Load following with Small Modular Reactors (SMR): A real options analysis

Load following is the potential for a power plant to adjust its power output as demand and price for electricity fluctuates throughout the day. In nuclear power plants, this is done by inserting control rods into the reactor pressure vessel. This operation is very inefficient as nuclear power generation is composed almost entirely of fixed and sunk costs; therefore, lowering the power output doesn't significantly reduce generating costs and the plant is thermo-mechanical stressed. A more efficient solution is to maintain the primary circuit at full power and to use the excess power for cogeneration. This paper assesses the technical-economic feasibility of this approach when applied to Small Modular Reactors (SMR) with two cogeneration technologies: algae-biofuel and desalinisation. Multiple SMR are of particular interest due to the fractional nature of their power output. The result shows that the power required by an algae-biofuel plant is not sufficient to justify the load following approach, whereas it is in the case of desalination. The successive economic analysis, based on the real options approach, demonstrates the economic viability of the desalination in several scenarios. In conclusion, the coupling of SMR with a desalination plant is a realistic solution to perform efficient load following

Multiple nuclear power plants investment scenarios: Economy of Multiples and Economy of Scale impact on different plant sizes

“Deliberately small” nuclear reactors are making their way on the market, not as a mere shift backwards to the small scale of first commercial reactors, but as concepts designed to foster modularization, simplification and serial production. They are proposed by manufacturers worldwide (SMART, 4S, SSTAR, mPower, Nuscale, etc.) and are also intended to address developed electricity markets. The idea of an economic attractiveness of Small and Medium sized Reactors (SMR) is counterintuitive, due to the loss of Economy of Scale on a capital intensive investment. Nevertheless a broader understanding of capital costs drivers has shaped a new concept of Economy of Multiples, that applies on multiple NPP deployment. It relies on learning accumulation to mitigate construction costs of later NPP units; design modularization to exploit the benefits of “serial” production; co-siting economies to decrease the incidence of fixed and site-related costs. We assume that smaller NPP size fosters design modularization and simplifications, with related cost savings. While the effect of modularization on construction costs has been modeled, the estimation of design-based savings may be the upmost arbitrary and controversial, but the underlying assumption is that the lower the plant size, the higher may be the “Design cost-saving factor”. The dynamic and benefits of the Economy of Multiples of SMR have already been investigated on a case study of a stand-alone Large Reactor (LR) against four SMR deployed on a single site. The two alternative investment projects have been evaluated on their economic performance and profitability. But Economy of Multiples is not a privilege of SMR. This work aims to analyze at what extent and conditions the Economy of Multiples holds against the Economy of Scale, when NPP of different sizes are deployed in multiple units, considering that the Economy of Multiples smoothes its benefits with the increase in number of units installed and that the maximum size of the sites is a limit to its application on LR. The limit case-study of “Very Small Reactors” (VSR) is investigated, representing a massive NPP deployment and a huge loss of Economy of Scale. Our analysis is performed by mean of INCAS (INtegrated model for the Competitiveness Analysis of Small-medium modular reactors) Polimi’s proprietary simulation code. Scenario simulations are run managing the Design cost-saving factor of each SMR fleet size as a parameter; its value is calculated in order to achieve the same level of economic performance of LR investment scenario. In other words we have determined the required design simplification effort needed by each NPP size, in order to attain the economic performance of the equivalent LR deployment scenario. Our results show that the Economy of Multiples holds as a competitive edge for Medium and Small Reactors even when nuclear site may host multiple LR: 8-9% design cost saving is able to grant the same economic performance of a fleet of LR, even with higher construction cost estimates. On the contrary, VSR need to achieve more stretching degree of design simplification and related cost savings (up to 15%) in order to be competitive with LR

An Evaluation of SMR Economic Attractiveness

The nuclear “renaissance” that is taking place worldwide concerns the new build of GW size reactor plants, but smaller GenIII+ NPP (Small ModularReactors, SMR) are on the verge to be commercially available and are raising increasing public interest. These reactor concepts rely on the pressurized water technology, capitalizing on thousands of reactor-years operations and enhancing the passive safety features, thanks to the smaller plant and equipment size. On the other hand, smaller plant size pays a loss of economy of scale, which might have a relevant impact on the generation costs of electricity, given the capital-intensive nature of nuclear power technology. The paper explores the economic advantages/disadvantages ofmultiple SMR compared to alternative large plants of the same technology and equivalent total power installed. The metrics used in the evaluation is twofold, as appropriate for liberalized markets of capital and electricity: investment profitability and investment risk are assessed, from the point of view of the plant owner. Results show that multiple SMR deployed on the same site may prove competitivewith investment returns of larger plants, while offering, in addition, unique features that mitigate the investment risk

A new model with Serpent for the first criticality benchmarks of the TRIGA Mark II reactor

We present a new model, developed with the Serpent Monte Carlo code, for neutronics simulation of the TRIGA Mark II reactor of Pavia (Italy). The complete 3D geometry of the reactor core is implemented with high accuracy and detail, exploiting all the available information about geometry and materials. The Serpent model of the reactor is validated in the fresh fuel configuration, through a benchmark analysis of the first criticality experiments and control rods calibrations. The accuracy of simulations in reproducing the reactivity difference between the low power (10 W) and full power (250 kW) reactor condition is also tested. Finally, a direct comparison between Serpent and MCNP simulations of the same reactor configurations is presented

