A new dawn for nuclear energy?

Business Standard, 4 September 2022

A weak economic case and the Fukushima accident had created pessimism about nuclear energy worldwide. That picture is changing. Technical improvements are improving safety and business viability. The Ukraine war and global warming have created a fresh urgency to get away from fossil fuels. In the US, a new design of a 50-megawatt (MW) `small modular reactor' (SMR) recently got regulatory approval. If SMRs make it into assembly line production, there will be big gains on price.

The great decline

After the accidents at Three Mile Island in the US (1979), Chernobyl in the USSR (1986), and particularly Fukushima in Japan (2011), there was great scepticism about the safety issues associated with nuclear energy. The Chernobyl accident could be explained as the incompetence of civil servants in authoritarian countries, but no such explanation was available for Fukushima, which took place in a healthy liberal democracy.

After 2011, Germany chose to shut down all nuclear plants. Angela Merkel is herself a Ph.D. in quantum chemistry, and she discussed these issues with her husband, Joachim Sauer, who is a physicist. She had earlier felt that sceptics about nuclear energy did not understand the quantification of risk, but after Fukushima her view changed.

The economic case for nuclear generation was weak. As an example, the 3,200-MW Hinkley Point C nuclear plant in the UK was green lighted in 2008, began construction in 2017, and is expected to be completed in 2027 at a cost of over GBP 25 billion. The only advanced economy where nuclear generation is important is France.

And the revival

In recent years, however, interest in nuclear energy has been increasing. The prominence of authoritarian countries in fossil fuels -- from Saudi Arabia to Russia -- induces geopolitical risks. And, while there has been a remarkable revolution in energy storage and renewables generation, the path to eliminating carbon dioxide remains daunting without nuclear energy.

But what about the risk? While the Fukushima disaster looked bad at its time, the overall reckoning is more positive. When researchers in 2019 went back and looked at the evidence, they found stopping nuclear energy production contributed to more deaths in Japan than the accident itself. And if Europe had more nuclear energy, Russian President Vladimir Putin may have been less inclined to invade Ukraine in a war that has cost over 50,000 lives so far.

While conventional big nuclear plants have faced difficulties, progress has taken place with small plants. Submarines and aircraft carriers in the West have used numerous small nuclear plants for decades. Their safety record has been perfect.

From artisanal to industrial

What about the costs? Can costs become low when compared with the behemoths? This will require assembly line manufacturing. We have seen this movie before. During World War 2, the Germans tried to strangle the UK, using submarine warfare. From July to October 1940, 1.5 million tonnes of allied shipping was sunk.

The allies brought the power of modern manufacturing to bear on making ships. Earlier, ships were made in artisanal ways. The Americans standardised on a simple design of 10,000 tonnes, called the `Liberty ship'. They built this on an assembly line. The first ship was made in 1941 in 244 days, and by 1943 it was down to 39 days.

Small modular reactors

We are at the dawn of that journey with nuclear reactors. After a six-year evaluation process, the US Nuclear Regulatory Commission (NRC) has approved a small reactor design named VOYGR from the US company NuScale. It is the seventh reactor design ever to be approved for use in the US.

This is a nuclear reactor which is made in a factory and not on site. Each module is 4.6-metre-wide and 23-metre-tall, and generates 50 MW. Its safety characteristics are fundamentally superior to traditional reactors: In the event of a power outage, the nuclear reaction just subsides.

Under present calculations, if 12 modules are installed giving a 600 MW plant, the cost of electricity (under first world conditions) is estimated at between $41 and $65 per MWh. This compares well with renewables which are at $30 to $45 per MWh, and suffer from intermittency. In India, both costs (nuclear and renewables) will be symmetrically higher, reflecting the country risk and the difficulties of the financial system.

SMR development is also underway at other firms such as GE Hitachi Nuclear Energy and Rolls Royce. Competition, innovation, the learning that comes from scale, and manufacturing on assembly lines will all contribute to gains in the cost structure.

Possibilities in India

In India so far, nuclear generation has not worked out well. The state sector faces problems and progress required importing nuclear reactors made by private companies. While the Indo-US nuclear deal of 2008 was a triumph of diplomacy and statecraft, the bottleneck of civil-nuclear liability has remained. The economics of large-scale nuclear plants, imported from the West, is unattractive. Electricity system thinking in India has then envisaged a combination of renewables and storage to get to zero emissions.

These things could change if SMR technology gets on a time trend of declining prices. We are still some years away from knowing how all this plays out. If it works well, firms in India will see these new SMRs as components that can fit in their business planning. An SMR is just a cylinder, 23-metre-high and 4.5-metre-wide, which generates 50 MW, which could be snuck away in the corner of a factory.

Engineering innovation is at the heart of the carbon transition. Pessimists look at the footprint of the global fossil fuel industry and find it hard to see how these industries can be rapidly closed down. This is a case of sunk cost fallacy, and an under-estimation of human ingenuity. Once governments tax carbon dioxide emissions to fully price their harmful consequences, private energy firms will seek out alternatives. The resulting innovation -- in renewables, nuclear, storage, and demand side efficiency -- will surprise us. In this global journey, we in India, get to free ride on the science and technology that is being developed elsewhere in the world, in well known areas such as solar cells or lithium-ion batteries, and in new areas such as SMR.

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