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It’s hard to make assumptions about cost more than a decade out. Just ask the nuclear startup NuScale.
Every company is, in a certain light, a kind of time machine, and every new product is a missive from the past. When a group of people get together to launch a startup, they’re making a bet that in a few months or years, people are going to want what they’re selling.
In the software industry, the past isn’t too long ago. Because it is possible to code and distribute an app somewhat quickly, a new software product might have only been conceived earlier that year or a year or two earlier.
In a mature consumer-product field — like, say, the car industry — the timeline is longer. A model year 2024 car might have first been conceived of in 2022, and it probably relies on a deeper engineering structure — a “platform” — that might date back to 2018 or earlier. Every new car contains, in essence, two-year-old technology.
But in the “hard tech” industry, the delay can be even longer. It can take more than a decade to get a new type of airplane or power plant to market. These types of technology are the biggest bet of all — because by the time the missive reaches its destination, the world may have changed.
So it was with NuScale, an Oregon-based company developing a small, modular nuclear reactor. Last week, NuScale announced that it was pulling out of a Department of Energy-backed, first-of-a-kind project in Utah.
The company had once planned to build six small, modular nuclear reactors in Utah in conjunction with the Idaho National Laboratory. But despite receiving more than $1 billion in Department of Energy subsidies, NuScale could not make the economics of its project work.
The main problem was that NuScale’s electricity was too expensive. Over the past two years, the estimated price of its project surged, rising by more than 75%. Because electricity projects have to recoup their costs from selling power, those high construction costs helped increase the estimated cost of the project’s electricity by 53%.
By the end, NuScale estimated that power from the project would cost $89 per megawatt-hour. (The average cost of residential electricity in Utah is about $20 per megawatt hour.) Of course, nuclear energy can provide benefits beyond what is captured by price — it is one of the few energy sources that can provide 24/7, zero-carbon electricity — but some costs are too high. NuScale struggled to sell its electrons to nearby towns: It simply could not compete with cheaper electricity from natural gas, solar, or other fuels.
It wasn’t supposed to be like this: NuScale’s smaller size and modular design were supposed to result in lower costs. In essence, NuScale hoped that cost savings would emerge from learning-by-doing and economies of scale — as it got better at making small, modular reactors, it would figure out how to bring down their costs.
That wasn’t a ludicrous idea. Economies of scale have brought down the cost of solar, wind, batteries, and electric vehicles over the past decade. And that idea — that as people do something more, they figure out how to do it more cheaply and efficiently — underpins American and Chinese climate policy.
But the Utah project was the first project of its kind, so NuScale hadn’t yet had the opportunity to take advantage of those economies of scale.
NuScale “shows how much customer matters for a first-of-a-kind deployment. NuScale went down a road that would have proven to be a really interesting model if successful, but it was a lot of legwork,” Ryan Norman, a nuclear analyst at the think tank Third Way, told me. Other advanced nuclear startups have more reliable customer relationships, he added.
Even worse for NuScale, the company found itself building the project amid the worst inflation in a generation. What might have once seemed like a “boring” part of a reactor’s design could create new and spiraling costs.
For instance, NuScale’s design required a lot of concrete, Farah Benahmed, a nuclear policy analyst at Breakthrough Energy, a set of climate investment and advocacy organizations founded by Bill Gates, told me. But concrete costs have risen dramatically, increasing by more than 9% over the past two years and helping to drive the company’s spiraling costs. Other advanced reactor designs don’t rely on concrete to the same degree as NuScale, Benahmed said. (Gates has invested in Terrapower, an advanced nuclear company that competes with NuScale.)
Other key inputs into NuScale’s reactors have also surged in price. From 2021 to 2023, the cost of carbon steel piping more than doubled, according to producer price index data. The cost of fabricated steel plates rose by more than 50%, and the cost of copper wiring rose by 30%.
More broadly, NuScale was founded in 2007 — which means, almost inevitably, that the company was responding to a very different energy moment than the one we have now. At the time, the world was undergoing the first wave of widespread public concern about climate change, driven by Hurricane Katrina, An Inconvenient Truth, and the Intergovernmental Panel on Climate Change’s fourth assessment report. It seemed plausible that Congress might pass a bipartisan cap-and-trade law, which would benefit zero-carbon nuclear power.
Most importantly, U.S. electricity costs were rising, and experts feared they would continue to increase in the 2010s. America’s natural gas supplies seemed to be running out, and the country was preparing to import liquified natural gas in large quantities.
