ROBERTS: Thank you, Jackie.
Let's go to question No. 2. "As mentioned in John's presentation, with the net-zero emission goal and fossil fuel price increase, nuclear energy has seen more pressure to meet energy demand.
However, with unclear regulation and guidelines to licensees willing to develop advanced reactors, supply cannot meet demand. Focusing on the regulation seems to be one of the answers, but what are some of the economic strategies regulators can collaborate on to solve this issue?" And by "regulators," I'm presuming NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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47 that means electricity regulators, not nuclear regulators.
So, John, I think this was tied to your presentation.
MR. PARSONS: Sure. Well, I think it's a good question and it's a big problem. Because we're allowing these nuclear plants to close, and we're allowing that to happen because we're favoring wind and solar, and not penalizing gas, we're sort of offering a chunk of money to pay for our electricity generation on the side to some types of technologies, but not to nuclear. That's going to give a bad signal to somebody who wants to invest in new nuclear.
So, really, if somebody wants to invest a lot of money in a big capital-intensive plan that's going to exist for several decades, they're going to be really wondering is policy going to be supportive of their technology once they have sunk all of the money. So, I think there's really going to have to be a commitment from the public side, a demonstration that we value nuclear and it's going to be appreciated for its zero-carbon emissions.
One example of where that's happening is in the United Kingdom. They are going through a NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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48 regulatory rethink about how they get Sizewell C built. And they're trying to decide what kind of a public commitment they want to make to assure investors that that plant will earn its return. They made a commitment on the previous new build, Hinkley, which is now under construction. That kind of commitment is likely what's going to have to happen in one form or another. There are many ways to do it.
MR. ROBERTS: Thank you, John. I appreciate that. And I believe there are differences between the UK and the United States in how the market is regulated today also.
The third question is for Jackie specifically, and it is, "Why is building a new natural gas plant cheaper than continuing operation on an existing nuclear plant? How is natural gas a threat to operational plants?"
MS. KEMPFER: Sure. I mean, I think that, at the end of the day, it comes down to -- and I would love for Matt to jump in on this a little bit, too, because I think he's a little bit better at talking about the market differences here. But, essentially, it comes down to the way that these resources are valued in different markets and the way that they're NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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49 structured here in the United States.
And as far as why is building a natural gas facility, a new gas facility, cheaper than continuing to operate a nuclear power facility, I don't think that's necessarily the case. I would say that building a new natural gas facility is like drastically cheaper upfront capital costs, of course, than building a nuclear power plant. So, that's a very stark difference there.
However, at the end of the day, as I mentioned earlier, it just comes down to the lack of value being placed on the carbon-free attributes of our nuclear power plants. And we've seen, as Matt showed in several additional states to what I pointed out, the huge impact that legislation like that can have on that sort of competitive landscape between natural gas and nuclear.
But, Matt, I don't know if you want to jump in and talk a little bit about sort of how the different ways our markets here in the United States can also impact that competition.
MR. CROZAT: Sure. Thanks, Jackie.
And I think that it's probably worth just taking a moment to be a little more explicit about the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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50 kind of natural gas plants that are relevant here. We have a whole generation of combined-cycle plants installed largely around the early 2000s until about the last five years it has slowed down. And that was, I think, in large part taking advantage of the declining natural gas pricing and, also, the ability to operate them relatively flexibly. And so, they're very useful machines.
I think that what's happened is, as gas prices fell, they're getting used a lot more regularly than we originally intended. So, that's one class.
But I think what is more notable from where I sit these days is the role of peaking plants. So, these are ones that are designed to run only rarely, only on the most severe days of the year and when the prices are highest. But, in many of these markets where you are paying for capacity, they have this revenue stream that's coming in to ensure that they are built and maintained.
Part of the reason why this matters is a lot of the discussion and policy argument in the last few years has been this intersection of how these state programs for nuclear impact capacity pricing.
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51 policies to come into play, and this has been issues at the Federal Energy Regulatory Commission. We'll see nuclear challenges, too.
