Potential Economics of Nuclear Small Modular Reactor Technology for Alaska

SMR Workshop Anchorage, Alaska

December 9-10, 2010 Ginny Fay and Tobias Schwörer

Institute of Social and Economic Research

Mission Statement:

ISER enhances the well-being of Alaskans and others, through non-partisan research that helps people understand social and economic systems and supports informed public and private decision-making.

Matt Berman, professor of

economics, assesses the

economics of the petroleum

industry and other resource

industries.

Alejandra Villalobos Meléndez,

research associate, studies the

economics of renewable energy

development and sustainability.

Steve Colt, associate professor of

economics and former ISER director,

focuses on energy economics,

isolated utility systems, and the

economics of ecosystem services—

including tourism and recreation.

Tobias Schwörer, research

associate, has studied many energy

issues; he is also interested in the

economic valuation of biodiversity.

Ginny Fay, assistant professor

of economics, is a resource

economist and biologist with

special interests in energy and

natural resource economics,

tourism and recreation, and

community development.

Ben Saylor is a computer

programmer and research

associate who has done

analysis for a variety of energy

projects.

Research Area: Energy and Environment

Alaska’s Energy Use Alaska Total Energy Consumption by Source

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Bil

lio

n B

TU

s p

er

ye

ar

Biomass

Hydro

Other Petro

Resid

Motor Gasoline

Lubricants

LPG

Kerosene

Jet Fuel

DFO

Av Gas

Asphalt Road Oil

Natural Gas

Coal

Electricity in Alaska

CAPACITY, KW GENERATION,

MWh

STATE 2,170,822 6,604,010

RAILBELT 1,383,512 5,056,448

RURAL 291,075 429,680

Railbelt Capacity

UTILITY TOTAL TOTAL CAPACITY KW

ANC MUNICIPAL LIGHT AND POWER 425,699

CHUGACH ELECTRIC ASSN INC 564,024

GOLDEN VALLEY ELEC ASSN INC 299,006

HOMER ELECTRIC ASSN INC 55,420

MATANUSKA ELECTRIC UTILITY 24,803

SEWARD, CITY OF 14,560

GRAND TOTAL 1,383,512

Utility Share of Installed Capacity in Railbelt Area

30.8%

40.8%

21.6%

4.0% 1.8% 1.1% ANCHORAGEMUNICIPAL LIGHTAND POWER

CHUGACHELECTRIC ASSNINC

GOLDEN VALLEYELEC ASSN INC

HOMER ELECTRICASSN INC

Utility Share of Power Generation in the Railbelt Area

27.5%

48.8%

15.6%

7.0% 1.1% 0.1% ANCHORAGEMUNICIPAL LIGHTAND POWER

CHUGACH ELECTRICASSN INC

GOLDEN VALLEY ELECASSN INC

HOMER ELECTRICASSN INC

MATANUSKA ELECTRICUTILITY

Rural Alaska Capacity UTILITY NAME CAPACITY KW

ALASKA VILLAGE ELECTRIC COOP 53,055

ALASKA POWER COMPANY 44,250

NOME JOINT UTILITY SYSTEM 21,670

KOTZEBUE ELECTRIC ASSOCIATION 21,025

BARROW UTILS & ELECT COOP, INC 20,300

NORTH SLOPE BOROUGH 18,700

OTHER 112,075

GRAND TOTAL 291,075

Rural Alaska Capacity Distribution

133, 83%

17, 10%

6, 4% 5, 3%

Communities with

capacity < 2.5 MW

Communities with

capacity 2.5 to 5

MW

Communities with

capacity 5 to 10

Communities with

capacity >10 MW

Utility Share of Power Generation in Rural Alaska

16%

11%

10%

9% 7%

7%

39%

ALASKA VILLAGEELECTRIC COOP

BARROW UTILS &ELECT COOP, INC

BETHEL UTILITIESCORPORATION

NOME JOINTUTILITY SYSTEMS

CITY OF UNALASKA

ALASKA POWERCOMPANY

OTHER

Rural Capacity by Prime Mover 6%

8%

83%

3%

Gas Turbine

Hydroelectric

InternalCombustion

WindTurbine

Small Remote Fuel Markets

Rural and Low Income Households

Funding for renewable energy, 08-10 ($ million, total $157 million)