Then came the fracking boom. Cheap natural gas flooded the market, reshaping the domestic energy system and moderating the rise in power prices. The United States never passed a carbon price or a cap-and-trade law. And the economics of building lots of NuScale reactors to provide zero-carbon, 24/7 electricity now look seriously different.
NuScale is not the only clean energy company to run into inflation-driven problems. The offshore-wind company Orsted recently canceled two projects on the Jersey shore due to cost and supply-chain problems. Other offshore projects are also at risk.
Nuclear advocates said that despite its issues, NuScale has accomplished something that no other nuclear startup has. It is the sole nuclear startup to receive approval from the Nuclear Regulatory Commission, the federal agency that must approve nuclear reactors before they can be used. “NuScale has paved the way for how to move through the NRC process. They’re a great example and paved the way for the industry,” Benahmed, the Breakthrough analyst, said.
That approval process took more than four years. It shows another way that it can take years or even decades for “hard tech” companies to get to market — to send their missive from the past to the present.
But despite that long timeline, advocates remain upbeat about the larger industry. “The investor base will do its due diligence to assess what business decisions went wrong with NuScale, but ultimately I think this development is less detrimental to the wave of support we've seen for advanced nuclear from that group,” Norman, the Third Way analyst, said. Because NuScale uses a small version of a light-water reactor — a conventional reactor technology that other advanced-nuclear startups have eschewed — investors probably won’t lose faith in the sector itself.
But they agreed that the make-or-break moment for nuclear is coming up. “The key decision point we need to wrestle with as we continue along the innovation path is: Who is going to lead?” Norma said. “Our allies are waiting. Our competitors are watching. Like it or not, now is the time for the U.S. and industry to prove itself. We've gotta have moxy.”
Editor's note: The original version of this article misidentified one of NuScale’s investors. We regret the error.
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A conversation with VDE Americas CEO Brian Grenko.
This week’s Q&A is about hail. Last week, we explained how and why hail storm damage in Texas may have helped galvanize opposition to renewable energy there. So I decided to reach out to Brian Grenko, CEO of renewables engineering advisory firm VDE Americas, to talk about how developers can make sure their projects are not only resistant to hail but also prevent that sort of pushback.
The following conversation has been lightly edited for clarity.
Hiya Brian. So why’d you get into the hail issue?
Obviously solar panels are made with glass that can allow the sunlight to come through. People have to remember that when you install a project, you’re financing it for 35 to 40 years. While the odds of you getting significant hail in California or Arizona are low, it happens a lot throughout the country. And if you think about some of these large projects, they may be in the middle of nowhere, but they are taking hundreds if not thousands of acres of land in some cases. So the chances of them encountering large hail over that lifespan is pretty significant.
We partnered with one of the country’s foremost experts on hail and developed a really interesting technology that can digest radar data and tell folks if they’re developing a project what the [likelihood] will be if there’s significant hail.
Solar panels can withstand one-inch hail – a golfball size – but once you get over two inches, that’s when hail starts breaking solar panels. So it’s important to understand, first and foremost, if you’re developing a project, you need to know the frequency of those events. Once you know that, you need to start thinking about how to design a system to mitigate that risk.
The government agencies that look over land use, how do they handle this particular issue? Are there regulations in place to deal with hail risk?
The regulatory aspects still to consider are about land use. There are authorities with jurisdiction at the federal, state, and local level. Usually, it starts with the local level and with a use permit – a conditional use permit. The developer goes in front of the township or the city or the county, whoever has jurisdiction of wherever the property is going to go. That’s where it gets political.
To answer your question about hail, I don’t know if any of the [authority having jurisdictions] really care about hail. There are folks out there that don’t like solar because it’s an eyesore. I respect that – I don’t agree with that, per se, but I understand and appreciate it. There’s folks with an agenda that just don’t want solar.
So okay, how can developers approach hail risk in a way that makes communities more comfortable?
The bad news is that solar panels use a lot of glass. They take up a lot of land. If you have hail dropping from the sky, that’s a risk.
The good news is that you can design a system to be resilient to that. Even in places like Texas, where you get large hail, preparing can mean the difference between a project that is destroyed and a project that isn’t. We did a case study about a project in the East Texas area called Fighting Jays that had catastrophic damage. We’re very familiar with the area, we work with a lot of clients, and we found three other projects within a five-mile radius that all had minimal damage. That simple decision [to be ready for when storms hit] can make the complete difference.
And more of the week’s big fights around renewable energy.
