BPU Learns Of Carbon Free Power Project Cost Increase

A three-dimensional model of a proposed nuclear electric generation facility at INL. Courtesy/LAC

Los Alamos Daily Post

Emitting zero greenhouse gas emissions has been a big topic for a long time in Los Alamos County. In 2022, Council heard from and responded to recommendations made by the Los Alamos Resiliency, Energy & Sustainability Task Force (LARES) to achieve this objective.

Likewise, the County’s Department of Public Utilities (DPU) is exploring energy generation options that will help achieve its goal of being a carbon neutral electric provider by 2040.

One such option is the Carbon Free Power Project (CFPP), a proposed nuclear electric generation facility to be constructed at an Idaho National Laboratory site. The facility would utilize small modular reactor technology being developed by NuScale Power, according to the County’s website. The plant is projected to be operational by 2030 and will emit a total of 462 megawatts, or 60 megawatts to 77 megawatts from each of the six modules.

It is further stated on the website that 28 of the 46 members of the Utah Associated Municipal Power Systems (UAMPS), which are municipal and cooperative utilities – including Los Alamos – have subscribed power from the CFPP. As of 2021, Los Alamos has subscribed to 1.8 megawatts.

The Board of Public Utilities heard an update on the project during a Jan. 11 special meeting. They learned that the biggest change is that the cost of the CFPP, like everything else, has gone up.

UAMPS Project Engineer Bob Coward put it bluntly: the cost estimate is higher. When UAMPS received the estimate, Coward said, “What we realized and what we learned, was the overwhelming reason why the project cost estimate went up really wasn’t because of missed scope or missed costs the last time or bad estimating. The primary reasons the cost estimates went up were actually two factors: the first is inflation … if you go look at the rate of inflation over the last two years [for large infrastructure building materials] … the total inflation is around 40 percent … in order to do these projects, they are expensive … you end up borrowing a lot of money to finance the construction, to finance the development, prior to operations. Since the summer of 2020 – the last cost estimate … the interest rates we were assuming for low return financing have gone up by 2 percent … that’s a big deal.”

Therefore, Coward said UAMPS performed an economic competitive test in accordance with the development cost reimbursement agreement. In the development cost reimbursement agreement, there is a target price of $58 per megawatt hour. So, if the economic competitive test calculated a cost higher than $58 that would allow UAMPS to withdraw from the CFPP and receive a reimbursement from NuScale for almost all of its out-of-pocket expenses. The economic competitive test was returned with a higher cost – $65 per megawatt hour, Coward said.

So now what?

Coward said the original development cost reimbursement agreement was developed two years ago.

“What we realized is this is a new landscape; we are in a different place … the inflation was more of a step change … interest rates … where they are now is more of a typical going forward value … the recommendation we’ve made as a project team is to pass on the opportunity for reimbursement … and to go forward with just as much protection as before and in fact with more protection for members,” he said.

Coward said UAMPS negotiated with NuScale a new target price of $89 per megawatt hour in 2022 dollars. NuScale will be obligated to reimburse essentially 100 percent to UAMPS if the new economic competitive test results this fall exceed the new target price.

He added that UAMPS will be eligible for 100 percent reimbursement if the subscription to CFPP is below 80 percent.

“What we accomplished for the members is the idea that we can work for the next year, we can get much smarter with the cost estimate … we will have the COLA (Combined Operation License Application) completed … we will see where the markets are … we will see what the subscription picture looks like and that allows us to make good progress on the project next year to drive the price that works for all the members and do that at essentially no risk to the members,” Coward said.

He added that should UAMPS members be reimbursed, Los Alamos County would receive $700,000 for its 1.8 megawatt subscription.

Deputy Utility Manager Jordan Garcia pointed out that when the County originally entered the CFPP in 2017, it was a different market.

“Based on what we’re seeing right now … (in) January … gas closed at $32.97 per thermal unit … we are consistently seeing prices right now above $150 … we were talking about $35-$45 for power and now we’re talking about something astronomically higher and it is competitive,” Garcia said.

This is not the only update to the CFPP, Project Director Shawn Hughes previously reported on the work done and the activities completed to date:

March 2022

Xcel Energy was announced as the operator for the CFPP and established a master service agreement. Xcel has made a significant impact so far, Hughes said. Xcel has been addressing maintenance, operations, how to staff and train. Hughes said Xcel operates nuclear power plants in the Midwest.