Small Modular Reactor Modeling

• Identified potential technologies and scales to fit Alaska applications

• Conducted a long-run levelized cost of energy analysis

• Primary applications: rural hubs and Railbelt

• Potential industrial loads—TAPS, military bases and mines

• Small villages: highest prices but insufficient loads

Small Modular Reactor Modeling • Rural hubs identified based on load data—

Bethel, Dillingham, Galena, Kotzebue, Naknek, Nome, Tok and Unalaska

• Rural hubs modeled primarily displaced diesel fuel

• Southeast and Southcentral locations with installed hydro capacity not considered

• Railbelt modeled SMR cost comparison with avoided costs of natural gas and diesel

Small Modular Reactor Modeling SMR costs uncertain so:

• Conducted sensitivity analysis bracketing a range of potential SMR costs

• Used low, mid and high oil price forecasts based on DOE, EIA Energy Outlook projections

• Similarly, used MIT CO2 low, mid and high price projections

Small Modular Reactor Modeling • Modeling goals:

– Determine if different SMR technologies are economic options based on identified parameters and uncertainties

– Is there a potential economic application for rural hubs?

• Identify how economics shift with oil and gas and CO2 price assumptions

• Alaska SMR costs depend on first mover or nth

mover status (using high to low cost assumptions)

Technologies, Capacities, Costs MW Capacity Cost Range ($M)

Toshiba 4S small 10 $45-80

Hyperion 25 $115-200

NuScale 45 $205-360

Toshiba 4S large 50 $225-400

M-Power 125 $565-1,000

Installed capacity cost range: $4,500-$8,000/kW

(compare $7,000-$10,000/kW for Lower Watana hydro)

Site permitting cost range: $5,000-$7,000/kW

SMR Modeling Results • Economics tied to community load/population

and MW of SMR unit

• Capital costs require that all energy be used for electric generation; difficult to compete with diesel or natural gas for space heating

• Bethel and Fairbanks—SMRs cost effective solution as soon as available (assumed to be 2015, high oil prices; 2020 for mid oil prices; mid capital costs)

$-

$50

$100

$150

$200

$250

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

High Crude Price

Low Crude Price

Mid Crude Price

Unalaska

Fairbanks

Bethel

Nome

Oil

Pri

ces

20

10

$/b

arre

l

SMR Modeling Results-mid costs

Assumption: medium capital & site permitting cost

$-

$50

$100

$150

$200

$250

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

High Crude Price

Low Crude Price

Mid Crude Price

Unalaska

Fairbanks

Bethel

Nome

4S large

4S small

Oil

Pri

ces

20

10

$/b

arre

l

SMR Modeling Results, low cost

Assumption: low capital & site permitting cost

$-

$50

$100

$150

$200

$250

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

High Crude Price

Low Crude Price

Mid Crude Price

Unalaska

Fairbanks

Bethel

Nome

Oil

Pri

ces

20

10

$/b

arre

l

SMR Modeling Results, high cost

Annual Energy Cost Savings per Household

Assumptions: - Medium capital cost & site permitting, - Electric heat to max out capacity

0

100

200

300

400

500

600

M-Power Toshiba 4Slarge

NuScale Hyperion Toshiba 4Ssmall

Bethel

Fairbanks

Local Fuel Thresholds

4.80

12.10

4.20

34.75

7.75

18.75

7.00

17.60

6.70

$0

$5

$10

$15

$20

$25

$30

$35

$40

Bethel Dillingham Fairbanks Galena Kotzebue Naknek Nome Tok Unalaska

Contact

Ginny Fay, UAA, ISER

– ginnyfay@uaa.alaska.edu

–907-786-5402

Tobias Schwörer, UAA, ISER

- ants1@uaa.alaska.edu

- 907-786-5404

website: www.iser.uaa.alaska.edu