ML24114A282
| ML24114A282 | |
| Person / Time | |
|---|---|
| Site: | Hermes File:Kairos Power icon.png |
| Issue date: | 04/23/2024 |
| From: | NRC |
| To: | NRC/NRR/DANU |
| References | |
| Download: ML24114A282 (9) | |
Text
From:
Cayetano Santos Sent:
Tuesday, April 23, 2024 3:38 PM To:
Weidong Wang; Larry Burkhart Cc:
Michael Orenak; Matthew Hiser; Brian Bettes; Josh Borromeo
Subject:
Preliminary Chapter of Hermes 2 SE Attachments:
Chapter 15 - Financial Qualifications.pdf
- Weidong, Attached is another one of the preliminary chapters from the safety evaluation (SE) for the Hermes 2 construction permit application. This chapter has been reviewed by branch chiefs and received a preliminary review by OGC. However, this chapter is not final because it still needs to be reviewed by division management and receive the final OGC review. Thus, this preliminary chapter could change between now and the approved SE that will be sent to ACRS for formal review. I am sending this chapter in advance so that members can become familiar with the safety evaluation and begin preparing for the formal review.
Twelve preliminary chapters were provided to you on March 14, April 4, April 22, and April 23, 2024. If possible, I will send additional preliminary chapters to you piecemeal after they receive the preliminary OGC for the first planned subcommittee meeting on May 16, 2024.
Kairos Power submitted Revision 0 of the preliminary safety analysis report (PSAR) for Hermes 2 in July 2023. All preliminary SE chapters being sent to the ACRS refer to Revision 1 of the PSAR. Although Revision 1 of the PSAR has not been submitted, Kairos stated their intent to do so once all PSAR changes are known (i.e., the end of the technical review). The current list of docketed PSAR changes that will be incorporated into Revision 1 of the PSAR can be found in ADAMS and on the NRC public webpage at https://www.nrc.gov/reactors/non-power/new-facility-licensing/hermes2-kairos/documents.html.
The staff has taken a different approach toward the Hermes 2 SE considering that Hermes 1 and Hermes 2 CP applications have most of the same information. Due to these similarities, the staff leveraged the Hermes 1 SE to the extent possible for Hermes 2, using an incorporation by reference for many sections. The following description, taken from Chapter 1 of the Hermes 2 SE, discusses how the staffs review of Hermes 1 was applied to its review of the Hermes 2:
Use of Docketed Information The staffs review of the Hermes 2 CP application was informed by the Hermes 1 CP application review. The Hermes 2 facility includes many SSCs that are identical to those that would be used in the Hermes 1 facility. Accordingly, large portions of the Hermes 1 PSAR are identical to the Hermes 2 PSAR. In the July 14, 2023, CP application submittal, Kairos highlighted the differences between the Hermes 1 and Hermes 2 PSARs in two ways. First, Kairos used blue font in the Hermes 2 PSAR to identify any modified or new
text. Second, Kairos provided a summary of the information deleted from the Hermes 1 PSAR to generate the Hermes 2 PSAR (ML23195A132).
In addition, Kairos identified the docketed information and audit information from Hermes 1 that is applicable to the Hermes 2 CP application in two letters dated October 27, 2023 (ML23300A141 and ML22300A144). This information is considered docketed information for the Hermes 2 CP application and was used to inform the staffs review.
Format and Content of Hermes 2 Safety Evaluation Sections Based on the consistencies between the Hermes 1 and Hermes 2 PSARs described above, the staff leveraged the Hermes 1 SE to the greatest extent possible to support its review of the Hermes 2 CP application. Accordingly, applicable contents of the Hermes 1 SE were incorporated by reference into this SE. To determine which Hermes 1 SE content could be incorporated by reference, the staff reviewed the differences between the Hermes 1 and Hermes 2 PSARs. Where the Hermes 2 PSAR only contained minor deviations (e.g., minimal or no effect on the NRC SE or editorial changes, as compared to the Hermes 1 PSAR), the staffs SE was largely limited to incorporating by reference applicable portions of the Hermes 1 SE. Similarly, where the Hermes 2 PSAR contained a limited number of significant but discrete changes, but was otherwise identical to the Hermes 1 PSAR, the staffs SE was likewise limited to an evaluation of the variances between the two PSARs. In this case, the balance of the staffs SE also incorporated by reference applicable portions of the Hermes 1 SE. Based on this approach, many of the Hermes 2 SE sections are organized using the following structure:
Brief introduction summarizing the Hermes 2 PSAR content with a focus on any changes in comparison to the Hermes 1 PSAR.
