Legislature(2021 - 2022)ADAMS 519
02/10/2022 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| HB299 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 299 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 299-MICROREACTORS
10:17:44 AM
CHAIR SCHRAGE announced that the only order of business would be
HOUSE BILL NO. 299, "An Act relating to microreactors."
10:18:37 AM
MARCUS NICHOL, Senior Director, New Reactors, Nuclear Energy
Institute (NEI), provided a PowerPoint presentation, titled
"State of Micro-Reactors" [hard copy included in the committee
packet]. He shared that NEI is the trade association for the
nuclear energy industry, and, in his position, he leads industry
efforts to deploy advanced nuclear reactors. He began on slide
2 of the presentation, stating that there are two types of
microreactors, stationary and mobile. Primarily the
presentation will deal with stationary reactors, which stay in
the same location for their operating life. He stated that
market opportunities in Alaska for microreactors are remote
villages, mining operations, defense installations, and
microgrids. He voiced the opinion that microreactors provide a
great opportunity to have a clean and resilient energy source.
10:20:27 AM
MR. NICHOL pointed out that slide 3 provides a list of companies
working on microreactor designs. He stated that these companies
are engaged with potential customers, and they also work with
the U.S. Nuclear Regulatory Commission (NRC) on licensing and
design approval. He said that the Ultra Safe Nuclear
Corporation (USNC) has recently announced a project in Alaska
with Copper Valley Electric Association (CVEA). He continued
that microreactors are generally 1 -to -10 megawatts of electric
energy in size, but they can be as large as 50 megawatts of
electric energy, as the legislation identifies.
10:21:37 AM
MR. NICHOL outlined the three concerns customers have when
considering a microreactor: the timeline, the cost, and the
regulatory process. He pointed out [on slide 4] the deployment
timeline. The process begins when a customer makes the decision
and enters into a contract with a provider. At this time, the
licensing process would begin. He suggested some parallel work
could be done during manufacturing, such as construction on the
site. He stated that there would need to be NRC approval before
the start up. He indicated that a conservative estimation for
this process is seven years, but it could be as fast five as
years. He said that over the past four years there have been
time reductions concerning the licensing process and the supply
chain, and the graph [on the slide] displays a five-year
timeline. He offered that NEI is working to shorten the
timeline to three years. He added that microreactors have a
shorter deployment timeline than advanced nuclear reactors.
10:24:28 AM
MR. NICHOL, in response to Representative Kaufman, stated the
timeline is built on the assumption that the technology would be
mature enough to deploy. The technology would have to be mature
when a contract is signed, as this is the point of [NRC]
verification. He stated that currently there are several
designs at a level of maturity which could be considered for a
signed contract.
10:26:13 AM
MR. NICHOL resumed the presentation on slide 5, which detailed
demonstrations in different states. All of the projects listed
are commercial versions planned to be online between 2025 and
2027. He said that Oklo Inc. has plans to operate its first
microreactor at the Idaho National Laboratory (INL). The
company has been working with INL to get access to fuel and the
operation site for the 1.5-megawatt reactor. He said that USNC
has announced two demonstrations. The first demonstration is a
government backed program at the Chalk River Laboratories in
Canada. The second demonstration is with the University of
Illinois. The university would use the microreactor to produce
power and heat, but it would also be used for testing and
research, as the university has a nuclear engineering program.
The U.S. Department of Defense (DoD) is also working on two
demonstrations. The first would be deployed in Alaska by 2027
at Eielson Air Force Base. The second DoD demonstration would
be a mobile microreactor at INL.
10:29:27 AM
MR. NICHOL, in response to Representative Rauscher, stated that
the purpose of the stationary microreactor at Eielson Air Force
Base would be to demonstrate a form of resilient power that
would allow the base to decouple from the grid, if needed. The
project would also provide enhanced protection against security
threats. He added that the mobile reactor developed by the
Strategic Capabilities Office at DoD would demonstrate proof of
technology, and it would be part of the U.S. military overseas
program development.
10:30:35 AM
MR. NICHOL, in response to a follow-up question, stated that the
stationary reactor for Eielson Air Force Base is scheduled for
deployment in 2027. The mobile microreactor demonstration would
be deployed at INL in Idaho in 2025.
