Advancing the Commercialization of Small Modular Reactors

Advancing the Commercialization of Small Modular Reactors Michael Kurth Sponsored by the American Nuclear Society August 1, 2013

Executive Summary Nuclear Energy has many promising benefits to help the United States reduce its environmental impact from electricity generation. It also can assist in developing a diverse energy portfolio to aide in energy price stabilization. If the United States continues to lead the way on nuclear technology, through export it can positively affect nonproliferation by conditions connected to the technology. Small modular reactors are a unique and promising new design of nuclear energy generation that may be able to advance all of these benefits. Small modular reactors however also have added benefits over traditional large nuclear reactors. These include advanced safety features, reduced capital costs, a different economic strategy, and modularity. These features allow small modular reactors to be placed in many markets that were previously very difficult for nuclear power to utilize. There are several domestic applications that include replacing retiring old coal power plants, remote locations, and government facilities. There is also considerable promise for international development through export. Currently there are several issues that could prevent small modular reactors from advancing from the current design phase into commercialization. The economic strategy of small modular reactors is unproven and it must overcome the lack of economic competiveness of the first built reactors. There are several licensing issues that must be dealt with as well, and the export process may be a detriment to developing a strong export process. In order to greatly increase the chances of successful development of this technology through the design stage and achieve commercialization, there should be several policy steps that are implemented to ensure that small modular reactors can fill market needs and are able to overcome

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issues that may prevent them from achieving commercial success. There are policy steps that relate to the initial domestic development and there are also those that relate to the export process. The policies related to the domestic development include an established Department of Energy cost-share funding program, a tax credit for advanced manufacturing that reduces emissions, and government facilities utilizing small modular reactors through power purchase agreements. These three options will greatly enhance the chances for commercialization success by increasing the initial cost competiveness and assisting in licensing issues. These policies will not only benefits the recipients of the funds but will also benefit future small reactor vendors due to resolution of licensing issues and other lessons learned through operation. They will also allow government agencies to reduce their emissions. The policies to effectively support the export of small modular reactors should be both timely and efficient to increase U.S. competiveness with international competition. In order to do this the U.S. should ensure that 123 Agreements for Peaceful Cooperation with foreign nations are done on a case by case basis. The Department of Energy should also continue its review process to better clarify the scope of its export license, and the Department of Energy should also update its application process with a modern online system. These will allow the export process to become more efficient allowing U.S. products to more quickly enter foreign markets. If these policies are utilized the small modular reactor commercialization in the United States has a much greater chance to obtain widespread success that will allow it to positively affect many areas.

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Acknowledgements I would like to thank the American Nuclear Society for sponsoring this wonderful opportunity to intern in Washington D.C. I would also like to thank the Nuclear Energy Institute for providing my office space as well as many resources to help in the development and completion of my paper. I would like to thank Dr. Alan Levin for all of his help and guidance in researching and writing this paper. I would also like to thank Dr. Gail Marcus for organizing and running the WISE program. I know all of the WISE interns really appreciated all of her hard work. I would like to thank all those who provided me with valuable information and insight throughout the entire process. Finally, I would like to thank my fellow WISE interns for the wonderful summer.

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Table of Contents

Executive Summary....................................................................................................................................... ii Acknowledgements...................................................................................................................................... iv Table of Contents .......................................................................................................................................... v List of Figures & Tables ................................................................................................................................ vi List of Acronyms ...........................................................................................................................................vii Introduction .................................................................................................................................................. 1 General Background...................................................................................................................................... 2 First Phase Background ................................................................................................................................. 5 Second Phase Background ............................................................................................................................ 7 First Phase Issues and Concerns ................................................................................................................. 11 Second Phase Issues and Concerns............................................................................................................. 16 First Phase Policies ...................................................................................................................................... 19 Second Phase Policies ................................................................................................................................. 24 First Phase Recommendations.................................................................................................................... 29 Second Phase Recommendations ............................................................................................................... 30 Conclusion ................................................................................................................................................... 32 References .................................................................................................................................................. 34 Appendix A .................................................................................................................................................. 38 Appendix B .................................................................................................................................................. 38

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List of Figures Figure 1: Who is building the world’s nuclear reactors? .............................................................................. 9 Figure 2: Export Licensing Process .............................................................................................................. 11 Figure 3: Cost Projections for 3 Scenarios of Future SMR Deployment ..................................................... 24

List of Tables Table 1: Energy Consumption Growth Rate.................................................................................................. 8 Table 2: Nuclear Energy Consumption Growth Rate .................................................................................... 8

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List of Acronyms B&W – Babcock and Wilcox DOC – Department of Commerce DOD – Department of Defense DOE – Department of Energy DOS – Department of State EAR – Export Administration Regulations EIA – Energy Information Administration EP – Emergency Preparedness EPZ – Emergency Planning Zone FOAK – First of a Kind GHG – Greenhouse Gas IAEA – International Atomic Energy Agency LEU – Low-Enriched Uranium LLWR – Large Light Water Reactor LOCA – Loss of Coolant Accident NOAK – Nth of a Kind NRC – Nuclear Regulatory Commission NSG – Nuclear Suppliers Group PPA – Power Purchase Agreement SMR – Small Modular Reactor SNAP-R – Simplified Network Application Process Redesign

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Introduction The development of a robust domestic small modular reactor (SMR) commercial enterprise will bring many benefits to the economy, the environment, and the safety and security of America. The reduced capital costs, shorter construction times, and less strenuous grid requirements will allow more utilities to include nuclear energy in their portfolio, increasing energy diversity and reduction of greenhouse gases that are prevalent in coal and natural gas usage. A strong export market is made possible by the majority of SMRs’ ability to be transported on ship and rail. This can open up revenue streams previously unavailable to American companies. The SMRs currently being developed include many passive safety features which allow for greater intervals of time between accidents and required operator intervention, and reduce the reliance on AC emergency back-up power. Also, the smaller inventory of nuclear materials greatly reduces the possibility of wide ranging accidents. Nonproliferation is always of the utmost concern with nuclear energy. A strong domestic enterprise will greatly increase the likelihood of both exports of American SMRs and of the regulatory and safety standards of America. In order for the domestic SMR program to achieve the desired goals, it must develop past its current status of a design, through the Nuclear Regulatory Commission (NRC) licensing process, and then begin domestic production, construction, and operation. Once this first phase of the process is accomplished, it is highly desirable that SMR vendors are capable of capitalizing on foreign markets. Although there are several potential domestic markets, such as replacing old retiring coal plants, remote locations, high security facilities and general growing energy demand markets, the fact remains that the overall and nuclear specific international energy consumption rates are growing at a much faster rate than domestic energy consumption. Because of this, there is much greater possibility for SMRs internationally than there is domestically. The international deployment reflects many of the same

