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NuScale Power Corp. and Utah Associated Municipal Power Systems (UAMPS) have abandoned a nuclear power project that would have been the first application of the USA’s first certified small modular reactor (SMR) design, citing weak subscription prospects.
The ballooning of project costs has led to an increase in the offered electricity price, according to NuScale.
Called the Carbon Free Power Project (CFPP), the plant was designed to employ six, 77-megawatt modules to generate 462 megawatts of clean electricity. Generation was planned to start 2029.
The Nuclear Regulatory Commission approved Portland, Oregon-based NuScale’s SMR technology September 11, 2020. Certified some three years after application, NuScale’s design remains the only SMR to have been cleared by the commission. The commission considers reactors with a capacity of 300 megawatts electric or less as small.
“Despite significant efforts by both parties to advance the CFPP, it appears unlikely that the project will have enough subscription to continue toward deployment”, NuScale said in a recent press release.
While blaming market feasibility, the company logged a net loss of $58.33 million for the third quarter with losses from operations totaling $92.92 million, according to its earnings report simultaneously released.
“Through our work with UAMPS and our partnership with the U.S. Department of Energy, we have advanced our NuScale Power Modules to the point that utilities, governments and industrials can rely on a proven small modular reactor technology that has regulatory approval and is in active production”, president and chief executive John Hopkins noted in the termination announcement. The announcement means the junking of a project 10 years in the making according to Hopkins.
But the NuScale boss said the company would build on that progress to deploy its SMR technology in partnership with other utility customers in the future. “NuScale will continue with our other domestic and international customers to bring our American SMR technology to market and grow the U.S. nuclear manufacturing base, creating jobs across the U.S.”, Hopkins said.
NuScale is now working with the DOE on winding down the project, which was to be built near Idaho Falls.
In its latest quarterly filing with the USA Securities and Exchange Commission NuScale said it has agreed to pay $49.8 million to the venture formed to oversee the Utah project, CFPP LLC, as part of the wind-down process.
It admitted in the regulatory disclosure, “Amounts we have agreed to pay to CFPP LLC under the Settlement and Release Agreement are significant, and the loss of CFPP LLC as a customer may negatively affect perceptions of our business or our ability to commercialize our SMRs or our ability to raise capital for operations or development needs”.
Though it had $159.15 million in current assets including $117.14 million in cash and cash equivalents as of the end of the July–September quarter, NuScale had negative operating cash flow for the first nine months of 2023.
“Management expects that operating losses and negative cash flows to continue as we continue the development of technology and the development of market and strategic relationships with other companies in our transition to commercialization of our technologies”, the filing said.
NuScale logged current liabilities of $81.48 million as of September 30.
NuScale earlier acknowledged inflationary pressure and construction material costs had raised project costs for the CFPP resulting in an adjustment in target price per megawatt hour to $89. “For example, the producer price index for commodities such as carbon steel piping and fabricated steel plates have increased by more than 50 percent since 2020”, it said in a news release January 9.
The cancellation of the CFPP follows that of two impairments-hit clean energy projects by Orsted AS offshore New Jersey, which likewise saw project costs surge.
The Danish majority state-owned developer recognized impairments of up to DKK 28.4 billion ($4.14 billion) for the first nine months of 2023. Most of these losses, DKK 19.9 billion ($2.9 billion), were related to the first Ocean Wind project, according to Orsted’s quarterly earnings report November 1.
Due to these impairments, as well as regulatory-related delays and supply chain challenges, Ocean Wind 1 and Ocean Wind 2 have now been scrapped, Orsted said. That means the cancellation of 2,200 megawatts of planned offshore wind power capacity that would power over a million homes, based on estimates by Orsted.
“The current market situation with supply chain challenges, project delays, and rising interest rates has challenged our offshore projects in the US, and in particular our offshore project Ocean Wind 1, which has led to significant impairments in Q3 [third quarter] 2023”, Orsted chief executive Mads Nipper said in the earnings release.
“Therefore, as part of our ongoing review of our US offshore wind portfolio, we’ve decided to cease the development of Ocean Wind 1 and Ocean Wind 2”.
To contact the author, email jov.onsat@rigzone.com
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