Object-Oriented Modeling and simulation of a TRIGA reactor plant with Dymola

This work presents the modeling and simulation of a TRIGA-Mark II pool-type reactor with Zirchonium-Hydryde and Uranium fuel immersed in light water, with Modelica object-oriented language, in Dymola simulation environment. The model encompasses the integrated plant system including the reactor pool and cooling circuits. The reactor pool plays a fundamental role in the system dynamics, through a thermal feedback effect on the reactor core neutronics. The pool model is tested against three experimental transients: simulation results are in good accordance with experimental data and provide useful information about the inertial effect of the water inventory on the reactor cooling

Cogeneration: An option to facilitate load following in Small Modular Reactors

Nuclear Power Plants (NPPs) have been historically deployed to cover the base-load of the electricity demand. Nowadays some NPPs might perform daily load cycling operation (i.e. load following) between 50% and 100% of their rated power. With respect to the insertion of control rods or comparable action to reduce the nuclear power generation, a more efficient alternative might be the “Load Following by Cogeneration”, i.e. diverting the excess of power, respect to the electricity demand, to an auxiliary system. A suitable cogeneration system needs: 1. To have a demand of electricity and/or heat in the region of 500 MWe–1.5 GWt; 2. To meet a significant market demand; 3. To have access to adequate input to process; 4. To be flexible: cogeneration might operate at full load during the night when the request of electricity is low, and be turned off during the daytime. From the economic standpoint, it is essential that the investment in the auxiliary system is profitable. This paper provides a techno-economic assessment of systems potentially suitable for coupling with a NPP for load following. The results show that district heating, desalination and hydrogen might be technically and economically feasible

Risk analysis of nuclear power investments in Large versus Small-Medium sized reactors

Capital intensive investment projects, as nuclear power generation, have traditionally pursued the Economy of Scale. Multiple SMRs on the same site represent an alternative investment option, that exploits the concept of Economy of Multiples to offset or partially compensate the loss of Economy of Scale. The comparative financial performance has been analysed of alternative NPP investment projects at a single site level: a stand alone, large LWR is compared against multiple SMRs, with the same total power generation capacity. Given conservative assumptions, as far as input variables are considered as deterministic values, scenario simulations show that a LR holds a competitive edge on multiple SMRs, in terms of investment profitability. Nevertheless, LR’s project profitability has proven to be more volatile against changed scenario conditions such as construction period and cost overrun, reduced electricity output, etc. SMRs’ lower project profitability is counterbalanced by higher capability to deal with perturbations of the forecasted scenario conditions, with limited loss of value, as compared to LR. If Profitability Index is assumed as an indicator of the investment performance, useful information may be derived about business risk and profitability from its distribution. This work lead to the conclusion that SMRs may be considered as a valuable and flexible investment option, in a merchant plant environment, where a stochastic approach has to be assumed in data elaboration and where investment profitability is as relevant as investment risk

Investment in different sized SMRs: economic evaluation of stochasticscenarios by INCAS code

Small Modular LWR concepts are being developed and proposed to investors worldwide. They capitalize on operating track record of GEN II LWR, while introducing innovative design enhancements allowed by smaller size and additional benefits from the higher degree of modularization and from deployment of multiple units on the same site. (i.e. “Economy of Multiple” paradigm) Nevertheless Small Modular Reactors pay for a dis-economy of scale that represents a relevant penalty on a capital intensive investment. Investors in the nuclear power generation industry face a very high financial risk, due to high capital commitment and exceptionally long pay-back time. Investment risk arise from uncertainty that affects scenario conditions over such a long time horizon. Risk aversion is increased by current adverse conditions of financial markets and general economic downturn, as is the case nowadays. This work investigates both the investment profitability and risk of alternative investments in a single Large Reactor or in multiple SMR of different sizes drawing information from project’s Internal Rate of Return stochastic distribution. multiple SMR deployment on a single site with total power installed. equivalent to a single LR. Uncertain scenario conditions and stochastic input assumptions are included in the analysis, representing investment uncertainty and risk. Results show that, despite the combination of much larger number of stochastic variables in SMR fleets, uncertainty of project profitability is not increased, as compared to LR: SMR have features able to smooth IRR variance and control investment risk. Despite dis-economy of scale, SMR represent a limited capital commitment and a scalable investment option that meet investors’ interest, even in developed and mature markets, that are traditional marketplace for LR