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advantages to America as domestic deployment, such as economic growth, reduced carbon emissions, and nonproliferation. The report will discuss the analysis of the feasibility of SMR technology of capturing these various markets, the benefits that will come from their implementation, and finally the policies that are in place today that will either inhibit or promote the development of this technology. It will then determine whether or not it will be necessary to alter any of these current policies or whether it will be necessary to create new policies altogether. It will first analyze the initial phase of SMR production, which includes domestic licensing and initial domestic commercial deployment. It will then analyze the full successful commercialization of SMRs, which is heavily dependent on exports. General Background SMRs have some of the same environmental benefits as traditional large light water reactor (LLWR) counterparts. These are mainly related to the zero-emission operation of the power plant and the very low levels of emissions including the totality of nuclear energy production. Nuclear energy while providing approximately 19% of American electricity, accounted for producing 64% of American emission free electricity generation [1]. This energy output accounted for approximately 570 million metric tons of carbon dioxide avoidance in the year 2012 [2]. Nuclear energy has a clear advantage in greenhouse gas (GHG) reductions over coal and natural gas. However it also has comparable total carbon dioxide (CO2) emissions to renewable technologies. There are several reports [3, 4, 5], that all show nuclear power having very slightly higher GHG emissions to hydroelectric, geothermal, and wind power, and it outperforms biomass and solar generated power in terms of GHG emissions. This is due to analyzing the life-cycle of energy production, which includes construction, operation, and decommissioning. When all of these factors are analyzed the construction and decommissioning emissions of Nuclear power are similar to that of renewables. Nuclear also outperforms all other energy 2

sources when it comes to amount of land required to generate energy [6]. A 225 MWe SMR would require 15 acres of land, whereas an average solar power plant would require 2400 acres and an average wind power plant would require 60,000 acres for the same energy output [7], although proponents of wind farms can claim dual use of land for farming. Geothermal and coal power plants are the closest in land requirements [6]. Small modular reactors have several key technical features that enable them entrance to new market space currently more difficult for larger nuclear reactor placement. They also contain key technical features that allow for greater safety. For the purpose of this report, the SMRs focused on are all pressurized light water reactors. There are four American vendors pursuing these SMRs, and three of them are pursuing what is termed an integral pressurized water reactor (iPWR). iPWR designs incorporate steam generators within the reactor pressure vessel, which allow for smaller penetrations into the pressure vessel. These smaller penetrations greatly reduce chances of large breaks that lead to Loss-of-Coolant Accidents (LOCA). There are three American vendors pursuing iPWR designs, NuScale Power, Babcock and Wilcox (B&W) mPower, Westinghouse SMR, and one pursuing a more conventional design that does not have the steam generator located within the reactor vessel, Holtec SMR-160 [8]. Although these vendor’s designs differ from one another in some regards, many of the principles behind the technology are similar. These are what would be considered the defining characteristics of light water SMRs. They are all much smaller than traditional LLWRs. The siting areas range from as small as 5 acres up to 45 acres (45 acres is for a 12 module/540 MWe NuScale site, which can be seen in Appendix B) [9-12], whereas LLWR sites can range from 200-400 acres [13]. SMRs range in electrical output from 45 megawatts (MWe) to 225 MWe [9-12]. This smaller size requires considerable less cooling as well as mitigating the worst-case-scenario, accidental release of radiation. All of the designs have modular capabilities, which allow the reactors to be transported either

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completely assembled or very nearly completely assembled, requiring much less intensive on-site construction. This reduces construction times and also reduces delays that commonly plague the LLWRs, which require much more intensive on-site construction. This modularity promotes the addition of reactors, in some instances up to 12 reactors at a single site, which can more readily meet slow growth demand. They have extended refueling cycles that range between 24 and 48 months [9-12]. These longer fuel cycles require less fuel handling, which is a benefit both to safety and nonproliferation. They have incorporated passive safety features based upon natural convection. Natural convection is when the fluid (water in the SMR’s case) surrounds the heat source (the reactor) and absorbs heat. This absorption of heat reduces the density of the water causing it to rise and then cooler water replaces it, and the cycle continues. These features allow for a greater amount of time between the initiation of an accident and necessary operator action. The designs have the capability to range from seven days without operator intervention, to an indefinite period with no required operator interaction [9-12]. These SMR designs greatly reduce the safety systems reliance on AC back-up power that failed in the case of the Japanese incident at the Fukushima Daiichi power plant. These designs also have other lessons learned from that incident and all of the reactors will be placed underground to reduce impact of seismic events, due to the attenuation of seismic waves with depth in bedrock, and create fewer access points for sabotage. It is also important to recognize that these SMR designs have many things in common with LLWRs as well. They both use light water as the coolant and moderator. These SMRs use the same type of low enriched uranium (LEU) fuel that is common among all operating LLWR. They also use the same cladding material (zirconium-based) and similar cladding structure (17x17 array), the only difference being in length [9-12]. The initial plan for SMRs is also to generate electricity the same as LLWRs. However, there are other commercial applications such as process heat, desalination, and district heating [14]. These similar features with the current licensed fleet of nuclear reactors, gives these SMRs 4

an advantage with both the regulatory process and the developmental stages [15]. These SMRs are therefore the closest to commercial development and deployment [15]. In order for these SMRs to achieve commercial deployment they must be able to demonstrate that an economy of mass production can be cost competitive with an economy of scale. In order for SMRs to overcome the economy of scale, they must be able to demonstrate considerable lessons learned from mass production. These lessons learned stem from the standardization of design, which through repetition leads to reduction of errors and more efficient construction techniques and processes. SMRs cannot be cost competitive with LLWRs built one at a time [16]. A significant number of SMRs must be manufactured and sold to offset the differences in cost per MWe produced. SMRs are appealing to utilities and vendors due to their smaller size and thus smaller upfront capital cost and shorter construction times [17]. The large upfront capital cost of a LLWR is a considerable detriment to utilities due to its ‘bet the farm’ nature of investment [16]. An example of the feasibility of overcoming this issue is the successful US Naval program. The Naval program successfully demonstrated that it could both substantially reduce cost and build times for reactors used in nuclear submarines [18]. First Phase Background The first phase of the development of a successful commercialization of SMRs will most likely depend upon NRC design certification, since all four vendors are pursuing this licensing route. Then the eventual complete NRC licensing and initial domestic deployment will follow. Extensive domestic deployment and international deployment will occur if the second phase of the SMR commercialization is to be enormously successful. The second phase will have differing factors and issues, as well as differing important background information. The information here will focus on the regulations involved in obtaining a domestic license for a SMR, the initial domestic marketplace for SMRs, and the current