And so, you do have a number of forces that are pointing to natural gas as being part of the expansion that we've seen over the last decade-plus.
And we're now to the point where it's affecting how nuclear is able to survive in the marketplace.
MR. ROBERTS: Thank you, Matt. I appreciate that.
All right. Our next question is for you, Matt, actually. It is, "Is there, or has there been, consideration to identify nuclear plants as national security assets due to grid impacts and climate concerns?"
MR. CROZAT: So, let me focus on the grid impacts, and particularly, on how to think about nuclear in extreme weather events. So, we saw very starkly last month the challenges in Texas. So, Texas is a system that has four large nuclear units, but even that's about 10 percent of their portfolio. They rely much more heavily on natural gas that they produce right there in Texas.
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52 role of natural gas in providing capacity for when the grid is most stressed. And what we saw was, the way that's accounted for doesn't necessarily fit when the peak comes in the middle of the depths of winter.
Basically, natural gas in the Northeast is intended for home heating primarily. So, that can cause stresses there. In the case of Texas, the gas wells just froze and the delivery systems couldnt keep up.
And so, as we've come to rely more and more on natural gas to provide reliability, I think there's now recognition that this just-in-time delivery system hasn't been well accounted for in the risks that we're bearing. We saw this in the Northeast in the polar vortex in 2014. And we saw in the last Administration Secretary Perry at DOE put forward a proposal to provide more credits to coal and nuclear plants that have fuel onsite and would, therefore, be less likely to have these kinds of problems. That proposal had challenges and was voted down at the FERC by a 5-to-0 vote. So, that wasn't going anywhere.
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53 and the changing weather patterns. And so, I think that there is an opportunity for the market designers and the market regulators to step back and think more holistically about what we're going to rely upon and how to value the firm capacity that nuclear can provide.
MR. ROBERTS: The question is open for any one of you. And it is basically, "What would a complete accounting of nuclear costs look like, the cost of a full fuel cycle from the uranium mining and milling, including the public health impacts of those, to the costs of operating storage and, then, a repository for many decades? How closely do current policies and financial arrangements conform with such a complete analysis?"
So, any one of you feel free to take that.
John, go ahead.
MR. PARSONS: So, I think, roughly, we have a complete costing. There are places where, certainly, somebody could analyze should it be done a little bit differently or more carefully, or whatnot.
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54 the mines are managed properly, and so on.
Similarly, with decommissioning, but the NRC imposes requirements for decommissioning to be costed properly and to be funded properly. And similarly, for the spent fuel. I think there might be places where we could argue about pennies on this, but they're not a significant contributor to the cost of nuclear. The differences of opinion that you or I might have about whether this or that component had been properly priced are small relative to the total cost. So, I think, by and large, we're good on a total costing. That would be my assessment.
MR. ROBERTS: Thanks, John.
Matt, you wanted to say something on that topic?
MR. CROZAT: No, I agree with John. I think nuclear probably comes closest to approximating the full cost of the system than other technologies.
And I'll point to a study that was done by the OECD's Nuclear Energy Agency a couple of years ago on the full cost of electricity provision. And that's the whole system, not just nuclear and not just fossil; it's everything together.
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55 attempt to account for everything else. And the calculation that I saw was the markets, essentially, were covering about half the actual cost, the total cost, but the rest were being socialized, either through electricity rates that are designed to spread out some costs across technologies and plants or not paying for them at all in the cases of health effects.
And so, I think that there is a better appreciation that, as we think about some of these external costs, as we'll call them, we tend to focus on carbon as the obvious one at the moment, but it's more than that. It's the health impacts of air pollution. It's the ability to ensure safety and the impacts there. And so, this is a worthwhile goal and one that I think nuclear has led the way on as far as ensuring that we're not creating a large expense that isn't covered within the system itself.
MR. ROBERTS: Thank you. Thank you, Matt.
Jackie, do you want to weigh in on that one, or do we want to go to the next question?
MS. KEMPFER: We can go on.