10:31:01 AM
MR. NICHOL turned to slide 6 which overviewed the estimated cost
of microreactors and cost competitiveness. He pointed out that
the graph represents the current cost of generating electricity
in various markets. He added that the overhead costs for
businesses are not included on the graph. For example, he
stated that the cost of using diesel in the remote arctic does
not include the capital costs of the diesel generator or the
generator's operation and maintenance. He said this comparison
of costs includes the fuel and the transportation of the fuel to
the location. The Alaska markets shown on the graph are as
listed: arctic communities, remote defense installations, island
communities and remote mining, the Alaska Railbelt, and the U.S.
grid. He pointed out that the graph shows the variability of a
microreactor's capital cost, along with the operation and
maintenance costs. He explained that the initial cost point of
the first reactor would be higher, with costs ranging from 15 -
to -40 cents per kilowatt hour; from there, as a [company]
deploys more reactors, the costs would go down. He explained
this is a well-known phenomenon - every time the number of units
produced is doubled, prices go down by a certain percentage. He
continued that for a higher cost there is a lower learning rate,
while a lower cost would have the best learning rate. He stated
that these learning rates are not just supported by large
nuclear plants but also experienced in other manufacturing
industries. He stated the graph demonstrates that microreactors
could be competitive, even in the more expensive markets; for
example, the high cost of transporting fuel would automatically
be reduced in the arctic communities. He stated that a lower
cost would be achieved at a higher learning rate, adding that a
microreactor could be competitive in the Alaska Railbelt. He
noted these costs do not reflect government support for first-
of-its-kind technology. He said the larger reactors are more
expensive, so federal support would be necessary. He stated
that microreactors, even without government support, would
reduce the cost of power. If the government were to help for
first-time costs, this would spur adoption more quickly. He
noted there is a private-only possibility of deploying
microreactors.
10:36:23 AM
MR. NICHOL, in response to Representative Rauscher, related that
the definition of "learning rate" would be how much the
percentage cost decreases every time production is doubled.
Responding to a follow-up question, he said the cost decreases
for a number of reasons. He explained that with any new task a
process becomes more efficient as it is learned. There would be
a learning process for the initial setup, but the more times a
process is done, the faster it can be done with more efficiency.
10:38:14 AM
REPRESENTATIVE RAUSCHER questioned whether the cost per kilowatt
hour would be indefinite.
MR. NICHOL, in response, said this cost of electricity is the
average cost over the lifetime of the plant. This levelized
cost combines annual costs and capital costs. The annual cost
is the operations and maintenance costs with fuel costs, while
the capital cost is amortized over the life of the plant. He
added that the day-one costs would include the financing of the
capital, so it would be higher, but this would decrease after
the capital cost has been paid off.
10:39:14 AM
REPRESENTATIVE RAUSCHER questioned the cost annually to run a
10-megawatt microreactor, for example. He questioned whether
there would be an available formula [to determine costs].
MR. NICHOL, in response, gave the example that the upfront cost
for a microreactor could be $100 million to purchase, plus
annual operating and maintenance costs. He said that he could
follow up with the exact numbers to the committee after the
hearing.
10:40:34 AM
MR. NICHOL outlined that the next two slides show the cost
breakdown. He showed slide 7, which outlined ownership types of
reactors. He stated that, because of interest rates and capital
costs, investor owners pay a higher cost in financing than
publicly owned utilities. He added that the federal government
has a loan guarantee program available for nuclear projects,
explaining if an investor owner utilizes a loan, the financing
interest rate could be reduced to an amount very similar to a
publicly owned utility. There are slight differences based on
the ownership structure, but costs could be fairly close with a
loan guarantee for a utility, publicly owned or not. If a
utility does not want to own the microreactor, but pays a third
party for the power through a power purchase agreement, it could
still have about the same cost of power.
10:42:34 AM
MR. NICHOL, continuing to slide 8, explained the second factor
for cost is whether the microreactor is used constantly, or
cycled on and off. A microreactor has a high capital cost but
low costs for operation, maintenance, and fuel. The more a
reactor is used, the more the capital cost can be spread out,
bringing down the levelized cost of electricity. He explained
that using the reactor at 100 percent power would be the lowest
cost. If used half the time, the cost [of the system] would
almost double. He said that at 75 percent capacity, with the
opportunity to cycle up and down to meet load demand, there
would be a modest impact on the expense of electricity. He
offered that the industry is investigating hybrid energy systems
that would operate the microreactor at 100 percent power all the
time using a cycle-based load to produce heat and electricity,
switching between the two. He stated that a heat storage system
could be added and charged when the amount of demand is less
than the amount of production. When demand is higher than
production, energy can be retrieved from the storage system.
