Interview: Holtec's Springman on Moving Into SMRs

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US-based Holtec International is known for its spent fuel canister manufacturing business and dry storage construction, but today the company is touting its small modular reactor (SMR) design. Privately-owned Holtec is seeking financing in the US and the UK for its first-of-a-kind SMR-160, using traditional pressurized-water reactor (PWR) technology, with plans for possible first deployment at its Oyster Creek decommissioning site and then elsewhere in the US and abroad. Holtec Senior Vice President of International Projects Richard Springman sat down recently with Energy Intelligence's Jessica Sondgeroth to explain Holtec's business model. Below is the first half of a shortened and edited transcript of that interview, focused on US deployment. The second half, focused on the UK and other export markets, will be published next week.

Q: Holtec has never been a reactor vendor before. Why start now? What is Holtec bringing to the table?

A: Good question. What I'd like to point out is that we launched our program around 2010. We've been providing reactor components really since our founding in 1986 and as part of our growth strategy, we wanted to expand into not just providing reactor components but providing the entire reactor system. That feeds into our overall business model where we do design, engineering, fabrication, project management, and site services. Our clients now are over 140 power plants around the world. I think it was kind of a natural progression in our evolution to go from the components to the complete system.

Q: So what led you to the SMR-160?

A: We made that decision around 2010 — we started looking at different technologies. At that time, there were a lot of different advanced technologies being discussed using integrated steam generators, different fuel types, and commercialization of technologies that had only been tested in labs. Then in 2011, Fukushima happened; we launched our program right before the nuclear industry cooled off.

That was a decision point for us: Do we continue with this development, or do we stop the development? What the Fukushima accident did for us was crystallize the objectives of what we wanted our SMR to achieve. With all the concern after Fukushima on safety, we felt a guiding principle for the long-term continuation of the nuclear industry is we had to design something that was absolutely safe. If you look at Fukushima, a lot of the lessons learned were around your seismic levels and other potential accidents that depend on active safety systems (require electricity to operate) that previously had been outside the design basis of the plants. A lot of them were focused on flex and emergency response, having equipment available to cool the plant down. These were important improvements; definitely the safety of all operating plants is much improved at this point against this wider envelope of potential severe accidents.

But none of those solutions really solve the issue at the core (no pun intended). The core issue is that when you shut down a nuclear power plant, the reactor core continues to generate heat. In traditional designs today, you need to have power and water to pump through the core to keep it cool.

The way we tried to tackle this problem was to design a reactor that doesn't need offsite power and intrinsically has all the water it needs to cool itself down. We did that by designing a reactor that operates — under normal operation conditions and shut down — to work completely passively. So, the residual heat from the fuel actually provides the energy to drive the coolant through the reactor, without any reliance on pumps and electric motors, and that’s why we think we have something unique and different in terms of the design.

Q: We know that the more complex the design the more challenging the regulatory environment. 

A: The reason we chose PWR technology as opposed to something new — especially in 2010, 2011, 2012 timeframe when we really crystallized the concept — was to take advantage of the massive op-ex and pedigree of safe operating PWRs, and noting the lack of regulations and codified licensing frameworks for a lot of the advanced design reactors. There's a lot of work being done in that area still, but not really clear regulatory guidance on how to go about the licensing — we knew it was going to be a long-term program.

What you really want is to have a consistent regulatory framework to do the design, so you don't have to change things along the way. Most clients around the world want PWR technology, so we specifically chose a PWR reactor, and then the design challenge was "How do we make this absolutely safe?" In making it safe, we also realized a lot of simplifications to the plant which had the secondary benefit to address the cost issue. When you simplify systems, they become less expensive to manufacture and deploy.

Q: As a PWR design the SMR-160 will also not be reliant on high-assay low-enriched uranium to advance your design.

A: Correct. It’s LEU [low-enriched uranium], less than 5% enriched. It's a standard fuel going into most of the PWR power plants today.

I think that's one of the differentiators: in each of these countries [where Holtec is marketing its SMR], they're watching the NRC [US Nuclear Regulatory Commission], and with the NRC not having clear regulatory guidance on how to license an advanced design reactor, they're largely not interested in “advanced reactors.” A lot of the companies that I'm talking to specifically are looking at their phase one deployment: light-water small modular reactors.

Q: What's the difference between the SMR-160 and existing PWRs?

A: The entire layout of the plant is obviously different. We've tried to simplify it, but in terms of some basic fundamentals, most of the PWRs obviously are of a larger size and they use pumps for their cooling system. You have to have electricity to provide the cooling, and you have coping periods, and a lot of redundant safety systems, and backup power.

In terms of safety, I think the core differentiator for us is that we've taken traditional PWR reactor technology, but we've configured it in a way that it operates without pumps, and it cools itself down without pumps. One of the key safety concerns is how do you cool the reactor after it shuts down? We don't need pumps to do that. We don't need offsite power to do that.

I think the other key area is being a spent fuel management company — we've really simplified the fuel handling, eliminated some of the complexities, made it very simple. All of our safety systems are inside the containment vessel, which is another difference. Everything is well protected; the reactor core is underground.

By doing all these things we've been able to shrink the emergency planning zone to the site boundary. There are some new rules around this by the NRC that we're open to taking advantage of to actually specify the EPZ as the site boundary. That I think opens up the siting locations, particularly for some applications in Europe where there's interest for district heating and where they have to be close to population centers. That reduction in the EPZ could be a very important factor, and also help to reduce the operating cost.

