By William J. Barattino
(This article summarizes a paper presented by the author at the ASME 2011 Small Modular Reactors Symposium)
Federal agencies have been directed by public laws and executive orders to reduce energy consumption, increase usage of clean energy sources, and reduce greenhouse gas emissions (GHGs). The U.S. Department of Defense (DOD) is working with the U.S. Department of Energy to develop a long-term strategy to embrace and implement these directives for military installations that includes small modular reactors (SMRs) in the mix of clean energy technologies. This blog post provides an initial assessment of the market size of SMRs on U.S. Army installations located in the United States that includes background factors driving the shift to clean energy sources; characterization of energy consumption and costs for Army installations; maximum overnight costs for breakeven based on offsets of current base electricity costs; and reductions in GHGs with use of SMRs.
The DOD is moving toward “NetZero” energy installations serviced by utility sources that are secure, reliable, and cost effective. NetZero energy implies power systems located within the boundaries of a military installation (or possibly on federal land to service a number of agencies within a region) for providing secure and uninterruptable power supplies for mission-critical base facility energy requirements.
Contractual processes for implementing new energy reduction, monitoring, and production for servicing base energy requirements are already used extensively by the DOD. Details of contract types differ, but are similar from the context that benefits (or savings) of an alternative must exceed costs over the system lifecycle. The good news here is that implementing contracts for cost-effective, alternatives requiring public-private relationships for servicing energy consumption on military installations is routine today.
Eighty installations were considered with peak power ranging from 0.6 to 132 MWe (the majority in the 1 to 75 MWe range). Installation energy consumption and cost data are recorded in the U.S. Army Energy and Water Reporting System, an on-line data reporting system with monthly inputs provided by base engineers.
Total energy consumption cost was $855.8M during fiscal year 2010. Of this total, $573M representing two-thirds of total cost was for electricity; and $282.8M representing one-third of total cost was for industrial processes. Hawaii has the highest yearly electricity cost of nearly $49 million per year due to its extremely high cost of 20.8 cents per kilowatt-hour, whereas the average cost of electricity for the entire set of 80 installations is 7.3 cents per kilowatt-hour. While SMRs can operate in a co-generation mode, the higher relative cost of electricity led to the conclusion that the primary focus should be for electricity production from a cost efficiency perspective.
After characterizing energy usage and costs, an economic assessment was conducted of projected cost savings that an SMR must remain below for its lifecycle costs to be competitive with displaced fossil fuel. The revenue stream to offset expenses was represented by the monthly cost of electricity of $2.7 million. Costs for site preparation, manufacturing, and construction were expensed as monthly construction loan payments over years 6 through 10 with a 4 percent cost of capital. For this scenario, the manufacturing and construction (i.e., overnight) cost of $1420 per KWe was required to meet our target goal of return-on-investment>10 percent. With a yearly cost escalation of 3-5 percent for electricity, the allowable overnight costs for breakeven increased to $3000-4000 per KWe. These preliminary analyses led to the conclusion that the DOD requires an energy business model that reconciles operational importance with cost. In other words, the principle of a “secure energy premium” will be required to balance energy-assurance-with-affordability.
Dramatic reductions in current base GHGs are realized with use of clean energy technologies. Nuclear energy for electricity results in a significant reduction of nearly 76 percent in GHGs averaged for all Army installations in the United States. When the SMRs are also used in a co-generation mode, GHGs are reduced by more than 96 percent.
Clearly, much work remains to accurately quantify the upfront and recurring expenses for SMR systems on military bases. This analysis provided an initial assessment as to whether SMR system lifecycle costs can compete with existing installation electricity costs. There is a high potential for moving forward with alternatives that demonstrate lower system cost, enhance security, and reduce GHGs. The more challenging cases, however, will be for installations where the SMR lifecycle cost is somewhat higher than continued use of fossil fuels, but enables secure NetZero energy with significantly lower GHG emissions.
William J. Barattino is the chief executive officer at Global Broadband Solutions, LLC. He has more than 30 years experience in program management and systems engineering and integration for telecommunications, space systems, lasers, imaging, facilities engineering, and applied mechanics. He is an ANS member and a guest contributor to the ANS Nuclear Cafe.