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Department of Energy (DOE) funding that is available to assist in “accelerated deployment of SMRs by supporting certification and licensing requirements for US-based SMR projects” [19]. The NRC has published several documents that outline what they feel will be potential issues regarding the licensing of SMRs. These were determined from meetings with the DOE and potential vendors. Of particular note for light water SMR commercialization are issues concerning; operator staffing, security requirements, and emergency preparedness (EP) framework, including emergency planning zones (EPZ) [20]. The staffing requirements are important to vendors to drive down operating costs, and the EPZ zones are important to capitalize on markets close to population centers. Beyond the initial licensing issues, SMRs must find a viable marketplace in domestic markets. One potential marketplace is the replacement of old coal plants that are retiring, which are commonly close to population centers. Environmentalists are actively pursuing the retirement of coal power plants and have been relatively successful with as many as 147 planned retirements and a goal of 375 more to go [21]. Coal plants are also subject to other disadvantages, which include; modest demand growth, relative fuel prices, availability of highly efficient natural gas combined-cycle plants that are not fully utilized and environmental compliance costs [22]. These older coal plants that are facing retirement tend to be smaller, around 150 MWe, and older, around 56 years old [22]. Another potential domestic market for SMRs is remote locations. Remote locations have characteristics that are well suited for SMRs. They do not have the large energy demands that are necessary for LLWRs and do not have the grid capabilities or infrastructure to support LLWRs. Remote locations also rarely have gas pipelines for natural gas usage. Remote locations generally have high energy prices, due to lack of natural resources and a dependence upon imported diesel fuel [23]. The final specialized domestic market is high security facilities in need of grid isolation. The Department of Defense (DOD) has recognized that military bases depend upon the civilian grid which is vulnerable [24]. SMRs have the potential to reduce the

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vulnerability by creating an ‘island’ grid and can also aide in President Obama’s intended goal of reducing government emissions of GHG [25]. The final area of potential domestic SMR deployment is the overall growing US market and its need for additional generating capacity. The US is projected to increase its nuclear energy consumption by approximately 68 billion kilowatt-hours by 2035 [26]. Using the assumption that a 100 MW SMR is built and operates at 85% capacity, this leads to approximately 91 SMRs fulfilling this gap. The DOE has provided funding to B&W to assist in the design certification and licensing, but not the construction of the mPower. This is a cost share agreement where at least 50% of the funds are to be supplied by industry. The DOE currently projects that $150 million will be available to B&W over 5 years, with a maximum of $226 million [27]. There has also been an announcement for a second round of funding and the other three vendors have submitted applications. The focus is on design certification and innovation. This second round will be derived from the $452 million allocated in the first round of SMR Licensing Technical Support Program [28]. The second round focuses on designs capable of achieving operation by 2025, three years later than the initial funding deployment date of 2022 [27,28]. This funding focuses on technical issues as well as general issues that pertain to a wide variety of SMR designs. Second Phase Background As stated previously, in order for SMRs to increase the probability of achieving a robust commercialization, they must examine and exploit international markets. There is competition of foreign vendors who are currently pursuing SMR technology and there is also the navigation through U.S. export laws. The Energy Information Administration (EIA) has projected that nearly all countries have nuclear energy consumption growth rates greater than their total energy consumption growth rates, other than America, Australia, New Zealand and the Middle East [26]. The Middle East zero 7

percent growth rate is because there are currently no nuclear power plants operating there. This can be seen in Tables 1 & 2.

It also projects that around the year 2035, China will have surpassed America in nuclear energy consumption. In 2011, the year EIA reported this data, China consumed 103 billion kilowatt-hours (kWh) compared to American consumption of 803 billion kWh [26]. China is projected to have increased its nuclear energy consumption over 800 billion kWh by 2035, equivalent to the entire current output of American nuclear power. The small portion of current American reactor construction is illustrated in Figure 1. The other market places that show the greatest possible growth rates under current projections for nuclear energy consumption include; India, Brazil, Africa, and the Middle East [26]. These projections are all based on current understanding and are subject to change under various unforeseen scenarios. 8

Figure 1: Who is building the world's new nuclear reactors? Source: Center for Strategic & International Studies, “Restoring U.S. Leadership in Nuclear Energy,” Rowman & Littlefield, June 2013.

There is also a considerable contingent of foreign entities that are competing for these potential international markets. Many of them have projected scheduled commercial start dates that precede the American projected start dates. Under the categorization of SMRs for Immediate deployment as defined by the IAEA [29], there are two designs from China, HTR-PM and the CNP-300, there is one design from India, PHWR-220, one design from Russia, KLT-40S and one design from Argentina, CAREM-25. The PHWR-220 and the CNP-300 are already in operation and the others are in some phase of construction. The other designs are also far different from the American designs. The HTR-PM is a high temperature reactor- pebblebed module, the CAREM-25 is a prototype to verify the validity of the larger CAREM reactor, and the KLT-40S is a floating nuclear power station. All of these SMRs are supported either directly or indirectly by their nation’s government. There are also designs from Japan, Republic of Korea, France, and Brazil [29].

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In order for American vendors to enter the foreign marketplace, they must first navigate through the export laws. This process is outlined in the Department of Commerce’s (DOC) “Civil Nuclear Exporters Guide” [30]. In order to export a nuclear reactor, the first step is that the United States has an agreement for peaceful nuclear cooperation with a foreign nation as outlined in section 123 of the U.S. Atomic Energy Act of 1954. These are termed 123 Agreements and they do not commit the US to any specifics but establish the ability to control export and import operations. The 123 Agreements are led by the Department of State (DOS) and the DOE and advice is given by the NRC. The US currently has 123 Agreements in place with 21 countries, The European Atomic Energy Community (EURATOM; a complete list can be found in the appendix), the International Atomic Energy Agency (IAEA), and Taiwan. There are several of these 123 Agreements that are expiring by 2015, including the IAEA, South Korea, China, and Taiwan. The DOS is also involved in negotiations with Vietnam, Jordan, and Saudi Arabia to obtain a 123 Agreement and is working on renewing agreements with Thailand, Taiwan, and South Korea [31]. The next step in the process is obtaining Part 810 Authorization, which refers to Assistance to Foreign Atomic Energy Activities or 10 CFR Part 810. This is led by the DOE with advice given by DOC, DOD, DOS, and NRC. Part 810 covers nuclear related technology and assistance. The general rule is that any product or service directly related to the reactor will fall under Part 810. The last step is Export and Import of Nuclear Equipment and Material, 10 CFR Part 110. Part 110 covers reactors, fuel cycle facilities, components, and materials. This process is led by the NRC with the DOC, DOD, DOS, and DOE all acting in advisory roles. Approval for 810 and the 110 licensing process both must obtain government-to-government assurances obtained by either the DOS or the DOE. Part 810 assurances ensure the recipient government will use the technology only for peaceful purposed and will not transfer any technology without consent of the US. The assurances of Part 110 are that the recipient government will use all materials in technology in accordance with the 123 Agreement. Part 110 also 10

assures that all materials and technology will be used only for peaceful purposes and subject to IAEA standards. The DOC is also involved in the process under the Export Administration Regulations (EAR), which has jurisdiction over ‘dual-use’ items. A detailed flow chart of the export licensing process can be seen in Figure 2.

