Coal to Nuclear (C2N)
Energy transition slam dunk?
The shift in narrative around nuclear from “proven failure” (in terms of new builds) to “climate imperative” has been startlingly rapid. This is party due to the broad recognition of just how much zero carbon heat and electricity we are going to need (and nuclear can provide both), and has certainly been accelerated by energy security concerns (Kazakhstan is the biggest exporter of uranium, but Canada and Australia also have large reserves). There has also been significant traction with SMRs, with NuScale announcing several development projects around the world and, in the process, becoming one of the few performing SPAC listings of the last year. One of the most compelling roles for nuclear in the years to come is replacing coal power plants (CPPs) as large base load power, availing of much of the same infrastructure, from grid connections to steam-cycle equipment, as well as creating economic opportunity in those communities that are at risk of being left behind in the transition. The importance of this element of a just transition is prominently recognised in the Inflation Reduction Act (thanks to Joe Manchin, who, incidentally, is also pushing for much needed energy permitting reform). Last week, the Department of Energy put out a report looking at the potential for C2N transition in the US, which I’m breaking down here. This was accompanied by an announcement that Microsoft and TerraPraxis were collaborating to build software to help CPP owners with decision framework on the best way to decarbonise. Nuclear is becoming cool again, folks. Watch this space.
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The DoE report looked at a total set of 157 sites of retired coal plants and 237 of operating sites (394 total), of which 125 and 190 respectively (315) totalling about 260 GW of capacity were identified as having the basic characteristics required for the transition to advanced reactors. [For context, that compares to about 1,150 GW of total capacity in the US, or 22%.]
Opportunity for utilities: “The C2N transition is a way to replace the retiring coal generation capacity while utilizing what would otherwise be stranded assets at CPPs and providing economic opportunity to site owners and surrounding communities.”
Repurposing infrastructure: The analysis looked at existing office buildings, electric switchyard components (transformers, substations, etc) and transmission infrastructure, heat transfer and steam-cycle components.
Cost reduction: Depending on the compatibility of the existing infrastructure, repowering coal plants with nuclear reduces the cost by 15-35% compared to a greenfield nuclear plant. [Now add in the 10% investment tax credit under the IRA for investing in energy communities, plus the other incentives which can stack to up to 50% altogether and you’re taking big, big chunks out of the upfront cost of deploying nuclear.]
Job creation: “For the case of transitioning to a 924 MWe plant, the study results suggest that jobs in the region could increase by more than 650 permanent jobs, distributed across the NPP, the supply chain supporting the plant, and the community surrounding the plant.” - This excludes transitory construction jobs. Whilst a number of the jobs are the same, some are different. Perhaps unsurprisingly, nuclear power plants require quite a few more nuclear technicians than CPPs….
Tax base: “Long-term job impacts translate to additional economic activity on the order of $275 million, implying a 92% tax revenue increase from the NPP for the local county when compared to a scenario of all coal to one of all nuclear.”
Advanced Reactor potential: The emergence of SMRs open up significantly more possibilities for C2N transition than with traditional large (>1GW) light water reactor (LWRs)s alone. This is due to the larger footprint required for those plants and also because the existing coal power plant infrastructure often isn’t big enough to accommodate that size. Whilst 80% of sights are appropriate for advanced reactors vs only 22% for LWR.
Heat sinks: the report notes that existing access to water rights for cooling purposes is a significant advantage for the permitting process relative to greenfield development, especially in Western states. [As an aside, the report doesn’t mention the possibility of using the waste heat for something useful. Nuclear as a source of low carbon heat is actually getting more attention of late with new high-temperature reactor designs.]
Reactor designs that operate at higher temperatures and pressures, such as Terrapower’s sodium-cooled fast reactor or X-Energy’s high-temperature gas-cooled reactors, mirror more closely the conditions of a CPP so the heat sink and steam-cycle equipment is more compatible. For the moment NuScale and GE Hitachi’s LWR designs are more mature, but it will be interesting to see how that evolves over the next couple of years with this CPP compatibility thing in mind.
Capex savings potential: in the scenario where buildings, heat sink and electrical components are reused, C2N could provide saving of between 17-26% vs greenfield. Where steam-cycle components are also reused (not applicable to pressurised water reactor designs like NuScale’s), those savings jump to a 20-38% range. The report cites work by TerraPraxis that gives similar results for the capex, with a 9-28% reduction in LCOE.