Financial case studies on small- and medium-size modular reactors

Nowadays interest in small- to medium-size modular reactors (SMRs) is growing in several countries, including those economically and infrastructurally developed. Such reactors are also called “deliberately small reactors” since the reduced size is exploited from the design phase to reach valuable benefits in safety, operational flexibility, and economics. A rough evaluation based only on the economies of scale could label these reactors as economically unattractive, but that approach is incomplete and misleading. An economic model (INCAS—INtegrated model for the Competitiveness Assessment of SMRs) is currently being developed by Politecnico di Milano university within an international effort on SMR competitiveness fostered by the International Atomic Energy Agency, suitable to compare the economic performance of SMRs with respect to large reactors (LRs). INCAS performs an investment project simulation and assessment of SMR and LR deployment scenarios, providing monetary indicators (e.g., internal rate of return, levelized cost of electricity, total equity employed) and nonmonetary indicators (e.g., design robustness, required spinning reserve). This paper presents the general features and purpose of the INCAS model, detailing the input required, and points out the main differences with other simulation codes. INCAS is applied to evaluate the financial attractiveness of an investment in four SMRs with respect to a single LR with the same power generation capacity installed, in different deployment scenarios. Then, a sensitivity analysis highlights the degree of elasticity of the key output parameters for the investors, with respect to the most sensitive input parameters. Given the uncertainties of the main input parameters, INCAS results are affected by uncertainties as well. However, the financial output parameters provide a general understanding on the investment economics: INCAS shows that the economy of scale is not the only cost driver, because the economies of multiples may compensate for most of the gap in the economic performance of the SMRs. The uncertainties that affect the input data and the model do not allow declaration of a straightforward and neat economic performance superiority of SMRs versus LRs, or vice versa. Nevertheless, some trends have been highlighted. In particular, in “supported” market scenarios, where overnight construction costs have the highest incidence and the market conditions are less volatile, the most suitable strategy is to pursue the economies of scale. In contrast, SMRs behave better in “merchant” scenarios, where the cost of financing is higher and financial risk is sensitive. A “modular” investing strategy with a step-by-step power block deployment process allows lower financial exposure and less capital at risk and may mitigate the impact of scenario uncertainties on a project’s profitability

OPEN MODEL FOR THE EVALUATION OF ECONOMIC ATTRACTIVENESS OF SMALL AND MEDIUM SIZED REACTORS

One of the IAEA’s statutory objectives is to “seek to accelerate and enlarge the contribution of atomic energy to peace, health and prosperity throughout the world”. One way this objective is achieved is through the publication of a range of technical series. Two of these are the IAEA Nuclear Energy Series and the IAEA Safety Standards Series. According to Article III.A.6 of the IAEA Statute, the safety standards establish “standards of safety for protection of health and minimization of danger to life and property.” The safety standards include the Safety Fundamentals, Safety Requirements and Safety Guides. These standards are written primarily in a regulatory style, and are binding on the IAEA for its own programmes. The principal users are the regulatory bodies in Member States and other national authorities. The IAEA Nuclear Energy Series comprises reports designed to encourage and assist R&D on, and application of, nuclear energy for peaceful uses. This includes practical examples to be used by owners and operators of utilities in Member States, implementing organizations, academia, and government officials, among others. This information is presented in guides, reports on technology status and advances, and best practices for peaceful uses of nuclear energy based on inputs from international experts. The IAEA Nuclear Energy Series complements the IAEA Safety Standards Series. To be competitive in anticipated markets, small and medium sized reactors (SMRs) rely on design and deployment approaches that are able to offset the adverse impacts of economy of scale. Such approaches include design simplification resulting from the application of safety design features that are the most appropriate for reactors of smaller capacity; the economy of mass production of multiple prefabricated modules; the option of incremental capacity increase, with possible benefits resulting from accelerated learning; sharing of common equipment and facilities; shorter construction periods, unit timing (spread of investments over time); and, possibly, greater involvement of local industry and local labour. The effectiveness of all of these approaches to SMR design and deployment depends on the application and on market variables, such as interest rates, and needs to be assessed and demonstrated for specific cases. Upon the advice and with the support of IAEA Member States, the IAEA provides a forum for the exchange of information by experts and policy makers from industrialized and developing countries on the technical, economic, environmental and social aspects of SMR development and implementation in the twenty-first century, and makes this information available to all interested Member States by producing status reports and other publications dedicated to advances in SMR design and technology development. This report was prepared to assist existing and potential stakeholders in Member States in understanding the economic competitiveness of SMR technologies compared to other energy sources and large reactors (LRs); to provide information on available approaches and frameworks to assess the economic competitiveness of advanced SMRs and LRs under specific conditions of their application; and to share knowledge on positive experiences of several Member States that are introducing SMRs into their energy mix. The report is intended for a variety of stakeholders including: design organizations involved in SMR development programmes; investors and potential users of innovative SMRs; and officers in the ministries or atomic energy commissions in Member States responsible for implementing nuclear technology development programmes or evaluating nuclear power deployment options in the near, medium and longer term. The main sections of this report highlight the experience with and future plans for SMRs in several Member States, and present the available methodological options to assist design organizations and guide potential users on the economic performance and investment attractiveness of SMRs. The report also provides recommendations on how to apply the available methodologies and define a framework for subsequent comparative assessment studies of different deployment strategies for different nuclear power plants under various possible conditions of their application. The annexes contributed by Member States provide in-depth descriptions of different assessment methods, give examples of their application, suggest further developments towards a consolidated methodology and also offer more details of the experience of Member States