Figure 2: Export Licensing Process

First Phase Issues and Concerns The issues and concerns emanate from the background information. These include licensing issues around operator staffing, security requirements, and EP. The EPZ can be significantly reduced according to members of industry because SMRs contain less radioactive material and in a worst case

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scenario of accidental release the overall danger would be less. They also have implemented structural designs to increase safety and security. The security staff can be reduced due to features such as underground placement, which reduce access points. In order for SMRs to be economically viable they must reduce as much of these operating and management (O&M) costs as much as possible to compete with the large economies of scale of LLWR. If SMRs are required to have similar staffing of LLWRs, then the costs per MWe produced will not be cost competitive. An acceptable cost per MWh comparable to other energy forms has been realized if low security and plant staffing are utilized [32]. B&W has even claimed that the EPZ radius necessary is only 1000 feet, compared to the 10 mile radius currently applied to LLWRs [32]. The other advantage in SMRs lies in the greater potential for siting flexibility. If this is not recognized and the EPZ has the same area requirements as LLWR, then it will greatly reduce the market penetration capabilities of SMRs, especially for coal replacement. The other viewpoint is that the EPZ, staffing and security requirements should not be reduced under any circumstances. The Union of Concerned Scientists is the leading voice of opposition to reduction in any of these areas. In testimony before Congress, issues were raised on whether EPZs should be extended, not reduced due to the detection of radiation levels 30 miles from the Fukushima site [33]. The spokesman goes on to illustrate how the Fukushima crisis resulted from multiple safety systems disabled at once, comparable to an intentional attack, which would justify keeping security force levels similar to LLWR [33]. The final issue is the nature of SMRs containing multiple reactors at one site could complicate accident scenarios and stretch operator resources too thin [33]. The NRC is of the utmost importance, as they will make the decision on the matter. Commissioner Magwood, representing his personal views, testified before Congress and stated in specific regard to these issues, he states “In my opinion, these concerns are not well grounded in an understanding of how the NRC develops regulatory requirements.” [34]. It is specifically cited that the

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NRC does not have a set formula on determining the amount of security personnel required, only that the facility is secure. It is also said that SMRs have passive safety features, which reduce human action in accident scenarios [34]. He ends his testimony stating his belief that SMR success will not depend on decisions from the NRC [34]. The NRC has released several documents all relating to these issues. In terms of control room staffing they are open to exemptions in the short term and revision of regulations in the long term [35]. They believe it may be appropriate for SMRs to develop reduced EPZ sizes [36], and they state that the current security regulations are adequate to apply to SMRs [37]. In terms of addressing these issues the NRC has outlined several general guidelines but has not committed to very many specifics. In terms of operator staffing they have outlined five potential areas of concern. The first is a major challenge will be to identify tasks that may be omitted and those that could substantially reduce workload. There is a limited amount of operational experience, which will require the use of simulators and parallels in other industries, if such parallels exist. There are integration challenges for tasks involving operating the unit with other on-site maintenance. The skill sets may require a different distribution of qualifications. There may be multiple staffing plans needed due to the addition of modules [35]. Although these are helpful as identifiers, they do not outline specifics to be addressed and tend to be noncommittal. For example the first concern, states that there is a need to identify tasks but it does not specify any. Also the documents commonly use language, such as ‘if’, ‘could’ and ‘may’, allowing statements to be noncommittal. This type of language is also used in the EPZ language, where the NRC proposes an outline of possible scalable EPZ sizes. It states an approach ‘could’ be to allow the EPZ to be scaled according to accident source term (amount of radioactive material released in an accident), fission product release and associated dose characteristics [36]. The NRC goes on to outline a plan for four separate EPZ categories based upon dose limits at various distances away from the reactor. The issue becomes a balance of how specific and committed the NRC language should be for SMRs that are only in the developmental design stage. 13

The other set of issues surrounding the domestic development of SMRs concerns the initial phase of deployment and exactly how they will fit into the marketplace. As mentioned, there are several markets that could utilize SMRS, and each has its own set of issues. The general domestic market for nuclear energy is a relatively flat and slow growth over the development and deployment period of SMRs [26]. It will be largely dictated by the domestic price of natural gas which currently is very low. Nuclear and all other energy cannot compete with the low cost of natural gas at the moment. However, natural gas prices are volatile and subject to possible carbon legislation, which nuclear and other renewables are not [16]. It will be necessary to determine what cost society is willing to pay for cleaner energy and how much energy utilities value energy diversification. Under optimal scenarios, higher natural gas prices and clean energy pricing, SMRs will be competitive [16]. However, America does not have a strong recent record of building nuclear power plants. The year 2012 was the first time a general commercial reactor was authorized to be built in over 30 years. It is this combination of uncertainty and history that would suggest this market potential is not ideal. SMRs, however, have the aforementioned criteria that allow it greater market diversification. This is evident in reports analyzing SMRs as a viable option to replace aging coal plants. The size of the retiring coal plants and the fact they are being retired due to environmental compliance costs makes SMRs the ideal candidates to replace them. However there are other reasons for their retirements such as, modest demand growth, relative fuel prices, and availability of highly efficient natural gas [22]. It is also true that these scheduled retirements will all occur before the optimal timeline of initial SMR deployment, much less a mass produced SMR enterprise. There will of course be more coal retirements as they continue to age and cannot compete with newer energy, including advanced coal. However, this makes the case against SMR replacement and more towards natural gas replacement. It must also be noted that many of these older coal plants are located near large population centers and even if SMRs have reduced EPZs it may be difficult to convince the public. 14

An area of SMR application that does not need to deal with the issue of large population centers is remote locations. These are considered viable candidates because often the supply of reliable and affordable energy is difficult to obtain. The infrastructure and demand do not facilitate a large power plant. The current light water SMR designs were all found to be too large for the most remote locations in rural Alaska [23]. These remote and rural locations ranged from 1 MWe to 9 MWe average annual loads [23]. However the study did find that under projections for 2025, SMRs could obtain economic feasibility utilizing both district heating and electricity generation for Fairbanks and SMRs could lower energy prices in Anchorage [23]. These cities have populations of approximately 30,000 and 300,000 representing a wide array of American cities except that their closest neighboring major city is approximately 1500 miles away. This analysis shows that current SMR designs have potential for relatively larger populated remote locations but not necessarily the most remote situations. The last specialized area of domestic SMR deployment concerns government facilities needing high security. The DOD has expressed interest in utilizing SMRs for military installations [24]. They have identified the dependence of military bases on the civilian grid, which is vulnerable to accidental outages as well as sabotage. Military installations currently receive 99% of their electricity from civilian grids [24]. The military also has a strong record of building and using nuclear reactors for Navy submarines. An issue with the military involving itself heavily in the initial SMR development is that it will tend to dictate designs. It could be possible that the DOD desires similar features as the commercial markets do, but it is also possible that the military needs features and designs that would not align with commercial markets. If the DOD takes too much of a leadership role it could pigeonhole reactors into military specific designs. This can be seen in the opinions of many who believe the current reactor fleet was driven by military submarine needs. It also is of concern of precedence. If the United States DOD