MR. ROBERTS: Okay. All right. Well, the next question is one I think Matt -- or I'm sorry --
John could address. And it is, "What can be done to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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56 advance the electricity market and energy policy to enable de-risking of financial risks for advanced reactors? Do you think carbon price, capacity, resiliency, and reliability have worth in power purchase agreements?"
MR. PARSONS: So, it's an important question. We really want to encourage innovation in these advanced reactors and we need to get investment moving forward in them.
I'd say, first of all, if we start treating all technologies equal in the electricity market, and rewarding technologies for being low-carbon, that would be the biggest contribution you could make. Investors would feel that nuclear is a viable technology to pursue.
In our Future of Nuclear study, looking specifically at advanced reactors, we encouraged continuation of policies that have been used in the past for creating demonstration reactors. So, for example, DOE sharing licensing costs. We believe that some production credits for the first units of generation being produced from advanced reactors for a demonstration project would be the kind of thing that would give investors in those a belief that there's NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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57 the proper reward.
MR. ROBERTS: Thanks, John.
Jackie, do you want to weigh in on this one?
MS. KEMPFER: Yes. Sure. So, we've done a lot to look at this and sort of what signals be sent, either through policy or sort of other means, to really boost investment and sort of the progress for commercialization of advanced nuclear.
One of the things we talk about a lot is to really reestablishment the U.S. Government as the first funder and customers of U.S. advanced nuclear to help compete with a lot of these state-owned nuclear enterprises like China and Russia. So, this could include things like reforming the DOE Loan Guarantee Program, you know, to make the $10.9 billion in loan guarantees specific to advanced nuclear realistically available through funding credit subsidy fees, or otherwise. Also, utilizing DOE authority under the Atomic Energy Act to issue site use permits at federal facilities to construct, own, and operate small modular reactors and microreactors.
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58 for clean energy technologies, inclusive of nuclear, that looks at 30 years or more, because that's really a better timeframe when we're talking about the operations of nuclear power.
And then, also, looking to Congress to potentially amend Section 203, not to get too wonky here, of the Energy Policy Act to require the federal government to purchase higher percentages of clean energy and make sure that that's inclusive of nuclear as well.
And then, finally, to get back to the topic at hand here at the RIC with NRC, working with Congress and the Nuclear Regulatory Commission to evaluate its licensing process, which we've already seen happen. Together, doing that with existing license holders and license applicants. The current licensing process takes years, and the NRC is required to recoup 90 percent of its costs from license holders and applicants, which dramatically cycles the potential for new market entrants. Small procedural changes to the licensing process can have an outsized impact in terms of time and cost to applicants.
So, I'll stop there. Those are my --
what? -- I guess 10 cents that I'll add in.
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59 MR. ROBERTS: Thank you, Jackie.
The next question is a very hypothetical one. "If we were able to shift our electricity generation to just wind, solar, and nuclear, how do you make sure your baseloads, grid power, needed for nuclear remain available at night or in winter, when solar is negligible or nonexistent and perhaps the wind is not blowing enough? What modifications would need to be made to existing plants, and at what cost, since having enough battery power on standby to prevent this is not likely, given current battery technology?"
We touched a little bit on this before in some of the earlier answers, but maybe if either Matt or any one of you could speak to that, that would be good.
MR. CROZAT: Sure. I'll take a swing at it.
But I want to step back a bit. If I think about that kind of a grid with wind, solar, and nuclear providing the vast majority of the electricity, I begin to think in terms of market share, of how much nuclear would I expect to have in that kind of a system.
And fortunately, there's been a boom of NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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60 really smart, sophisticated energy modeling that's taken place over the last two years -- MIT has been at the heart of this, but they're not alone -- really beginning to give us the fidelity to think in terms of, well, how do I provide this electricity not just over the course of a year, but in the course of hours, and with different geographies.
And what you see is there is a need for firm capacity. Nuclear can provide that. You could imagine natural gas with carbon capture could be an option. If you had a very different kind of energy storage system, electricity storage system, perhaps that could, too.
