Unmet Czech expectations: NuScale small modular reactors fail to cope with cost increases

As reported by Bloomberg, the first US project involving 6 NuScale small modular reactors, with a total installed capacity of 462 MW, has been cancelled. NuScale was unable to meet a key condition set by the Utah Associated Municipal Power Systems (UAMPS) utility consortium for the project to continue, primarily due to the steep increase in project costs and, consequently, the high electricity price offered to offtakers. The project was therefore deemed economically unviable, and an agreement was reached to terminate it. However, NuScale will pay a huge fee for failing to meet its commitments.

In 2020, NuScale became the first company to complete certification of a small modular reactor (we wrote about the certification here). In 2021, the company said that the cost of electricity from its small modular reactors would be USD 58/MWh, but the projected price has risen steeply since then.

The cost of delivering the project rose not only due to inflation, but also because of changing market conditions. The company reported a cost review last year. As a result, the projected price of electricity from the small modular reactors was revised to USD 89/MWh in January this year. This raised concerns over whether the price would be acceptable to end consumers and whether the project was economically viable.

For the project to proceed, NuScale had to sell 80% of the project's installed capacity, or rather 80% of its electricity output, under its agreement with UAMPS. NuScale failed to do so, and the project was therefore cancelled. As a result of failing to meet its commitments, NuScale must now pay UAMPS a project termination fee of USD 49.8 million.

The project's failure also has implications for Czechia, which is likewise planning to develop small modular reactors. NuScale is one of the companies with which Czech energy giant ČEZ is cooperating on a strategy for their development.

However, ČEZ has not relied solely on NuScale's small modular reactor. It has already signed memoranda of cooperation on small modular reactors with NuScale, GE Hitachi, Rolls-Royce, EDF, Westinghouse, KHNP and Holtec.