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becomes heavily involved in the domestic deployment of SMRs, it could allow foreign nations a similar reasoning for involving their military in SMRs. Second Phase Issues and Concerns The second phase of development will depend heavily on exports. As indicated in the background information the international market shows a much stronger case for nuclear development than domestic potential. The issue becomes whether or not American made SMRs will be capable of filling this need. The large developing countries, like China, will most likely continue the construction of LLWRs and it remains to be seen how much SMRs will be utilized. The smaller developing countries with limited grid capabilities and limited capital have shown interest in SMRs. However, many of these countries have no nuclear power generation history to rely on and must develop the necessary national infrastructure, which takes 10-15 years. The other issue concerns American export laws and whether they facilitate the efficient export of nuclear technology and specifically SMRs. There are also issues concerning the safety and security for exporting to foreign countries. The first issue regarding export of SMRs is the laws by which they are constrained. As outlined in the background, there are four separate American government agencies that are involved in the nuclear export process. The process is difficult to navigate due to the multiple agencies involved. It also is opaque at times due to the DOE’s lack of a modern application system, which would allow real time tracking. It is inefficient, which results in long approval times, and it is more restrictive in its controls than many other foreign counterparts [39]. The inefficiencies stem from the multiple agencies involved, which can create communication and coordination errors between agencies. There is also a lack of dedicated staff in the DOE’s National Nuclear Security Administration (NNSA). The staff currently is comprised of three individuals who also have other responsibilities. The export laws of America were created over six decades ago with few adjustments since, compared to foreign regimes, Japan, Republic 16

of Korea, France, and Russia, who in large part have created or amended their export control laws within the past decade. It must also be made clear that most of these regimes provide a single export agency compared to the four involved in the US process [39]. The other facet of American export control that is troublesome is the lack of a hard deadline. The process in America can take anywhere from six months to well over a year, and the NRC once took three and half years to approve export to the Philippines due to concerns over the site suitability, which the NRC has no jurisdiction over and other issues. This is compared to Japanese, Korean, and Russian timelines of 15 to 90 days [39]. This advantage stems mainly from the fact that many foreign vendors are government owned, which streamlines the process. The American system will doubtfully ever be able to achieve similar timelines, but it is important to attempt to limit the disparity. The DOC and DOE have both acknowledged there are issues regarding nuclear exports and the importance of nuclear exports. The DOC has launched the Civil Nuclear Trade Initiative to identify trade policy issues and commercial opportunities, and the DOE is currently in the process of revising its part 810 regulations. The DOC has identified tariffs that often are a significant trade barrier to American manufactures attempting to enter foreign markets. The DOC’s program has been relatively helpful, publishing guides to civilian exporters and identifying prime countries for SMR export [30]. However the DOE has been less successful. The DOE’s initial proposed changes to the 810 rules have been met with strong opposition from industry, due to its perceived increase in scope. However they are in the process of reviewing and changing proposals [40]. The Government Accountability Office (GAO) also acknowledged in 2010 that the vague 810 regulations are too broad and put American companies at a competitive disadvantage [40]. There is also concern over future 123 Agreements with members in Congress pushing for blanket provisions that require all agreements to include non-enrichment and non-reprocessing

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language. Meanwhile, the Obama administration wants to allow case-by-case studies of 123 Agreements. This difference is strategies could lead to further delays in 123 Agreement timelines, which are already a relatively slow process. The export process must be comparable in efficiency and transparency with foreign nations in order for American companies to remain competitive. The export of SMRs also has issues regarding nonproliferation. When discussing nuclear reactors, nonproliferation is of the utmost concern for national security implications. The issue is centered on whether or not a domestic SMR industry with a focus on exports can positively affect nonproliferation concerns. If American SMRs are deployed globally and the United States is the global leader in SMR technology, this provides extra leverage in negotiating nonproliferation concerns such as oversight, reprocessing, and enrichment. A US led SMR program will influence the type of fuels used, waste treatment and storage as well. America has been regulating nuclear applications longer than any other nation and this experience has given the NRC an internationally regarded ‘gold standard’ [40]. The Part 110 License from the NRC is primarily concerned with ensuring peaceful nuclear uses and that the export will not be inimical to the common defense and security. It also ensures that the export does not constitute an unreasonable risk to the public health and safety in the United States. This experience and knowledge has led many foreign governments into agreements to learn from America’s process. The NRC has been influencing international behaviors for many years but if SMRs are not readily deployed internationally this influence will wane as other governments become more influential. In more developing nations, a SMR export program can influence the trajectory of infrastructure necessary for nuclear power. However, a very robust SMR commercialization will have many more reactors in a wide range of areas. This could pose a problem in terms of available security and the necessary monitoring. This will require international cooperation and agencies such as the International Atomic Energy Agency (IAEA) must be prepared with the necessary resources to ensure this is properly accomplished.

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Another issue concerning export of SMRS is competition from global competitors. The global competitors pursuing SMR designs are commonly heavily funded by their respective governments, usually both in the direct financing of the technology but also through favorable financing terms and rates. This allows these programs to work outside of the constraints of the free-market system that US companies must work within. Governments are capable of looking much more long term and also consider issues such as national security. The plethora of governments involved in SMR technology showcases a wide belief that not only is this technology promising but there are also national security implications. The issue then becomes, whether or not private companies are capable of competing with foreign government funded companies. At this point, American companies still have a technological advantage but it could quickly deteriorate if the SMR program is not developed. The superior technological design of the AP-1000, developed over many years with the assistance of US government funding, is now currently being built in China. In order to continue this similar process, SMR technology must be developed over many years. The design and creation of innovative technology is a difficult investment for private companies to make without government assistance. First Phase Policies Ensuring the timely deployment of SMRs is of the utmost importance. A timely deployment of SMRs will allow the possibility to compete with foreign companies and also will enable the possible replacement of a larger portion of retiring domestic coal power plants. It will also allow the government to achieve greenhouse gas emission reduction goals that have been stated for future years. The continuation of the DOE funding program and added measures to bridge the gap between licensing and initial deployment will greatly increase the probability that this takes place. The current DOE program is focused on the domestic licensing and deployment of SMRs. It also focuses on verifying the