Regulatory evaluation section that, in most cases, incorporates by reference the regulations and guidance from the corresponding section of the Hermes 1 SE due to the similarities between the Hermes 1 and Hermes 2 facility designs.
Technical evaluation that:
o Identifies the consistent and modified Hermes 2 PSAR information, as compared to the Hermes 1 PSAR.
o Incorporates by reference, as appropriate, content from the Hermes 1 SE for PSAR information that is consistent between Hermes 1 and Hermes 2.
o Evaluates the new design information and non-editorial changes (i.e.,
minor and/or few significant changes), as compared to the Hermes 1 SE.
The depth of the staff review provided for each change is dependent on the significance of that change.
A full conclusion specific to the Hermes 2 review.
For Hermes 2 PSAR sections that contain entirely new information and/or several significant changes when compared to the Hermes 1 PSAR, the staff performed its evaluation without incorporation by reference from the Hermes 1 SE. One example of a section which reflects such an evaluation by the staff is Section 5.2, Intermediate Heat Transport System, of this SE related to the intermediate salt loops. These systems are not in the design of the Hermes 1 test reactor; therefore, they were not evaluated by the staff in its review of the Hermes 1 CP application. Accordingly, the staff evaluated this system without incorporation by reference of the Hermes 1 SE.
If you have any questions, please contact me or Mike Orenak.
-Tanny Santos
Hearing Identifier:
Kairos_Hermes2_CPDocs_Public Email Number:
14 Mail Envelope Properties (MW4PR09MB90100E15931D7619E2BB67D2E5112)
Subject:
Preliminary Chapter of Hermes 2 SE Sent Date:
4/23/2024 3:37:52 PM Received Date:
4/23/2024 3:37:00 PM From:
Cayetano Santos Created By:
Cayetano.Santos@nrc.gov Recipients:
"Michael Orenak" <Michael.Orenak@nrc.gov>
Tracking Status: None "Matthew Hiser" <Matthew.Hiser@nrc.gov>
Tracking Status: None "Brian Bettes" <Brian.Bettes@nrc.gov>
Tracking Status: None "Josh Borromeo" <Joshua.Borromeo@nrc.gov>
Tracking Status: None "Weidong Wang" <Weidong.Wang@nrc.gov>
Tracking Status: None "Larry Burkhart" <Lawrence.Burkhart@nrc.gov>
Tracking Status: None Post Office:
MW4PR09MB9010.namprd09.prod.outlook.com Files Size Date & Time MESSAGE 5958 4/23/2024 3:37:00 PM Chapter 15 - Financial Qualifications.pdf 178192 Options Priority:
Normal Return Notification:
No Reply Requested:
No Sensitivity:
Normal Expiration Date:
15 FINANCIAL QUALIFICATIONS Financial qualifications establish whether an applicant is financially qualified to own, construct, operate, and decommission a non-power production or utilization facility. Financial qualifications related to the issuance of a construction permit (CP) include estimates of construction costs, estimates of fuel cycle costs, and sources to cover costs.
This chapter of the Hermes 2 CP safety evaluation (SE) describes the U.S. Nuclear Regulatory Commission (NRC) staffs (the staffs) review and evaluation of Kaiross financial qualifications as presented in Chapter 15, Financial Qualifications, of the Hermes 2 Preliminary Safety Analysis Report (PSAR), Revision 1.
