First U.S. small nuclear reactor project canceled as costs soared

Advanced nuclear reactor developer NuScale Power and a Utah power group abruptly canceled what would have been the first small modular reactor in the U.S. as construction costs neared $10 billion.

Why it matters: It's a significant setback for a nuclear energy technology seen as crucial for providing around-the-clock emissions-free energy.

Catch up fast: The idea behind small modular reactors, or SMRs, is that they can be built in factories and shipped wherever needed, in theory avoiding the cost overruns that have plagued conventional large nuclear plants.

Driving the news: NuScale yesterday said it had agreed to terminate its small modular reactor project with Utah Associated Municipal Power Systems, a wholesale energy services provider.

• NuScale and UAMPs had initially planned to build six small modular reactors totaling about 462 MW.
• Participating towns began to pull out of the SMR project as construction costs climbed from $5.3 billion to $9.3 billion.

The latest: It's "unlikely that the project will have enough subscription to continue toward deployment," NuScale and UAMPS said in a statement Wednesday.

• NuScale will pay a $49.8 million termination fee to UAMPS.
• Since the announcement, the reactor developer's stock price as of Thursday morning had plummeted more than 30% to about $2.10.

Of note: The U.S. Department of Energy under President Trump approved a $1.35 billion cost-sharing agreement over 10 years for the Carbon Free Power Project.

• NuScale, based in Portland, Oregon, had received about $232 million of that funding.

Between the lines: The project's estimated costs have spiraled 53% to $89 per megawatt-hour, per a report by the Institute for Energy Economics and Financial Analysis, which has consistently criticized the effort.

• That's multiple times the estimated price of other emerging clean technologies, such as multiday battery systems.

Be smart: The cancellation gives weight to critics who have dismissed small modular reactors as an expensive distraction from other clean energy technologies.

• Then again, as our Generate colleague Ben Geman points out, it's just one project that, as DOE said in a statement, was a first-of-a-kind project at that.

👀 What we're watching: GE Hitachi is spearheading an effort with Ontario Power Generation to build another SMR outside Toronto. Meanwhile Holtec is moving ahead with a four-reactor project.

• We'll be interested to see the final price on those initial projects — and more importantly, just how much the estimated price declines for subsequent projects.