The nuclear power industry is in crisis. The newest generation of state-sponsored, super-expensive reactors are behind schedule and wildly over-budget. Older plants are being retired at a rate that new ones aren’t replacing. And dozens of startups with novel technologies are languishing, with no clear path toward partnering with private- and public-sector backers to take them to the next level.
But there’s hope for a new approach, the Breakthrough Institute says. In a newly released report, the nonprofit group has collected specific policies from other capital-intensive industries -- wide-body aircraft manufacturing, pharmaceuticals, fracking and even private-sector space travel -- that it says could help the nuclear industry break out of its current trap.
“The old model of commercialization of nuclear technologies, which relied on heavy state support and centralized decision-making, simply hasn’t delivered new designs that meet the needs of deregulated and competitive markets in the developed world, or that can compete with cheap fossil fuels in most developing countries,” the report states.
That’s too bad, because “in the United States today, there are dozens of advanced nuclear startups that could bring game-changing nuclear technologies to market,” it notes. Indeed, private investors have put $1.3 billion into about 50 “advanced nuclear” startups in the U.S. and Canada, think tank Third Way reported in 2015.
But the path to commercialization for these designs remains uncertain -- and very expensive. “The Nuclear Regulatory Commission is presently unprepared to license them. The Department of Energy and the national laboratories are not well set up to assist them. Nor are all but the largest incumbent nuclear firms in a position to acquire the large amounts of capital that would be required to navigate the current licensing process, develop advanced materials and fuels, or build first-of-kind reactors.”
The report highlights startup NuScale as a case study in how difficult it is to bring new nuclear reactor designs to market. Established as a university spin-off in 2007, NuScale landed engineering giant Fluor as a majority shareholder in 2011, and in January of this year submitted the country’s first small nuclear reactor design for federal review. Now the Nuclear Regulatory Commission has up to 40 months to review the design.
Here are some key lessons to be learned from the four industries studied in the report.
Wide-body aircraft: "Economies of multiples," not economies of scale
The wide-body aircraft business is a lot like nuclear power. Both have come to rely largely on state support, in particular military spending, and are closely enmeshed with the governments sponsoring them. Both have also seen a handful of giant companies take up the majority of business, gaining competitive advantage through economies of scale.
But the last two decades have seen the emphasis shift “away from economies of scale to economies of multiples,” the report says. “The relative failure of enormous jumbo jets such as the Airbus A380 highlights the tradeoffs between economies of scale and the flexibility of smaller designs. It is only once they start producing hundreds of units that Boeing and Airbus really see their production costs fall, and the smaller the designs, the quicker those economies come into play,” it wrote.
“Public procurement of advanced nuclear for national laboratories, military bases, or public universities and hospitals could play a similar role for advanced nuclear innovation, as could the inclusion of nuclear in state- and country-level clean energy mandates."
Pharmaceuticals: Staged licensing to give startups a path to growth
While drug-making and nuclear power may not appear to have much in common, the Breakthrough Institute says pharma’s massive growth over the past three decades has given the nuclear industry a roadmap for licensing regulations that support small-scale innovation.
“The predominant innovation model, whereby smaller and larger firms combine to develop new drugs, is often cited as the ideal of today’s nuclear entrepreneurs,” according to the report. “The Food and Drug Administration created a staged licensing process, whereby different pre-commercialization innovation successes (e.g., drug effectiveness in small trials) get formal regulatory validation. This system has allowed startups to get funding, perform trials, and complete discrete steps in the licensing process with confidence that the chance of an acquisition (and a large payout) is high, even as their drug is still years away from commercialization."
In order to foster greater collaboration between startups and traditional players in the nuclear space, the report states that it's critical to replace the Nuclear Regulatory Commission's current opaque commercialization system with one that's more transparent.
Commercial space flight: NASA's role in creating a new industry
If you think nuclear power is complicated, try sending rockets into space. Neither effort can exist without massive government backing, the report noted -- but that doesn’t require top-down approaches that limit technologies to a handful of choices picked by the biggest companies. One of the most important aspects of NASA’s move to private partnerships for spaceflight was that “NASA didn’t down-select technologies; they awarded funding to any company that met a predetermined set of criteria,” the report states. NASA was also looking to foster a robust commercial spaceflight industry, not find a single company to complete a given task.
So in 2006, NASA awarded “Space Act Agreements,” which gave companies access to NASA facilities, as well as advice and consulting from experienced NASA engineers. The cooperation wasn’t limited to technology -- NASA also worked on “educating the investment and insurance communities and developing a customer base for non-NASA orbital transportation services,” plus matching companies with vendors. In addition, NASA played the role of disinterested third-party arbiter, which allowed other companies to come together. Thanks to this approach, SpaceX delivered its first cargo load to the International Space Station in 2012, just 10 years after the company was founded.
“There is no reason why today’s nuclear-focused public institutions couldn’t do the same," the report states.
Fracking: How to make inter-firm collaboration add up to more than the sum of its parts
Whether you consider it a good thing or bad thing, the revolution in hydraulic fracturing of shale formations to recover natural gas “was the result of multiple smaller technological advances, relating to underground mapping, microseismic imaging, the composition of hydraulic fracturing fluid, and even innovative drill bits,” the report noted. “Of all the possible policy changes suggested by this review, encouraging the state to create more active institutions for inter-firm collaboration is probably one of the lowest-hanging fruits. Not only are the costs low, but the pre-existing network of nuclear-focused national labs is also the perfect platform on which to foster these kinds of institutions."
The national labs were a critical cog of the network of players focused on hydraulic fracturing. They helped bring together individual players and an industry consortium called the Gas Research Institute. The U.S. government would also help set GRI's research priorities and play a similar convening role to that which NASA fulfilled in developing commercial spaceflight. "Attempting to replicate that success can only help boost nuclear innovation," according to the report.
Building the case for a big change in federal nuclear policy
The Breakthrough Institute report comes the same week that a U.S. Senate committee has released a bill, called the Nuclear Energy and Innovation Modernization Act (NEIMA), that’s meant to take a different approach to boosting the industry than the multibillion-dollar loan guarantees that have constituted the bulk of previous federal support.
Jessica Lovering, the Breakthrough Institute’s energy director, said in a Thursday interview that the new bill does take some steps the report calls for. NEIMA encourages more transparency into the Nuclear Regulatory Commission licensing process, for example, and changes the fee structures to put less burden on industry partners, she said. But it doesn't cover many other important issues, such as setting forth a role for the Department of Energy, which fosters most of the country’s nuclear research and development, she noted.
“We’re hoping to shape the next set of policies coming out at the federal level -- building more momentum for more aggressive investment in new technologies, on the commercialization side,” she said. It won't be easy. Getting the Nuclear Regulatory Commission to act like NASA has with its commercial spaceflight push “would require a major piece of executive leadership” from the Trump administration, she said.
But if you contend that carbon-free nuclear power should be a key part of the world’s future power mix, as the Breakthrough Institute does, it’s worth the effort to make the U.S. competitive in the industry, she said. Most of the world’s reactors today are being built by China, Russia, France and South Korea, but “there’s also a market in developing countries, and it would be great if U.S. companies could compete in that market.”