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December 12, 2012 Small Modular Reactors, National Security and Clean Energy: A U.S. National Leadership Strategy Victor H. Reis Senior Advisor U.S. Department of Energy Presidents Vision Timely Goal Strategy Outline Energy as U.S. Sputnik Moment Sputnik/Apollo as Strategic Planning Model Global Nuclear Energy Partnership (Lessons Learned) Small Modular Reactors (SMR) A U.S. SMR Leadership Strategy Summary (SEAB SMR Subcommittee Report)

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Secretary Chu at National Press Club

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Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik, we had no idea how we would beat them to the moon. The science wasn't even there yet. NASA didn't exist. But after investing in better research and education, we didn't just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs. This is our generation's Sputnik moment. Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all -- and I urge Democrats and Republicans to work together to make it happen. State of the Union January 25, 2011 We're telling America's scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we'll fund the Apollo Projects of our time. President Obama NewtonLavoisier

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Presidents Vision Timely Goal Strategy Sputnik & Apollo: A Strategic Planning Perspective A Cold War Strategy Oct 4, 1957 April 12, 1961 Bay of Pigs Invasion April 17, 1961 July 20 1969 First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. May 25, 1961 July 29,1958 Feb 1958 Focus & Align 2X$2X$

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Civil Nuclear Power Leadership: Global Nuclear Energy Partnership: GNEP ? .my Administration has announced a bold new proposal called the Global Nuclear Energy Partnership. Under this partnership, America will work with nations that have advanced civilian nuclear energy programs, such as France, Japan, and Russia. Together, we will develop and deploy innovative, advanced reactors and new methods to recycle spent nuclear fuel. President Bush Feb 18, 2006 Presidents Vision Timely Goal Strategy Global Partnership Advanced Reactors/Fuel Cycle Not Aligned: U.S. Utilities U.S. Spent Fuel Policy National Security (non-proliferation) Leadership

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What Happened to GNEP? LWR Large Fuel Bank Take Back Interim Storage Overseas Reactors Yucca Mountain SMR Current Reprocess Future (Fast) Recycle Systems

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Small Modular Reactors, National Security and Clean Energy: A U.S. National Leadership Strategy Presidents Vision Timely Goal Strategy When we enhance nuclear security, were in a stronger position to harness safe, clean nuclear energy. When we develop new, safer approaches to nuclear energy, we reduce the risk of nuclear terrorism and proliferation. President Obama 3/26/2012 Hankuk Univ Clean Energy Nonproliferation Develop a U.S. SMR Industry; Aligned with U.S. Utilities

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one of the most promising areas is small modular reactors (SMRs). If we can develop this technology in the U.S. and build these reactors with American workers, we will have a key competitive edge. Small modular reactors would be less than one-third the size of current plants. They have compact designs and could be made in factories and transported to sites by truck or rail. SMRs would be ready to "plug and play" upon arrival. If commercially successful, SMRs would significantly expand the options for nuclear power and its applications. Their small size makes them suitable to small electric grids so they are a good option for locations that cannot accommodate large-scale plants. The modular construction process would make them more affordable by reducing capital costs and construction times. Their size would also increase flexibility for utilities since they could add units as demand changes, or use them for on-site replacement of aging fossil fuel plants. Some of the designs for SMRs use little or no water for cooling, which would reduce their environmental impact. Steven Chu, Wall Street Journal, March 23, 2010 Secretary Chus Description of SMR U.S. Competitiveness Affordability Flexibility Market Retiring Coal Plants Develop a U.S. SMR industry! How many SMR? How fast? Role of Government Clean Energy Nonproliferation

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25 Westinghouse SMR Containment Vessels fit into single AP1000 Containment Vessel Westinghouse AP1000 Nuclear Steam Supply System Westinghouse SMR Integral Nuclear Steam Supply System Conventional vs Small Modular Reactor

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Selected for DOE Cost Share 11/20/2012 Jose Reyes Innovation in Small Modular Nuclear Reactors: LWR Examples 45 MW 180 MW 140 MW All PWR Design Commercial LEU Fuel U.S. Industrial Base Affordable to more utilities 225 MW AP 1000 Proliferation Safeguards

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Natural Convection Cooling Seismically Robust Simple & Small Defense in Depth Innovation, Safety and Small Modular Reactors Earthquakes and Floods Deeply embedded reactor building limits motion and dissipates energy Water tight separated, waterproof reactor compartments Loss of Offsite Power Passively safe AC power NOT required for safety functions Defense-in-depth 2 backup D/Gs for grid independent AC power Station Blackout Long-duration station keeping 7-14 day battery supply for plant monitoring/control APU back-up APUs inside reactor building recharge battery systems Probabilistic Risk Assessment (PRA) of Core Damage Frequency (CDF) ~ 10 -8 /year

