Fracking gas and carbon politics have driven the world's largest nuclear utility to the same conclusion the Obama Administration came in with—the future of nuclear power is in small modular reactors.
Former Exelon CEO John Rowe declared new-build nuclear dead two years ago. Holding to Rowe's vision of the economics, current Exelon CEO Chris Crane sees the only hope for nuclear power in SMRs, which can be made in a factory, delivered, and operated underground to maximize efficiency, safety and security.
"New nuclear plants being built in a competitive market is not in our future, unfortunately," Crane said Tuesday at a Washington D.C. lunch sponsored by Resources for the Future. "The future as we look at it for new nuclear, a decade-plus out, would be on efficient modular reactor designs."
For traditional nuclear plants to be viable, Exelon determined some years, natural gas has to cost at least $8 per MMBTU with a price on carbon of at least $25 per ton, Crane said. Without the carbon tax, it needs natural gas prices to rise to $13.
Gas is currently trading between $4.50 and $5, and Exelon, like other observers, expects the price to remain between $4 and $6 for the foreseeable future.
Crane, who previously served as Exelon's chief nuclear officer, sees possibility for small modular reactors because they can be built at a much lower capital cost. Traditional reactors require a $12 billion capital investment over 8 years, he said, before they begin making money.
"If you're building a dual unit nuke today it about $16 billion that's spent over 8 years, an incredibly dilutive period of time for a competitive generator to tell their shareholders, 'Wait, you're going to see something good in 8 years.' They work to the quarter not to the decade, for sure."
Modular reactors have the potential to see a return on investment in two years, he said, and since they can be installed underground, they could have lower operating costs, especially in safety and security. (In a report last year, the Union of Concerned Scientists doubted SMRs can be made both more cheaply and more safely.)
If Exelon were to build new plants today, Crane said, they would be gas plants.
"If we were to build something—as we are looking at a couple projects right now in a few of our marketplaces—we would definitely build natural gas," Crane said.
"The benefit: cheap, reliable natural gas that could be plentiful. The problem is, one more time as an industry we're all going to the same fuel source."
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