The U.S. Department of Energy's program to award developers of small modular nuclear reactors with funds to bring this new type of reactor to market is a wasteful example of corporate welfare, a taxpayer watchdog group said Feb. 27.
The group, Taxpayers for Common Sense, gave the DOE its "Golden Fleece Award" for the small modular reactor program, singling it out for what the group sees as particularly reckless spending.
"The nation is two days away from the across-the-board budget cuts known as sequestration. But at the same time we are hearing the Department of Energy and the nuclear industry evangelizing about the benefits of small modular reactors," Taxpayers for Common Sense President Ryan Alexander said in a statement. "In reality, we cannot afford to pile more market-distorting subsidies to profitable companies on top of the billions of dollars we already gave away."
In 2012, the DOE awarded Generation mPower LLC, a joint effort between Babcock & Wilcox Co. and Bechtel Corp., with access to a $450 million funding opportunity to help license and develop the 180-MW small modular reactor, or SMR, it hopes to eventually install at a site owned by the Tennessee Valley Authority.
The department previously said it is interested in supporting up to two projects, and one of mPower's competitors, Westinghouse Electric Co. LLC, has said it expects to eventually receive the rest of the funding from the DOE.
Taxpayers for Common Sense also said it believes more awards are on the way for the SMR developers. "We definitely think Westinghouse is a leading contender," Alexander said during a conference call. The funding will not stop at the awards, the group predicted. "We would be concerned about this being the first step of subsidies," she said, pointing to subsidies for insurance.
Further government investment is worrisome for taxpayers, the group said, because SMRs may never be a cost-effective source of electricity. "In the Department of Energy's materials on SMRs, the agency argues there is a 'need and a market' in the United States for SMRs," a report released alongside the Golden Fleece Award said. "In reality, no one is clamoring to buy an SMR because there is no assurance the electricity will be remotely competitive with power from other sources."
According to Taxpayers for Common Sense Senior Program Director Autumn Hanna, this conclusion was reached by assuming a 12 cent per-kWh current cost of electricity for conventional nuclear plants. Even if SMRs could prove to be 25% cheaper than a traditional large reactor, at 9 cents per kWh, they would still be more expensive than natural gas in the 5 cents to 8 cents per kWh range, she said.
"We just can't see the numbers working out to be competitive with natural gas," Hanna said during the conference call.
Taxpayers for Common Sense said it opposes subsidies for any energy source, including conventional nuclear plants. For example, the group has been critical of the DOE's loan guarantee offered to Southern Co. and partners in their ongoing project to build new nuclear reactors at the Vogtle plant in Georgia.
But the Vogtle project demonstrates exactly why SMR funding can be a win for taxpayers, Nuclear Energy Institute spokesman Steve Kerekes said in response to the group's statement. The SMR program is patterned after the success of a previous DOE program to speed the development of the Westinghouse AP1000 reactors now being built at Vogtle, he said.
"The ongoing construction of those multibillion-dollar power plant expansions already has created well in excess of 5,000 construction jobs for workers who put their earnings back into the economy and pay taxes on their incomes," Kerekes said in an email. "Given the fourth-quarter 2012 drop in America's gross domestic product and our 7.9% unemployment rate, the U.S. economy could use a lot more 'fleecing' like that."
Westinghouse also touted the economic benefits of SMRs as a worthwhile investment. "Westinghouse's plan to be first-to-market with a commercial SMR plant is central to our business strategy to provide emissions-free, economic energy options in 225-MW increments and in doing so, create tens of thousands of jobs for Americans and the economic impacts of a robust global export industry," the company's chief technology officer, Kate Jackson, said in an email.
Written by: Matthew Bandyk
Original Publication URL: http://www2.snl.com/Interactivex/article.aspx?CdId=A-17078107-13866
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