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Source: Energy Information Administration Operating Commercial Coal Plants in 2008 SMR Market: Replacing Retiring Coal Plants Older coal plants tend to be least efficient and have the highest GhG emissions Virtually all plants greater than 50 years old have capacities less than 300 MWe Retiring all plants >50 yrs old displaces 50 GWe Retiring all plants >40 yrs old displaces 120 GWe

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#195 on 2012 Fortune 500 list Not a good impedance match between utilities financial structure and new large reactors cost. ( Affordability $10B vs $1B) Current Ownership of Publically Listed U.S. Nuclear Power Reactors EDF 62,400 58

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U.S. SMR Timely Goal National Security (Nonproliferation): Nuclear Posture Review 2010 First, and for the first time, preventing nuclear proliferation and nuclear terrorism is now at the top of Americas nuclear agenda, which affirms the central importance of the Nuclear Non-Proliferation Treaty. U.S. Leadership in International Regime to Control Material & Technology IAEA, NSG, IFNEC, 123 agreements, etc. Fuel Leasing Regime U.S. maintain market share of civil global nuclear power (~30%) 2011 State of the Union By 2035, 80 percent of Americas electricity will come from clean energy sources Clean Energy:

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Assume U.S. requires 30% of World Nuclear Energy to Influence Non Proliferation 30% World World Current U.S. Nuclear Plants will be retiring Nuclear Replacement of U.S. Nuclear Plants Uncertain High Upfront Nuclear Costs (Affordability) Utility Risk Natural Gas alternative (Hydraulic Fracturing) Fukushima(?) But:

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U.S Maintain 30% of World Nuclear Power Current U.S. Nuke Plants (60 year life) U.S. Nuke Power (GW) Year Projection of New U.S Large Reactors 120 GW ~ 10 GW/yr Maintain 30% of World Nuke World Nuke Power 30 GW/yr Current U.S. Nuke Plants (60 year life)

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And unless we free ourselves from a dependence on these fossil fuels and chart a new course on energy in this country, we are condemning future generations to global catastrophe. Senator Obama April 2006 The Conversion of a Climate-Change Skeptic By RICHARD A. MULLER July 28, 2012 And yes, my plan will continue to reduce the carbon pollution that is heating our planet because climate change is not a hoax. President Obama Democratic National Convention September 2012 Clean Energy Climate Change

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Meeting Administrations 2035 80% Clean Energy Standard Source Coal Coal (CCS) Natural Gas Nuclear (Large) Nuclear (SMR) Hydro Renewable Petroleum TOTAL CO 2 (Gton) 1.85 0 0.4 0 0.04 2.3 Elect (TWh) 1800 0 785 800 0 250 130 40 3800 2010 U.S Electricity Consumption and CO 2 Emissions. EIA CE=42% Elect (TWh) 2100 0 1030 870 0 250 320 0 4570 CO 2 (Gton) 2.1 0 0.5 0 2.6 EIA Reference Projections 2035 CE=43% Weighted Emission Standards : Assume: Coal= 1, Gas = 0.5, CCS =0.1 Elect (TWh) 300 200 1000 480 970 250 800 0 4000 CO 2 (Gton) 0.3 0.02 0.5 0 0.8 Assumed 2035 electricity to meet 80%clean energy 15% Efficiency improvement No new Coal, Coal >50 years out Renew & CCS ~ met 120 GW of SMR

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Presidents Vision Timely Goal Strategy When we enhance nuclear security, were in a stronger position to harness safe, clean nuclear energy. When we develop new, safer approaches to nuclear energy, we reduce the risk of nuclear terrorism and proliferation. Nuclear is a Business Not a Religion John Rowe CEO Exelon Talk to American Nuclear Society November 2011 A U.S. SMR Leadership Strategy They have compact designs and could be made in factories and transported to sites by truck or rail. The modular construction process would make them more affordable by reducing capital costs and construction times. Provide enough U.S Government assistance to make SMR economically competitive with natural gas for U.S. electricity producers. Non proliferation: ~ U.S. 30% of World Nuke Clean Energy: 80% U.S. Electricity 2035 ~ 120 GW of U.S. SMR by 2035 Align U.S. national and commercial interests