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commercialization potential of SMRs. To these ends, the program has invested resources to determine whether regulatory issues will be resolved and in studies analyzing the economic potential of SMRs. The current DOE’s cost-share funding agreement focuses on licensing issues surrounding several topics of concern but the focus here will be on the resolution of issues concerning staffing requirements and emergency planning standards. The policy issue involved is determining what the NRC will require and how the DOE can best address these requirements through the cost-share program. In order for the DOE program to achieve these goals it must research and develop technology suited to the SMRs to provide justification to the NRC to change various regulations. The DOE is uniquely suited to provide many of this technical information through its national labs. Oak Ridge National Lab and Brookhaven National Lab have expertise in reactor modeling and human reliability respectively, which address operator staffing concerns. Sandia National Laboratory has experience in security modeling and simulation. Sandia also has expertise relating to source terms, necessary in determining EPZs. The DOE cost-share funding program also has devoted funds to outside organizations analyzing the economic competitiveness of SMRs. The DOE funded the Energy Policy Institute at Chicago’s study on SMRs to determine estimated costs for SMRs. It analyzed the economics of overnight costs, the model of SMR economy of mass production and the learning cost benefits possible. Under favorable circumstances, the study has shown SMRs can be competitive. However, the study also identified more areas that needed further research. These include how costs are driven down through the learning process and new approaches in industrial modeling applicable to the modular nature of SMRs. There is language in House Report 113-135 that intends to bring the funding up to its original plan for $226 million over five years [41]. Although this amount of $452 million total ($226 million from the DOE and $226 million from B&W) in investment is not substantial enough to get an SMR design through the licensing process by nearly all accounts, it represents a significant enough investment to 20

ensure a vendor carries the design through licensing completion. The DOE has shown success with a cost share program in nuclear power technology. The relative success of the DOE’s Nuclear Power 2010 program cost share program has seen construction start on four advanced reactors in the southeastern United States. These four reactors also had government benefits due to the Energy Policy Act of 2005. This act increased government incentives, including production tax credits, federal risk insurance, federal loan guarantees, and a 20 year extension of the Price Anderson Act for nuclear liability protection. Although it may be true not all or any of these measures are needed, it is possible some form of government assistance will be needed to increase the probability that SMRs move past the licensing phase into construction and deployment. SMRs may alleviate the ‘bet the farm’ capital costs of LLWR but the first-of-a-kind (FOAK) reactor will have many risks due to new technology. Due to variances in SMR economics, compared to LLWRs, four reactors built will not be able to overcome the differences between economies of scale and economies of mass production. The success of SMRs will depend upon the economies of mass production and therefore it may not be feasible to expect utilities to build a FOAK reactor and hope they can sustain loses to one day satisfy the economies of mass production. A possible solution to this is government facilities acting as a ‘first mover’ in the purchasing of power production from SMRs, government tax credits for manufacturing facilities to offset the initial upfront capital costs of SMR production, and a subsidy system that does not increase net government spending. The DOD has expressed interest in this technology and is also well accustomed to role as first mover, although this has not been the case for many years. Since SMRs and nuclear energy in general have national security implications, this is a natural role for the DOD. The DOD could act as a purchaser of SMR electricity for military bases but the operation and maintenance duties would be carried out by utilities more accustomed to nuclear power plants. There are over 374 military bases that use 133 MWe

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or less and the majority use 10 MWe or less [42]. It would not be feasible for the DOD to act as owner/operator for bases requiring so little energy. The DOD acting as a first purchaser in this technology would allow utilities certain assurances in power purchase agreements (PPA) that would not be available in the private sector. A PPA would eliminate the possibility of a utility forced to shut down a SMR for its lack of near term non-competiveness and would also allow the SMR learning process to move forward with far less risk. However there is concern that appropriators will not allow this longterm PPA for any government agency. This first purchaser response of the DOD may put SMRs into a position where they can demonstrate their ability to be a practical solution to both international and domestic markets. Another potential application is the purchasing of power generated by SMRs through other government organizations and facilities. The DOE and federally owned electric utilities are suitable agencies for this concept. The Tennessee Valley Authority (TVA) is a federally owned corporation currently involved with the NRC for possible licensing and construction of up to six mPower SMRs at its Clinch River site. This site is adjacent to Oak Ridge National Laboratory. There are other national labs around the country that require secure energy sources and emission reductions. The DOD or another government agency acting in this first mover role will allow SMRs to eliminate the large amount of risk that is associated with FOAK engineering and technology. It will however not entirely eliminate the economic issues that arise from the economy of production issue. In order for SMRs to be successful many of them must be produced and it is very unlikely the first ones produced will be economically competitive. Therefore, there must be some element that is able to bridge this cost competitiveness gap. There are many possible ways to bridge this gap. A potential solution is a combination of advanced manufacturing credits and short-term government incentives to be paid back in the long-term.

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The Advanced Energy Credit for Manufacturers is legislation that already exists to help reduce greenhouse gas emissions. It provides an investment tax credit up to 30 percent of qualified investment in advanced energy projects. These projects are described as those that reduce greenhouse gas emissions, as well as other qualifications that are not necessary pertinent to SMRs, that establish, expand or re-equip manufacturing facilities. The other necessary qualifications include the placement of the facility in service within three years after the date of certification. Another option would be to enable utilities to drive down short term costs through subsidies but then enforce that these subsidies are repaid when SMR production reaches is nth-of-a-kind production (NOAK). The exact nature of a program in this nature would need to be determined once production costs can be accurately determined. An example could be under FOAK costs of $130 per MWh, a subsidy of $22 per MWh (similar to current subsidies for wind) could be applied. This could be applied through several stages, slowly reduced, eliminated, and progressively increased until the initial subsidy is paid back. This would drive done the initial disparity in competiveness and associate the pricing closer to projected costs of electricity. This could allow SMRs to be more competitive in the initial phase but would decrease the benefits of later NOAK production. This would allow risk to be spread out over multiple years and reactors, instead of the first initial years being very risk intensive. The process can be visualized in Figure 3, which shows three projection timelines for SMRs. If the lower band and the low end natural gas pricing projections prove to be accurate, subsidies could be eliminated after 24 Modules and could be reversed after 30 Modules to begin repayment on the initial subsidies. However if the upper band is the actual proper projection, even under high natural gas projections the NOAK Plant is not cost competitive. Under this scenario, the subsidy system with future payback would most likely

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not be feasible.