15.1 Financial Ability to Construct the Hermes 2 Facility 15.1.1 Introduction Section 15.1, Financial Ability to Construct the Hermes 2 Facility, of the Hermes 2 PSAR describes whether Kairos Power LLC (Kairos) is financially qualified to, among other things, construct the Hermes 2 facility. The application includes required financial information for CPs, as set forth by the NRC in Title 10 of the Code of Federal Regulations (10 CFR) 50.33(f), which demonstrates that Kairos possesses or has reasonable assurance of obtaining the necessary funds to cover estimated construction costs and related fuel cycle costs. The application includes estimates of the total construction costs of the facility and related fuel cycle costs and indicates the sources of funds to cover these costs.
15.1.2 Regulatory Evaluation The staff reviewed Section 15.1.2, Regulatory Evaluation, of the Hermes 1 SE for applicability to the Hermes 2 SE. Based on the similarities between the Hermes 1 and Hermes 2 facilities, the staff finds that the regulations and guidance listed in Section 15.1.2 of the Hermes 1 SE are applicable to Hermes 2. Therefore, this section incorporates by reference Section 15.1.2 of the Hermes 1 SE.
15.1.3 Technical Evaluation 15.1.3.1 Construction Costs Pursuant to 10 CFR 50.33(f)(1) and 10 CFR Part 50, Appendix C, Section II.A.1, Estimate of construction costs, which references the requirements in Appendix C,Section I.A.1, Estimate of construction costs, Kairos provided the projected costs for the construction of the proposed Hermes 2 test reactor facility in a proprietary enclosure to the CP application. The costs included estimates for coolant, fuel for the initial core, and overnight capital. The Kairos estimates are proprietary and are therefore not discussed in this public SE.
As part of the Hermes 1 General Audit (ML23160A287), the staff reviewed the Hermes 1 overnight capital cost (OCC) and fuel cost target model, including the basis for each element of the estimate and associated statistical analyses. According to Kairos, the estimate for OCC, excluding fuel, is based on a top-down cost model and validated through a bottoms-up cost model, which incorporates experience from manufacturing, procurement, contracting, and construction costs for Kaiross Engineering Test Unit. By letter dated October 27, 2023 THIS NRC STAFF DRAFT SE HAS BEEN PREPARED AND IS BEING RELEASED TO SUPPORT INTERACTIONS WITH THE ACRS. THIS DRAFT SE HAS NOT BEEN SUBJECT TO FULL NRC MANAGEMENT AND LEGAL REVIEWS AND APPROVALS, AND ITS CONTENTS SHOULD NOT BE INTERPRETED AS OFFICIAL AGENCY POSITIONS.
(ML23300A144), Kairos confirmed that prior Hermes 1 audit responses were considered applicable to Hermes 2; therefore, the Hermes 1 OCC and fuel cost target model audit discussions are applicable to Hermes 2. The staff reviewed the detailed OCC model inputs, applying the same methodology, and found that the OCC target for the Hermes 2 facility is reasonable.
Based on a detailed review of the cost to construct the facility and the supporting bases and assumptions discussed above, the staff finds that Kaiross cost estimate for the Hermes 2 facility is reasonable.
15.1.3.2 Sources of Construction Funds According to the Hermes 2 CP application, funding for the design and construction costs (including reactor coolant and initial fuel load) relies on raised equity funding. The amount of funding available covers the estimated cost to construct the facility and includes a contingency allowance. The application states that this contingency allowance by Kairos investors is available, if needed, for Hermes 2. The staff finds that the contingency allowance provides additional assurance that Kairos has, or can obtain, the required funding for the project.
The staff compared the total estimated cost to the total secured funding available to complete the project and found that the available funding covers the estimated cost and includes contingency funding, as needed. Therefore, based on the general financial plan described in the application and financial commitments currently in place, the staff finds that Kaiross financial plan is reasonable.
15.1.3.3 Technical Summary Kairos has supplied financial information for construction and nuclear fuel inventory cost. The staff reviewed the financial ability of Kairos to construct the proposed facility and to cover fuel cycle costs. The staff finds that the financial information provided satisfies the applicable acceptance criteria of NUREG-1537, Part 2, Section 15.1, Financial Ability to Construct a Non-Power Reactor, and demonstrates adequate financial assurance for construction.