Aligning with the production of decarbonized [energy], he said
there is the idea that hydrogen and other synthetic fuels could
be produced [using microreactors].
10:45:08 AM
REPRESENTATIVE FIELDS shared his understanding that USNC's
proposal for CVEA would provide about half the electricity at 20
cents per kilowatt hour. He stated that this is because
hydropower would be used in the summer and the microreactor
would be used in the winter. He expressed the understanding
that this cost represents the low end [of the cost analysis in
the presentation]. He questioned whether this is possible
because the project would use "heat to heat the terminal." He
questioned whether USNC has a good price point and whether Mr.
Nichol is aware of this project in context of the broader price
curve.
MR. NICHOL responded that he has not seen the details of the
USNC cost analysis, so he cannot comment on the numbers.
Regarding the presentation, he said the cost analysis was put
together with estimates from developers. The analysis is
conservative because NEI did not want to report low price
estimates when the actual price could be much higher. He
expressed the understanding that companies with specific design
analysis could show less cost. He deferred other questions on
this topic to USNC.
10:46:45 AM
MR. NICHOL resumed the presentation on slide 9. To help
understand the use of microreactor heat, the slide showed
hydrogen being used as a proxy. He cited a study by
LucidCatalyst detailing the cost to produce hydrogen from
various energy sources. He explained that solar, wind, and
other clean electricity sources use electricity to create
hydrogen. He added that nuclear can also produce hydrogen
through electricity. He stated when hydrogen is produced with
heat, or heat assisted electricity, the cost drops dramatically.
In the clean-heat category on the graph, he pointed out that the
lowest cost for producing hydrogen is nuclear technology-based.
He said these would not be microreactors, but the cost would be
comparable, adding, if the production of hydrogen is used as a
proxy, it can be seen that nuclear offers a very competitive
price for heat.
10:48:16 AM
MR. NICHOL continued to slide 10, which addressed the utility
for microreactors and the interest in other states. He
referenced policy changes made in several states that would help
support advanced reactors. He pointed out that moratoriums have
been repealed in Montana and West Virginia, allowing projects to
move forward with state agencies regulating environmental
impacts and electricity costs. He stated that some states are
studying the feasibility of nuclear advanced reactors, while
others have put into place support mechanisms, such as tax
incentives. He pointed out that NEI is studying the correlation
between a state's interest and its policies. States with
policies which discourage advanced reactors have little utility
interest, while states with policies supporting advanced
reactors have more interest. Concluding the presentation, he
expressed appreciation for the committee's interest in
microreactors and the proposed legislation.
10:51:04 AM
REPRESENTATIVE KAUFMAN, in relation to different energy security
situations, referenced an article which reported that Germany
has leaned towards renewable energy, like wind and solar, while
France has anchored its power production in atomic energy. He
expressed the understanding that Germany has energy insecurity
because the base production capacity is not connected to a more
durable form. He questioned the use of microreactors versus the
use of other types of green energy.
MR. NICHOL responded that NEI sees itself in partnership with
renewables and other clean energy sources, such as wind, solar,
carbon capturing, and energy storage. He expressed the belief
that the amount of new energy sources needed in the future would
leave plenty of room for all. He said systems which include a
diversified portfolio, including nuclear energy, have the lowest
costs and best reliability of all systems. He stated that
France, as an exporter of energy, would have more energy
security than Germany, as an importer of energy. He argued that
there is a direct correlation between having a healthy nuclear
industry and forgoing the use of nuclear energy.
REPRESENTATIVE KAUFMAN expressed the belief that optimizing the
selection from an array of solutions for a region, in relation
to local conditions, would be best. He expressed interest, with
respect to hydrogen, in the cogeneration potential of making
power on one end and heat on the other. He stated there are
solid state storage methods of hydrogen in fuel cells which can
be loaded with cartridges. He speculated, if hydrogen is
available, that would be an interesting way forward.
10:54:25 AM
REPRESENTATIVE SCHRAGE thanked Mr. Nichol.
[HB 299 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 299 NEI Presentation.pdf |
HENE 2/10/2022 10:15:00 AM |
HB 299 |