home Nuclear Attitude, U Can Nuclear Replace Coal In The West? Over 20 Utah Cities Are Betting On It Despite The Risks

Can Nuclear Replace Coal In The West? Over 20 Utah Cities Are Betting On It Despite The Risks

The solar panels outside the visitor’s center in Blanding, Utah produce enough electricity that the city can sell some of that power back to the grid, according to City Manager Jeremy Redd.

But that’s only when the sun is shining.

“You have intermittent sources of power and I think those are super important, and I think anybody saying we should do solar and wind, absolutely, I agree,” Redd said. “But it cannot be our only source of power. It’s just not reliable enough.”

Until there’s a good way to store solar and wind energy, Redd said Blanding needs access to a reliable source of power. Right now that’s coal. But, like many coal plants around the country, the one that supplies a quarter of Blanding’s power is shutting down soon.

When that happens, Blanding will have to purchase almost 85% of its electricity on the open power market, which Redd said leaves the city’s power customers more exposed to price spikes.

Renee Bright
NuScale’s design is the first small modular reactor to receive a safety certification from the Nuclear Regulatory Commission.

To avoid that, Blanding is investing in the construction of a first-of-its-kind nuclear plant that promises to provide clean, cheap energy without the safety risk of old-school reactors.

A company called NuScale Power developed the technology for the plant, which uses “small modular reactors,” or SMRs. It’s working with a coalition of cities in the West called the Utah Associated Municipal Power Systems (UAMPS) to build a nuclear plant at the Idaho National Laboratory in Eastern Idaho.

It’s called the Carbon Free Power Project — and, so far, Blanding is one of 23 cities and three utilities in Utah that have signed on to fund it. Another 10 cities, counties and utilities in the West have also signed on to fund the plant, which is scheduled to come online in 2029.

Redd, who sits on the UAMPS’ board of directors, said it’s the perfect solution for Blanding, which is located just 15 miles from the country’s only operating uranium mill and between Canyonlands National Park and Bears Ears National Monument.

“A lot of our future is going to rely on tourism,” he said. “So we are in this interesting place where we are pretty pro-nuclear, and we want to see the haze and the things that come from the dirtier power go away.”

Blanding put $100,000 dollars into the first phase of the project, in order to reserve the right to draw 3.5 megawatts of energy from the 720 megawatt plant. And Redd said the town plans to invest around $260,000 in the project’s next phase.

That money won’t be due until the plant is up and running, at which point Blanding power customers will pay it back as part of their power bill. Or, if Blanding pulls out of the project it would need to pay that money to UAMPS at that time.

The U.S. Department of Energy announced last week it will put $1.4 billion into the project to help pay for the next phase of development, essentially subsidizing the project for investors.

Pay Now … Save Later?

But since 2015, the plant’s overall price tag has grown from $3 to $6 billion. Combine that with the falling price of electricity produced from natural gas, and it starts to look like a bad investment, according to M.V. Ramana, a nuclear researcher at The University of British Columbia. He was paid to study the project by a group that opposes nuclear power plants.

“What’s happened is that the average electricity rate has come down a lot,” he said. “So this is actually a really bad time to be thinking about that kind of stuff.”

UAMPS plans to sign a contract with NuScale on Wednesday that says investors can leave the project if the price of power produced by the plant costs over $55 per megawatt hour, according to Jackie Coombs, member relations manager for UAMPS.

Jeremy Redd UAMPS KG.jpg
Kate Groetzinger
Blanding city manager Jeremy Redd is on the board of the Utah Associated Municipal Power Systems. He is a proponent of the Carbon Free Power Project, an ongoing effort to build a nuclear plant in Idaho.

That’s almost double the nearly $29 UAMPS members paid on average for power last year, according to Ramana. And by investing in the project, cities commit to paying the $55 when the plant is scheduled to come online almost a decade from now.

Ramana said that’s like taking out a 40-year fixed mortgage, without the ability to refinance.

“You’re stuck with the same mortgage payment for the next 40 years, even if the market out there for cash changes completely,” he added.

Despite the higher price, Redd said the guarantee is one reason Blanding is investing in the project because it helps reduce the financial risk of the investment. And it will help insulate Blanding from fluctuating prices on the power market, he added, which went to $150 per megawatt hour this summer.

“If we had had a $55 resource, we would have saved over $66,000 in August alone,” he said.

Banking On Investors … But They Aren’t Showing Up

But the price of $55 per megawatt is not necessarily guaranteed. The formula NuScale uses to calculate the cost of the power is dependent on the plant operating at full capacity, and only around a third of that energy has been claimed by investors so far.

Renee Bright
Twenty-three cities and three utilities in Utah have signed on to fund the Carbon Free Power Project, which is scheduled to come online in 2029.

“When you run the economic competitiveness model, it’s based on a full plant subscription,” said Joel Eves, power manager for Lehi City, which put about $455,000 into the project before the city council voted to leave it this summer. “So in the developer’s eyes that $55 is met. But you will never meet that as a participant.”

Eves told the Lehi City Council in August that UAMPS has been aggressively recruiting cities in the West to join the project, but they’ve only secured one new participant in the past two years: Wells, Nevada, at one megawatt. And the City of Logan, which was subscribed for seven megawatts, left the project in August as well.

“Everybody talks about it,” he said. “In the Northwest specifically we hear a lot of rumors and interest, but when people are pressured to make commitments they don’t materialize.”

The City of Lehi lost the money they put into it so far. Had it stayed invested, Lehi would have had to pay $1.9 million at the end of 2023, Eves said. And that number could have gone up to $450 million by the end of the project in 2029 — or about 10 times Lehi’s 2021 budget — if no new investors materialized.

Still, Eves said the decision to leave wasn’t easy.

“We feel a lot of pressure about carbon reduction … and to have a solution that we felt like did its part was exciting, to have it be a new era for nuclear, was exciting.”

Unlike Lehi, Blanding will continue with the project, according to Redd, who is leaving his position with the city later this month.

“There are a lot of people watching the project because it’s a carbon-free source,” he said. “And I’m confident that in the next two years it will be fully subscribed.”

Current participants in the Carbon Free Power Project have until Oct. 30 to decide whether to invest in its next phase, or leave the project and lose the money they’ve already invested.

Source: Kuer