1. Long Island, New York – We saw the face of the resistance to the war on renewable energy in the Big Apple this week, as protestors rallied in support of offshore wind for a change.
2. Elsewhere on Long Island – The city of Glen Cove is on the verge of being the next New York City-area community with a battery storage ban, discussing this week whether to ban BESS for at least one year amid fire fears.
3. Garrett County, Maryland – Fight readers tell me they’d like to hear a piece of good news for once, so here’s this: A 300-megawatt solar project proposed by REV Solar in rural Maryland appears to be moving forward without a hitch.
4. Stark County, Ohio – The Ohio Public Siting Board rejected Samsung C&T’s Stark Solar project, citing “consistent opposition to the project from each of the local government entities and their impacted constituents.”
5. Ingham County, Michigan – GOP lawmakers in the Michigan State Capitol are advancing legislation to undo the state’s permitting primacy law, which allows developers to evade municipalities that deny projects on unreasonable grounds. It’s unlikely the legislation will become law.
6. Churchill County, Nevada – Commissioners have upheld the special use permit for the Redwood Materials battery storage project we told you about last week.
Long Islanders, meanwhile, are showing up in support of offshore wind, and more in this week’s edition of The Fight.
Local renewables restrictions are on the rise in the Hawkeye State – and it might have something to do with carbon pipelines.
Iowa’s known as a renewables growth area, producing more wind energy than any other state and offering ample acreage for utility-scale solar development. This has happened despite the fact that Iowa, like Ohio, is home to many large agricultural facilities – a trait that has often fomented conflict over specific projects. Iowa has defied this logic in part because the state was very early to renewables, enacting a state portfolio standard in 1983, signed into law by a Republican governor.
But something else is now on the rise: Counties are passing anti-renewables moratoria and ordinances restricting solar and wind energy development. We analyzed Heatmap Pro data on local laws and found a rise in local restrictions starting in 2021, leading to nearly 20 of the state’s 99 counties – about one fifth – having some form of restrictive ordinance on solar, wind or battery storage.
What is sparking this hostility? Some of it might be counties following the partisan trend, as renewable energy has struggled in hyper-conservative spots in the U.S. But it may also have to do with an outsized focus on land use rights and energy development that emerged from the conflict over carbon pipelines, which has intensified opposition to any usage of eminent domain for energy development.
The central node of this tension is the Summit Carbon Solutions CO2 pipeline. As we explained in a previous edition of The Fight, the carbon transportation network would cross five states, and has galvanized rural opposition against it. Last November, I predicted the Summit pipeline would have an easier time under Trump because of his circle’s support for oil and gas, as well as the placement of former North Dakota Governor Doug Burgum as interior secretary, as Burgum was a major Summit supporter.
Admittedly, this prediction has turned out to be incorrect – but it had nothing to do with Trump. Instead, Summit is now stalled because grassroots opposition to the pipeline quickly mobilized to pressure regulators in states the pipeline is proposed to traverse. They’re aiming to deny the company permits and lobbying state legislatures to pass bills banning the use of eminent domain for carbon pipelines. One of those states is South Dakota, where the governor last month signed an eminent domain ban for CO2 pipelines. On Thursday, South Dakota regulators denied key permits for the pipeline for the third time in a row.
Another place where the Summit opposition is working furiously: Iowa, where opposition to the CO2 pipeline network is so intense that it became an issue in the 2020 presidential primary. Regulators in the state have been more willing to greenlight permits for the project, but grassroots activists have pressured many counties into some form of opposition.
The same counties with CO2 pipeline moratoria have enacted bans or land use restrictions on developing various forms of renewables, too. Like Kossuth County, which passed a resolution decrying the use of eminent domain to construct the Summit pipeline – and then three months later enacted a moratorium on utility-scale solar.
I asked Jessica Manzour, a conservation program associate with Sierra Club fighting the Summit pipeline, about this phenomenon earlier this week. She told me that some counties are opposing CO2 pipelines and then suddenly tacking on or pivoting to renewables next. In other cases, counties with a burgeoning opposition to renewables take up the pipeline cause, too. In either case, this general frustration with energy companies developing large plots of land is kicking up dust in places that previously may have had a much lower opposition risk.
“We painted a roadmap with this Summit fight,” said Jess Manzour, a campaigner with Sierra Club involved in organizing opposition to the pipeline at the grassroots level, who said zealous anti-renewables activists and officials are in some cases lumping these items together under a broad umbrella. ”I don’t know if it’s the people pushing for these ordinances, rather than people taking advantage of the situation.”