April 2022

A presentation was made to the nuclear community at the Advanced Reactor Summit in April. Hughes said CFPP, LLC explained where the project stands and where it is heading.

May 2022

Several project members traveled to Washington, DC, to hold a semiannual meeting with leadership at the Department of Energy (DOE).  Hughes said these meetings are important because DOE is supporting the project financially.

July 2022

All surface, subsurface, geo-tech investigations were complete. Hughes said this encompasses all exploratory and characterization work that goes into the license application, which helps CFPP demonstrate to the Nuclear Regulation Commission (NRC) that the site is qualified to host this type of facility. He added that the CFPP submitted its quality assurance program description to the NRC. This is an important step in  the development of a nuclear operations contract, Hughes explained.

August 2022

The quality assurance program submitted in July was used to to qualify NuScale as a supplier of quality materials and quality services to CFPP.

CFPP hosted different delegations in Japan, Czech Republic and Romania that are looking to have their own NuScale plants. Hughes said the meetings were information exchanges.

September 2022

The review process for the class 3 estimate began. The class 3 estimate picks up the capital costs as well as the maintenance and operations costs. Hughes said CFPP, LLC has been working on challenges including funding issues, economic issues and risk management in the development program. The review process took about three months and was finalized in December.

October 2022,

Xcel supplied the “ready to operate plan” to CFPP, LLC. Hughes said this is an important work stream that focuses on achieving full plant operations capability. However, he said staffing needs to be identified as well as the training program to get the reactor operators fully qualified.

December 2022

The big focus last year was developing the class 3 estimate, Hughes said. The class 3 estimate was issued as well as the revised project plan. Hughes explained the cost estimate is for the overall project including licensing, the NRC review, startup testing and commission, plant operations and maintenance all the way through to decommission.

“It is truly a lifecycle cost estimate,” he said.

Compared to other small modular reactor projects, “We’re quite a way downstream in terms of engineering maturity and the quality of the cost estimate,” Hughes said. “We’re really understanding what this is going to cost to deliver, and I guess part of that as well is being very current on the impacts of inflation and the interest rates as (they) will impact the overnight cost estimates.”

He added that there has been considerable contractor oversight and early design work. Besides the nuclear plant, Hughes said the owners’ responsibilities include the non-nuclear plant facilities such as the administrative building, training facility, security, warehouse transmission, water, etc.

“So, there’s quite a lot of work that the owners’ engineers are doing to build out the full facility,” Hughes said.

Looking to this year, the focal point is the COLA, he said. CFPP, LLC is very much involved in the oversight but input for issues such as decommissioning funding, energy alternatives analysis, need for power and financial modeling is needed. Fluor is the lead on COLA but the owners have much to contribute, Hughes said. Fluor is contracted to provide estimating, development, design and engineering services for the CFPP.

Another key step is the quality assurance program description, Hughes said. From the regulatory standpoint, Hughes said it is very important to establish this program and get it accepted by the regulators and get it in practice to demonstrate the plant’s functionality as contractors are qualified to participate in the project.

As far as site development, Hughes said there has been a lot of engagement with the community in Idaho Falls and Idaho National Laboratory. He also said CFPP is being proactive with the tribes in that area.

“A fairly good relationship has been established with the community and the tribes,” Hughes said. “Our aim is to continue to interact with them and have them participate actively in our field activities.”

Hughes said that the process for the water rights campaign has begun. This includes identifying sources who hold rights, as well as targeting rights for acquisition and integrating them in the schedule. Hughes said they are working with PacifiCorp on transmission and distribution.

Regarding the site use permit, Hughes said a site permit has been obtained from DOE to utilize the site at Idaho National Laboratory for the project. Phase I granted permission to do site characterization work, he said, and phase II will address the remaining scope of the work including full deployment of the plant, maintenance and operation, and decommissioning. He said the process has begun to update the site use permit.

Hughes touched on contractor activities, which include the class 3 estimate. He said a level 2 integrated project schedule was produced, which features more than 1,100 activities and the number will continue to grow as the work steps are defined. Hughes said suppliers will develop their pieces of the schedule and that will be integrated, too.

The schedule, as of now, is for the first module to be operational in December 2029 and modules 2-6 to be online in 2030.

“Our objective is to hold the schedule as we continue to develop the project,” Hughes said.


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