15.1.4 Conclusion The staff concludes that there is reasonable assurance that funds will be made available to construct and cover fuel cycle costs for the Hermes 2 facility and that the financial status of Kairos regarding construction and fuel cycle costs is in accordance with the requirements of 10 CFR 50.33(f). Therefore, the staff concludes that Kaiross financial qualifications for construction of the Hermes 2 facility and associated fuel cycle costs are acceptable.
Based on the staffs findings above, the staff concludes that the information regarding Kaiross financial ability to construct the Hermes 2 facility is sufficient and meets the applicable guidance and regulatory requirements identified in this section for the issuance of a CP in accordance with 10 CFR 50.40, Common standards.
15.2 Financial Ability to Operate the Hermes 2 Facility Information related to Kaiross financial qualifications to operate the Hermes 2 facility will be reviewed as part of the operating license (OL) application review process.
15.3 Financial Ability to Decommission the Hermes 2 Facility Information related to funds that be available to decommission the Hermes 2 facility will be reviewed as part of the OL application review process.
15.4 Foreign Ownership, Control, or Domination 15.4.1 Introduction Section 104 of the Atomic Energy Act (AEA) of 1954, as amended, prohibits the Commission from issuing a license to an alien, a foreign corporation, or other entity if the Commission knows or has reason to believe it is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government. Section 15.4, Foreign Ownership, Control, or Domination, of the Hermes 2 PSAR describes the ownership and control of Kairos.
15.4.2 Regulatory Evaluation The staff reviewed Section 15.4.2, Regulatory Evaluation, of the Hermes 1 SE for applicability to the Hermes 2 SE. Based on the similarities between the Hermes 1 and Hermes 2 facilities and the consistency of the ownership and control structures between Hermes 1 and Hermes 2, the staff finds that the regulations and guidance listed in Section 15.4.2 of the Hermes 1 SE are applicable to Hermes 2. Therefore, this section incorporates by reference Section 15.4.2 of the Hermes 1 SE.
15.4.3 Technical Evaluation According to the application, Kairos is a limited liability company formed in the State of Delaware with a principal place of business in Alameda, California. Kairos is a privately held company with a limited number of investors, all of whom are U.S. citizens or entities owned or controlled by U.S. citizens. Additionally, the application states that all current investors and employees with the options to hold future shares totaling one percent or more of Kaiross stock or options are U.S. citizens or entities owned or controlled by U.S. citizens. Finally, Kairos Power LLC key management personnel, specifically the Chief Executive Officer, is a U.S. citizen and may be contacted through the Kairos Power LLC headquarters address. The staff conducted an independent analysis, including open-source research and verification of the information provided in the CP application, and found no evidence of foreign ownership, control, or domination (FOCD). Therefore, the staff does not know or have reason to believe that Kairos is owned, controlled, or dominated by a foreign interest.
15.4.4 Conclusion Based on staff findings above, the staff concludes that the information on FOCD is sufficient and meets the applicable guidance and regulatory requirements identified in this section for the issuance of CPs in accordance with 10 CFR 50.40.
15.5 Nuclear Insurance and Indemnity 15.5.1 Introduction The Price-Anderson Act, found in Section 170 of the AEA, provides a system to pay funds for claims by members of the public for personal injury and property damage resulting from any
nuclear incident. The Price-Anderson Act provides coverage in varying degrees. The Price-Anderson Act implementing regulations are found in 10 CFR Part 140, Financial Protection Requirements and Indemnity Agreements. Section 15.5, Nuclear Insurance and Indemnity, of the Hermes 2 PSAR describes Kaiross intent to obtain insurance and financial protection in accordance with the Price-Anderson Act. The staff evaluated the sufficiency of Kaiross nuclear insurance and indemnity considerations, as described in Hermes 2 PSAR Section 15.5.