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And with rising oil prices and a warming climate, nuclear energy will only become more important. Thats why, in the United States, weve restarted our nuclear industry as part of a comprehensive strategy to develop every energy source. We supported the first new nuclear power plant in three decades. Were investing in innovative technologies so we can build the next generation of safe, clean nuclear power plants. 3/26/2012 Hankuk Univ Obama Administration & SMR Small Modular Reactor Licensing Technical Support. -The conference agreement includes $67,000,000 to provide licensing and first-of-a- kind engineering support for small modular reactor designs that can be deployed expeditiously, to be administered as specified in the budget request. The Department is directed to consider applications utilizing any small modular reactor technologies. The conferees expect the program to total $452,000,000 over five years. FY 2012 Budget We can build the next-generation nuclear reactors that are smaller and safer, cleaner and cheaper. Ohio State Univ., March 22, 2012 As part of the Obama Administrations all-of-the-above strategy to deploy every available source of American energy, the Energy Department today announced an award to support a new project to design, license and help commercialize small modular reactors (SMR) in the United States. November 20,2012

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Tools for U.S. Government SMR Assistance Small Modular Reactor Technical Support Program (5 year/$452M) Augment Small Modular Reactor Technical Support Program Cost share design costs beyond licensing Carbon Tax or Cap & Trade Carbon Emissions Tax Credits for Clean Energy ($22/MWh for renewable) Loan Guarantees ( $18.5B nuclear, $107B total) Offset Power Purchase Agreements (PPA) for early SMR users Build SMR Demonstration Plants Tools for this Strategy ( 5 year/$500M) (5 year /$1B) ~ 2GW (2035)

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Levelized Cost (C) ($/MWh) Number of SMR Manufactured (N) Natural Gas Target Cost SMR FOAK COST Estimate of Government Offset Cost for SMR PPA SMR FOAK = 100 $/MWh NG Target = $60 $/MWh Learn = 90%, [N=20] Power = 100 MW PPA = 10 year Learning Curve, C i = C FOAK xN i (ln(learning)/ln2) Cost gov ~ Area x P x Duration PPA Area Total Government Offset Cost ~ $1.5 B

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When we enhance nuclear security, were in a stronger position to harness safe, clean nuclear energy. When we develop new, safer approaches to nuclear energy, we reduce the risk of nuclear terrorism and proliferation. A U.S. SMR Leadership Strategy Non proliferation: ~ U.S. 30% of World Nuke Clean Energy: 80% U.S. Electricity 2035 Proliferation Safeguards U.S. SMR~ 120 GW by 2035 $2B Cost Share $2B PPA Presidents Vision Timely Goal Strategy U.S. SMR U.S. Industrial Base U.S.SMR Industry U.S Power Cos ~ 2GW (2035)

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Summary 1)A U.S. industry building and deploying to U.S. electricity suppliers light water, low enriched uranium fueled SMRs holds considerable promise of establishing the U.S. as a global leader of civil nuclear technology, directly supporting many of the nations high priority clean energy, national security and economic competitive goals. 2)Establishing such an SMR industry is a long-term endeavor and would likely require continued sustained U.S. government support going beyond the current Small Modular Reactor Licensing Technical Support Program through the first-of-a-kind cost- recovery phase. 3)The Subcommittee recommends that the Secretary of Energy charter an integrated government SMR strategy....many uncertainties surrounding the commercialization of SMRS. N. Augustine J. Baker F. Beineke A. Carnesale B. DeMars J.Deutch N. Donofrio (Chair) A.Kadak W. Madia R. Meserve B. Richter SMALL MODULAR REACTOR SUBCOMMITEE OF THE SECRETARY OF ENERGY ADVISORY BOARD Final Report Conclusions: November 16, 2012 Presidents Vision Strategy Timely Goal 120 GW by 2035 $4B over 20 years

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To the making of these fateful decisions, the United States pledges before you and therefore before the world its determination to help solve the fearful atomic dilemma to devote its entire heart and mind to find the way by which the miraculous inventiveness of man shall not be dedicated to his death, but consecrated to his life. President Eisenhower, United Nations December 1953 The United States knows that peaceful power from atomic energy is no dream of the future. That capability, already proved, is here--now--today. Who can doubt, if the entire body of the world's scientists and engineers had adequate amounts of fissionable material with which to test and develop their ideas, that this capability would rapidly be transformed into universal, efficient, and economic usage. Completing the Eisenhower - Atoms for Peace Vision Nuclear Power Final Statement

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We must harness the power of nuclear energy on behalf of our efforts to combat climate change, and to advance peace opportunity for all people. President Obama Prague, April 2009 U.S Leadership: Obama - Atoms for Peace & Prosperity Human destiny will be what we make of it. And here in Prague, let us honor our past by reaching for a better future. Let us bridge our divisions, build upon our hopes, and accept our responsibility to leave this world more prosperous and more peaceful than we found it. Nuclear Power Final Statement