When investors pull money out of certain technologies and companies shift resources to pursue other opportunities, what story does that tell? These signs that the marketplace are leaving a technology on the shelf suggest any number of things: an absence of demand, evidence that the proposed technology is too expensive or simply unworkable, or maybe even that another competing technology is better and cheaper.

These market signals are exactly what we are seeing for small modular reactors, a technology that some have argued would transform the nuclear power industry. Despite the availability of generous federal subsidies, private investors and companies are withdrawing support and scaling back or cancelling their development projects in this area.

In December, the Department of Energy awarded NuScale Power funding to support up to half of the costs of developing the “NuScale Power Module.” At the time of the award, NuScale heralded its technology as “an innovative, simple, safe, economic and scalable small modular reactor.” And yet, recently, NuScale, along with others, has withdrawn support or scaled back its internal small modular reactor development programs. Babcock & Wilcox, which was previously awarded DOE funding to support its own project, mPower, sought to sell that division earlier this year and had trouble finding a buyer and is significantly scaling back investments in small modular reactor technology. Westinghouse also declared that it would be reducing investments in its reactors project.



[See a collection of political cartoons on energy policy.]

The industry is recognizing something that seems like it should have been obvious all along: small modular reactor technology is a pipe dream. The idea of hot-tub sized nuclear reactors is simply beyond the reach of commercial pricing. New, traditional, large-scale nuclear reactors are not cost competitive in the face of other energy prices, particularly natural gas, and traditional nuclear reactors rely on decades of experience of design and construction (also, decades of experience of cost overruns, but that is a story for another day). Small modular reactors would have to produce energy at less than half the cost of conventional reactors to compete, and not even the most outspoken proponent suggests that is possible.

So what is the reaction of the Department of Energy to all these clear indicators that the private sector does not think these reactors are commercially viable? So far, DOE has shown no signs of acknowledging these market realities. In the president’s budget proposal in March, DOE proposed a 30 percent increase in the Small Modular Reactor Licensing and Technical Support Program, increasing allotted funding by $27 million to a total of $97 million. And at a recent appropriations committee hearing, Department of Energy Secretary Ernie Moniz affirmed DOE’s commitment to the program.

At Taxpayers for Common Sense, we have a general skepticism of energy subsidies, not only because they distort the marketplace, but they have historically proven very difficult to undo. (Witness, for example, the more than 100 years some of the subsidies for oil and gas have been on the books). So even when the marketplace sends clear signals, as we see in the case of small modular reactors, the subsidy train moves forward. At a time when belt-tightening continues not only in Washington but all over the country, continuing to back a misguided subsidy program is simply the wrong path. The Department of Energy should suspend or, better yet, cancel the small modular reactor program immediately.