15.5.2 Regulatory Evaluation The staff reviewed Section 15.5.2, Regulatory Evaluation, of the Hermes 1 SE for applicability to the Hermes 2 SE. Based on the similarities between the Hermes 1 and Hermes 2 facilities and the consistency of the nuclear insurance and indemnity considerations between Hermes 1 and Hermes 2, the staff finds that the regulations and guidance listed in Section 15.5.2 of the Hermes 1 SE are applicable to Hermes 2. Therefore, this section incorporates by reference Section 15.5.2 of the Hermes 1 SE.
15.5.3 Technical Evaluation As stated in its application, Kairos intends to obtain insurance and financial protection consistent with the requirements of the Price-Anderson Act, pursuant to Section 170 of AEA and the requirements in 10 CFR Part 140. After receipt of the CPs and a 10 CFR Part 70, Domestic Licensing of Special Nuclear Material, license to possess fuel, Kairos will obtain financial protection of $1 million in insurance consistent with 10 CFR 140.13, Amount of financial protection required of certain holders of construction permits and combined licenses under 10 CFR part 52. Prior to operation, Kairos will obtain the full financial protection required by 10 CFR 140 using the formula provided in 10 CFR 140.12(b). The amounts of financial insurance required by 10 CFR 140.12(b) and documentation required by 10 CFR 140.15, Proof of financial protection, will be provided with the application for an OL.
The staff reviewed Kaiross intent to obtain $1 million in financial protection in accordance with 10 CFR 140.13 prior to the possession of fuel. Because the CPs do not authorize the possession of fuel, this item can reasonably be left for later consideration and is identified in Appendix A of this SE. Additionally, an OL application will need to identify the amounts needed for full financial protection. Proof of financial protection and execution of an indemnity agreement, as required by Section 170 of the AEA, will be required before an OL is issued.
15.5.4 Conclusion Based on staff findings above, the staff concludes that the information regarding nuclear insurance and indemnity is sufficient and meets the applicable regulatory requirements identified in this section for the issuance of CPs in accordance with 10 CFR 50.40.
15.6 Summary and Conclusions on Financial Qualifications The staff evaluated the information regarding Kaiross financial qualifications, as described in PSAR Chapter 15 and proprietary documents supporting the Hermes 2 CP application. Based on the information provided, the staff finds: (1) that Kaiross financial qualifications for construction of the Hermes 2 facility and associated fuel cycle costs are acceptable and meet the requirements of 10 CFR 50.33(f), and (2) staff does not know or have reason to believe that Kairos is owned, controlled, or dominated by a foreign interest. Such further information as may be required to assess financial qualifications for operation and decommissioning, as well as
proof of financial protection and execution of an indemnity agreement, which can reasonably be left for later consideration, will be supplied as part of the OL application.
Therefore, based on its review, the staff finds that the information on financial qualifications: (1) meets all applicable regulatory requirements, and (2) meets the applicable acceptance criteria in NUREG-1537, Part 2. Based on these findings, the staff makes the following conclusion regarding issuance of a construction permit in accordance with 10 CFR 50.40:
x Kairos is financially qualified to engage in the construction of its proposed facility in accordance with the Commissions regulations.
15.7 References Kairos Power LLC. Financial Information. July 14, 2023. ML23195A126. (proprietary information, not publicly available).
. Submittal of the Construction Permit Application for the Hermes 2 Kairos Power Fluoride Salt-Cooled, High Temperature Non-Power Reactor, Revision 1, [month] xx, 2024, Pkg.
MLxxxxxxxxx.
. Kairos Power Response to Hermes 2 General Audit Question 1.5-2, October 27, 2023.
ML23300A144 Nuclear Regulatory Commission (U.S.) (NRC). NUREG-1537, Guidelines for Preparing and Reviewing Applications for the Licensing of Non-Power Reactors, Part 1, Format and Content, and Part 2, Standard Review Plan and Acceptance Criteria. NRC: Washington, D.C. February 1996. ADAMS Accession Nos. ML042430055 and ML042430048.
. Final Standard Review Plan on Foreign Ownership, Control, or Domination. Federal Register. September 28, 1999 (64 FR 52355).
. Summary Report for the Regulatory Audit of Kairos Power LLC Hermes Construction Permit Preliminary Safety Analysis Report - General Audit, June 2023, ML23160A287.