Figure 3: Cost Projections for 3 Scenarios of Future SMR Deployment

Second Phase Policies The second phase of SMR commercialization will most likely depend heavily upon exports and thus should be facilitated by efficient and practical export laws. As they currently are written, the export laws governing nuclear exports are both confusing and require a long period of time to obtain license. In order to compete with foreign SMR designers, the export laws should be streamlined so they require less time. The ideal situation would allow export laws to be handled by one or two departments within the government, similar to other foreign governments. This however will not be practical to implement as the structure of export laws is written into several different statutes and bilateral agreements including, Atomic Energy Act, Nuclear Non-Proliferation Act of 1978, Bilateral Agreements on Peaceful

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Nuclear Cooperation (Section 123 Agreements), and others. It will be nearly impossible to strip away export control powers from the four departments and effectively deliver these responsibilities to one or two departments. It is with this is mind that the emphasis should be focused on streamlining the current process to facilitate timely decisions on export applications. The first step in the export process usually begins with a 123 Agreement between the United States and a foreign government. A 123 Agreement is a congressional-executive agreement, requiring congressional approval. Section 123a outlines nine nonproliferation requirements, which include transfer rights, security requirements, enrichment and reprocessing, storage and other items. Section 123a also includes conditions under which the President can exempt these requirements. If they are “seriously prejudicial to the achievement of U.S. non-proliferation objectives or otherwise jeopardize the common defense and security,” [43] then they may be exempt. The Agreement must be submitted to both the House Committee on Foreign Affairs and the Senate Committee of Foreign Relations. It must also include an unclassified Proliferation Assessment Statement (NPAS) produced by the DOS. Congress then has the opportunity to review the 123 Agreement for a total of 90 days of continuous session. If the President has not exempted the agreement from any of the requirements outlined in Section 123a, then the Agreement will become effective unless Congress adopts a joint resolution of disapproval. When the Agreement contains exemptions, Congress must adopt a joint resolution of approval. There currently have been several House and Senate bills attempting to require greater Congressional oversight and stronger nonproliferation standards. Some of the ideas were to mandate positive Congressional approval for non-exempt Agreements, enforce no enrichment and reprocessing rights for countries who do not already possess them, and prohibiting third party nationals with access to facilities without prior consent. 25

It has been established by the DOC through their International Trade Administration’s Civil Nuclear Trade Initiative that there are 27 countries that have the best potential for SMRs. Of these 27 countries, only 5 currently do not have a 123 Agreement in place or are in negotiations. This is a positive sign that the DOS has done an accurate and efficient job of identifying potential nuclear business and establishing 123 Agreements with them. Since these 123 Agreements usually span multiple administrations, it is highly probable that early identification and negotiation will be necessary to align with the 2022-2025 timeline of SMR deployment. Another form of export control that is also currently being examined for policy change is DOE’s Part 810. In 2011, for the first time in 25 years the DOE proposed changes to Part 810. The rule proposals are intended to align U.S. Part 810 to the Nuclear Suppliers Group (NSG) Guidelines and also update them to modern business practices. The major changes to Part 810 include, clarification of the types of technology transfers with the scope of regulation (810.2), addition of technical clarity (810.3), clarification of what activities are generally authorized and to which destinations (810.6), and finally it states the information required for specific authorization for ‘deemed export’ (810.11) [44]. A deemed export is technology or information transferred to a foreign national and is considered an export to his or hers foreign country, even if it occurs in the U.S. To obtain these goals, the DOE has proposed changes to 810.2 to provide a specific list rather than an illustrative list of activities that are regulated under Part 810. Part 810.3 outlines a specific list of activities that require specific authorization in all instances. It has reversed its negative of list of countries in 810.6 which require specific authorization, into a positive list of countries that do not need specific authorization to better reflect the status of countries with a 123 Agreement. The final clarification involving deemed exports outlines current DOE practice of seeking a license to give information or technology to a foreign national who is from a nonauthorized country or involves activities that require specific authorization [44].

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The industry’s response to this policy change has been very negative. In particular the industry notes that in trying to better define the scope through a specific list in 810.2, the DOE actually expands its scope of 810 by including technologies related to the storage and movement of used nuclear fuel. Also the proposed rule change of switching from negatively to positively identified countries, places 73 additional countries on the restrictive specific authorization list. There is concern that this proposed change will inhibit growing relations with emerging nuclear markets, as well as disrupt relations with long time trading partners such as Mexico. There is also concern of slowing the process due to the addition of these 73 countries and addition of added scope. Another area of policy that has not been addressed by the current proposals to the Part 810 rule change is the modernization of the application process. The DOE’s current system lacks an online system for the submittal, processing, and tracking of an application for export. The DOC currently has an online system for export application, the Simplified Network Application Process-Redesign (SNAP-R). This process allows users to submit export license applications online, declare requests for classification of commodities, provide encryption registration, and follow progression of the application. If a similar program were able to be implemented at the DOE it could reduce paperwork, increase security and transparency in the Part 810 process. This type of program could also assist in decreasing processing time. Although the costs of SNAP-R could not be determined, a potential policy could determine the costs of implementing a similar program at the DOE. This cost could be offset by potential cost savings and the difference could be made up with application fees paid by vendors. Another potential measure to ensure the success of SMR commercialization is working with countries to develop the necessary infrastructure for SMR deployment. There is substantial infrastructure required in terms of regulatory structure, legal framework, supply chains for both physical and personnel needs, roads, grid requirements, etc. SMR deployment will require the same intensive

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network or infrastructure as LLWRs require in nearly all areas except maybe roads, finances, grid requirements, and others. Developing countries tend to be lacking in these areas and will allow more expansive deployment of SMRs. This will increase the influence of American nonproliferation interests. The US can employ this building of infrastructure to not only increase the chances of successful implementation of a SMR program abroad but also influence a developing country’s regulatory structure. The development of foreign infrastructure can also increase foreign relations and decrease global output of greenhouse gases. If the US wishes to truly affect greenhouse gas emission it must not only affect output levels domestically but it must also try and reduce developing nation’s emissions as they progress through industrialization. The DOS’s Fiscal Year (FY) 2014 Budget already contains language supporting energy infrastructure development in emerging markets and also energy to mitigate climate change. The Overseas Private Investment Corporation (OPIC) is a completely selffunded organization that states it will provide $5.7 billion in loans and other assistance [45]. It also is a key contributor to climate change in emerging markets. The IAEA also has a budget of $110 million dollars and is involved in the use of nuclear materials for peaceful purposes [45]. There are also many of bilateral and multilateral programs that are involved in the development of energy infrastructure and greenhouse gas emission reduction. The last policy issue to be addressed is developing taxes on imported products that promote US sales abroad without impacting domestic jobs negatively. The DOC has commented that currently tariffs are negatively impacting US manufacturer’s ability to enter foreign markets, while foreign suppliers can much more easily enter the US market. These tariffs range from 3.3 to 5.2 percent on key reactor components, and are suspended in some cases. For example, a nuclear reactor as codified by 8401.10.00 in the Harmonized Tariff Schedule of the United States has a general tariff of 3.3%, whereas in the majority of Europe, according to the European Commission, a nuclear reactor has a tariff of 5.7%.