But you have this pretty significant need for that firm capacity. And in this regard, I would expect the answer is that I wouldn't have a nuclear plant all alone surrounded only by variable sources; that you would have a range of these nuclear plants, or with something else like carbon capture and fossil, and the like.
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61 appreciate the need for this firm, dispatchable, carbon-free slice of the generation. And that's where you'll see many companies talk about we're going to commit to 100 percent carbon-free. We know how to get to the first 80 percent. It involves keeping the nuclear that we have, building out wind and solar until these variability problems become a little too acute. But that last 20 percent, I need something else.
And that could be advanced nuclear in many cases. As a matter of fact, they look a lot like advanced nuclear from where I sit. But there is this appreciation that it's not one small slice. I need this class of generation that's going to make the system work, especially as I think about things like the Texas event and comparable challenges to reliability that we're going to need to be able to weather.
MR. ROBERTS: Thank you, Matt. Appreciate it.
In the interest of time -- we only have about three minutes left in our session and in the RIC in general -- so, I'm going to ask this one last question. And it basically asks, "The advanced NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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62 reactors being considered have diverse design/fuel cycles requiring a lot more time for commercialization; for example, compared to light water reactor-based designs. Is that a major concern in trying to get to carbon-free power by 2035?"
And I'll open that for any one of you to answer.
MR. PARSONS: So, I think we need to do a lot of different things at a lot of different time scales. We need to preserve the existing reactors.
We need to start planning to build some of the designs we already have working, and we need research teams working to demonstrate some of these new fuel cycles and new reactor designs. Some of them are pretty ready to be demonstrated. High temperature gas reactors, for example, are very ready, and there are others.
But we also have to look longer term.
There's a whole world out there to decarbonize. And even if we can accomplish something in parts of the United States quickly, there's a lot of work to do.
MS. KEMPFER: Yes, I will just jump in on this last question really quickly.
I'm kind of known as a stubborn optimist when it comes not only to addressing climate change, NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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63 but also to really the future of the advanced nuclear industry here in the United States and globally. But I can really say that, over the past five years, I think we've seen more rapid progress and development of these technologies than anyone expected. And I truly believe that by the end of this decade we will see probably multiple advanced reactors, I would say anywhere from three-plus, that have actually been demonstrated and are ready to be deployed, both here in the United States and abroad.
And I'll just kind of take my final moment here to highlight something that I'm most concerned about, actually, for the future of advanced nuclear.
And that's fuel availability. Something that we're paying a lot of attention to at Third Way is there is, rightly so, a lot of excitement around the advanced reactor demonstration program and the reactors themselves, Oklo's microreactor that's moving forward through the licensing process.
But what doesn't get as much attention is that we actually don't have a supply chain for the high-assay, low-enriched uranium that most of these reactors are going to rely on. So, it would be great if we see the two advanced reactor demonstration NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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64 projects operational, as well as Oklo's plant comes online. But if we don't have the fuel here in the United States to operate the 2nd, 10th, 20th reactor, we've kind of built a bridge to nowhere.
So, I just wanted to use my final moment to sort of flag that these two things, the progress in building these first reactors, has to run in parallel with the development of the full supply chain that we need for these technologies to be successful.
MR. ROBERTS: Thank you, Jackie. And I think we would all agree that supply chain is a very important factor in the future development and progress in the industry, as it is with any industry.
And so, with that, I want to thank all three of our panelists. We are actually at 2:46, or a little bit over. But I wanted to thank you all for your presentations, your discussions, your thoughtful insights and remarks.
Thank you to our audience for your excellent questions.
Thank you also to Jon Barr, who was very instrumental in putting this all together; to Lorna Kipfer; to Dan and Nate, our AV techs, and the entire NRC RIC planning team for your efforts to develop NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.
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65 NRC's first-ever virtual RIC.
I hope this session was helpful to our attendees in touching on some of the most important factors that will shape the future of the nuclear power industry.
This is all very helpful to the NRC as we prepare for the future and continue in our journey to be a modern, agile, risk-informed regulator.
Thank you, and this closes RIC Session TH25.
(Whereupon, at 2:48 p.m., the proceedings were concluded.)
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