Legislature(2021 - 2022)ADAMS 519

02/10/2022 10:15 AM House ENERGY

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10:17:26 AM Start
10:17:44 AM HB299
10:54:46 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       February 10, 2022                                                                                        
                           10:17 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Calvin Schrage, Chair                                                                                            
Representative Matt Claman                                                                                                      
Representative Zack Fields                                                                                                      
Representative George Rauscher                                                                                                  
Representative James Kaufman                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Chris Tuck                                                                                                       
Representative Tiffany Zulkosky                                                                                                 
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 299                                                                                                              
"An Act relating to microreactors."                                                                                             
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 299                                                                                                                  
SHORT TITLE: MICROREACTORS                                                                                                      
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
02/04/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/04/22       (H)       ENE, RES                                                                                               
02/08/22       (H)       ENE AT 10:15 AM ADAMS 519                                                                              
02/08/22       (H)       Heard & Held                                                                                           
02/08/22       (H)       MINUTE(ENE)                                                                                            
02/10/22       (H)       ENE AT 10:15 AM ADAMS 519                                                                              
WITNESS REGISTER                                                                                                              
MARCUS NICHOL, Senior Director, New Reactors                                                                                    
Nuclear Energy Institute                                                                                                        
Washington, District of Columbia                                                                                                
POSITION STATEMENT:  Provided a PowerPoint presentation, titled                                                               
"State of Micro-Reactors" and answered questions.                                                                               
ACTION NARRATIVE                                                                                                              
10:17:26 AM                                                                                                                   
CHAIR  CALVIN  SCHRAGE  called the  House  Special  Committee  on                                                             
Energy meeting to  order at 10:17 a.m.   Representatives Rauscher                                                               
and Schrage were  present at the call to  order.  Representatives                                                               
Kaufman,  Fields,  and  Claman  arrived as  the  meeting  was  in                                                               
                      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                                                               
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                                                               
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                                                               
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.]                                                                                                         
10:54:46 AM                                                                                                                   
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at [10:55]                                                                    

Document Name Date/Time Subjects
HB 299 NEI Presentation.pdf HENE 2/10/2022 10:15:00 AM
HB 299