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First Phase Recommendations The current DOE program is assisting the SMR program in accelerating timelines to ensure prompt deployment of SMRs to impact GHG emission concerns through general use but also potential coal replacement use. The DOE program is also facilitating competition with foreign entities. In order for the DOE’s current path to be successful though it must at least be awarded the original amounts of funding it was intended to receive. Although the additional $85 million is hard to justify in times of low government spending, the United States should honor and fulfill its agreements. It would be just as wasteful to spend so little money as to not get a design over the licensing hurdle. The program’s investment in research will address many NRC licensing concerns that will be used for many years if SMRs are successful. It also is a cost share program requiring at least 50/50 investment from the private sector. Developmental technology that can positively affect environmental and security concerns is a traditional application of government funding. It should continue to be so with the SMR DOE cost-share program. The government must purchase power for its various facilities either through private or government owned utilities. Since President Obama has issued executive orders requiring government to reduce its greenhouse gas emissions, SMR usage is a natural fit for many of the executive branches facilities. These can include DOE national laboratories as well as domestic military bases. In the case of the Oak Ridge Lab the government would be an owner of the SMR through the TVA. However for other DOE and DOD facilities, the owners and operators would be private sector utilities. This would allow the government to meet its reduction of GHG goals and could also provide grid isolation for the facilities involved. It could be seen as troublesome involving the military in SMR programs, however if they are simply purchasing the power from a utility the impact could be negligible. For these reasons the only

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purchasers of SMR technology in the government should be the DOE with other departments willing to purchase power from private sector utilities. The manufacturing credit that is currently available for emission reduction technology should be extended to SMR manufacturing facilities by extending the completion deadline. These facilities will be permanent structures employing high skilled and high paying jobs. If this timeline were simply extended for this advanced technology it would reduce some risk involved in the initial development and help reduce emissions. However, the timeline should not be extended indefinitely. The timeline should be adjusted to commercial projections as the technology becomes more mature, probably closer to five years to adjust for lead times in acquiring new products and/or retooling of facilities. The subsidy program outlined may work but the details will need to be adjusted whenever the economics of SMR production are determined. However because there is a scenario when SMRs are not economically competitive with either the high or low natural gas scenarios, this program would not be a wise decision to implement at this time. It could prove to be helpful to SMR industry but it could also prove to be very detrimental to taxpayers. If the program were put into place at this time SMRs may never be able to pay back the initial subsidies. For this reason, this policy should not be implemented at this time. Second Phase Recommendations It is important that 123 Agreements do not involve rigid standards that are applied to all negotiating nations. It must be realized that each individual nation has different needs and different wants. The US should respect the sovereignty of foreign nations. Their decisions to not give up their reprocessing and enrichment capabilities are well within their rights. In less nuclear developed countries, agreements to allow for fuel take-back programs such as the Russians have are beneficial to

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less comprehensive nuclear infrastructures. The insistence of foreign nations giving up these rights could result in unsuccessful attempts to reach 123 Agreements, which will negatively affect SMR commercialization. The realities of the current status of nuclear technology are that countries no longer have to go through the United States to develop this technology. Since other countries do not require these measures, American companies will be at a distinct disadvantage if this measure is enforced. 123 negotiations should be made on a case by case basis, respecting and acknowledging the differences that exist amongst foreign nations. Allowing case-by-case negotiations will also allow for more timely resolution of the negotiations into agreements. This is important so that American SMRs will be poised for competition in these markets. The DOE’s Part 810 revision will also be important for American competition in foreign markets. This is why these revisions should reflect both the DOE’s and the industry’s desires. Although the DOE’s intention was to create more clarity on the scope and details of its regulation, the response from the industry clearly showed the DOE was unsuccessful. The DOE should continue pursuing its goals of clarification and to align Part 810 more with the NSG Guidelines. In order to successfully achieve this goal, the DOE should continue working with representatives of industry to ensure the clarification and intended scope of Part 810 is realized. The aspect of the DOE’s licensing that should be adjusted relatively quickly is updating the application system with a modern online computer system. There is a comparable system already in the DOC and the transfer from one department to another should not be that difficult. This would increase efficiency and transparency. The cost could be simply paid for by application fees by exporters. The aspect of foreign infrastructure building shows that there are many programs already well equipped to handle many of this nation building through the DOS budget. The programs and measures

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in place seem adequate in terms of both bilateral and multilateral programs to successfully address many developing countries infrastructure needs. Although American companies have stated that the low tariffs allow greater market access to foreign competitors, it is highly doubtful there will be a foreign competitor who takes over the domestic U.S. SMR market. The U.S. should concern itself with driving down foreign tariffs. The U.S. should not however increase its tariffs. The low tariffs provide more equal access to foreign made items increasing competition that will hopefully decrease price and increase quality. Also if the U.S. chooses to raise tariffs, Europe could choose to raise its tariffs to keep the current gap constant. The focus of the SMR program should be on greater access not less. Conclusion A commercialization of small modular reactors in the United States will produce many beneficial attributes that affect the environment, the economy, and the safety and security of America in a positive way. SMRs provide a great alternative to more carbon intensive energy sources and also provide a way to influence foreign countries to use less carbon emitting technology. The commercialization effort, with an emphasis on export, will be able to positively affect nonproliferation efforts through enhanced relations and the adoption of American standards through its technology. All of these excellent reasons explain the advantages to ensuring America has a place among the world’s SMR producers. However, these reasons for action are not enough to ensure a timely and effective deployment of SMRs. First the current American vendors pursuing designs must go through the NRC licensing process, where they face potential obstacles. If the NRC provides a clear path, it is believed these can be overcome without serious damage to the economic viability of SMRs. The current DOE program is facilitating the acceleration of this process and should continue with initially stated levels of funding. 32

SMRs must then demonstrate their economic benefits and this can be best accomplished by the government acting as a first mover. SMRs can make the case for domestic application after a successful deployment through government facility applications, but their ultimate success will rely on international markets. Due to the nature of mass production, there must be a lot of SMRs built and utilized for the economics to work. Foreign markets represent the best opportunity for SMRs and they can be implemented as long as American vendors have a clear, consistent, and fair path through the export process. If they current structure of export laws are modernized and accelerated, this will ensure equitable and timely decisions of exports. There must also be a concerted effort not to require all bilateral negotiations have the same terms in order to guarantee a timely resolution of these discussions. Then through foreign developmental assistance and equitable tariffs, domestic SMRs will more closely compete with international companies. If these policy objectives are met and American vendors can demonstrate their SMRs do in fact have all the benefits they currently propose, then a strong commercialization of SMRs is greatly increased. The SMR program will need continued support from the DOE program. The SMR program will also need more government support through its development. However the support structures are not permanent and SMRs will be able to stand on their own footing once the initial risks are better understood. Once this takes place, SMRs will advance environmental stewardship, economic production, and national defense, all primary focuses of the government.

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Appendix A List of EURATOM Countries Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. Appendix B SMR Vendor Designs

Babcock & Wilcox mPower The B&W mPower iPWR design has a thermal output of 530 MWt and has an electrical output of either 180 MWe for a water-cooled condenser or 155 MWe for an air-cooled condenser. It is approximately 13 ft. in diameter and 83 ft. tall, and weighs 628 tons without fuel. It operates at 2050 psi with an inlet temperature of 567oF and an outlet temperature of 608oF. It uses a standard 17x17 fuel assembly array with