Q: How is Holtec different from other new reactor vendors out there?  

A: What I think is unique about Holtec's offering is our business model. Our deployment model. We're a nuclear manufacturer already. We've been in the business for more than 30 years, we have a QA [quality assurance] program in place. We're a certified nuclear material organization, which opens up the supply chain for us, because we can take the nuclear quality assurance responsibility from vendors who don't have a nuclear QA program and do all the testing required to make sure that it meets the applicable quality standards.

The fact that we're a fabricator and we can produce many of the key mechanical components for this plant is another unique advantage — that we have the factory engine behind us to do it. We have the factory engagement during the design. We do have some areas that we traditionally haven't had expertise in. For example, instrumentation and controls (I&C). Mitsubishi Electric, which has the MELTAC control system that's been licensed and deployed at dozens of nuclear power plants worldwide, has been working with us since around 2015. We're also working with Framatome on the fuel design: it's essentially a standard 17x17 PWR fuel assembly. They produce these for existing plants. It’s a tried-and-true technology — the only thing we need to do is qualify it for our specific reactor operations parameters, which are extremely similar to the world-operating PWR fleet.

Then on the construction side — we do construction. We’ve just finished a large [spent fuel storage] facility at the Krsko nuclear power plant [in Slovenia], which is a pretty sizable nuclear construction job with nuclear quality assurance. But the scale of an SMR is bigger and clients wanted to know “Who's your construction partner, who's going to construct this? Is it you?” We looked at that closely and we decided to partner, domestically for North America, with Kiewit — they’ve done about 70% of the combined cycle plants in the US in the last 20 years. They have major government contracts and associated capital construction works as well at US Department of Energy facilities and they have an excellent reputation for on-time delivery and budget management, making sure they deliver on cost and schedule. But Kiewit really only operates in North America; internationally we still had a gap.

But about two years ago we signed up Hyundai Engineering and Construction out of South Korea — they were part of the team that built the Barakah plants Units 1-4, which I understand was one of the lowest-cost NPP delivery projects in recent times. What they did in the UAE is pretty remarkable. They have 50 years of continuous construction experience in Korea and then in the UAE. We thought what better partner than Hyundai Engineering and Construction to join our team. They're doing the Balance-of-Plant design for us and they're going to be our international construction partner.

So if you look at our team in terms of the delivery model, we have all the major boxes checked in terms of experience: we have Holtec for the mechanical components, we have Mitsubishi Electric for the I&C, we have Framatome for the fuel, and we have very credible construction partners to actually deliver a real project. Another point that often doesn't get discussed is that for the practical execution of large-scale projects you need to have a balance sheet. The clients want performance guarantees. They want liability limits. It's hard to do it with a paper company. You really have to have a balance sheet, be able to go to the bank and have a line of credit available. Through Holtec Hyundai, Kiewit and Mitsubishi Electric, we can put together the financial assurances needed to deliver a real project.

Those three boxes — the technology, the team and the financial capacity — frankly, I don't think there's anyone else out there right now from the Western world that has those three boxes checked.

Q: When you say you can put together financial guarantees, you mean all of the partners?

A: It's going to depend. We can put the guarantees in place for our portion of the work. But every project is going to be slightly different. Our partners have shown a willingness to also put some skin in the game, and we're obviously willing to put skin in the game and to lead that project team.

Q: How should we be thinking of Holtec in the future, 10-20 years from now? A vendor? A developer? Are you going to be an operator? 

A: The way I look at it, in the short term we're focused on deploying through a more traditional model, where there's a project owner and we would deliver the project to them. We're in discussions with major nuclear utilities in the US — some publicly announced, some not — on delivering an SMR-160 project. The specific delivery model is under discussion. Whether it would be Holtec providing client-assisted turnkey project delivery (noting “client-assisted” because the utility must be the site licensee and maintains certain responsibilities) or a more traditional model in the Western world where Holtec provides the technology and main nuclear systems, but the utility manages and contracts the construction.

In Europe, we're working with several clients still finalizing their project delivery model. But we're similarly open to leading the full project delivery team under a client-assisted turnkey project, either directly or under a consortium. We’re also working with local companies to deliver the project.

Depending on timing, we’re also looking to develop a project for one of our decommissioning sites, specifically, we've been looking at Oyster Creek, which is in New Jersey — we own that site for decommissioning, so we own the land. We have the staff from that project actively decommissioning that site and we're looking to deploy four SMRs at that site. The commercial side of that is still being put together. Obviously, at the end of the day, you're not going to build it unless it's commercially viable.

We're still waiting for the DOE to provide the implementation details on how the Inflation Reduction Act is going to be administered. We have to see the administrative details of whether and how the project would qualify to one extent.

I think there's also a lot of interest in the news about Palisades, where we've expressed our interest to restart that plant. We haven't had specific discussions, but obviously long term we'd be interested to put an SMR there if we had the commercial backing.

In terms of our decommissioning sites, we've looked at several different deployment models: we could be the owner, part-owner to bring on other investors. The sequences of when those investors would come in is still open for evaluation. There's several paths we could go to be our own operator or to bring on a third-party operator.

I think when we look at the long-term view in 10 to 20 years, it's very conceivable that we could be an operator for our SMRs in the US and abroad. That's really something the market is going to need, especially when we look at new-to-nuclear countries. They don't have a lot of the infrastructure set up with the experience to operate a plant. If you want to go to some of the Southeast Asian countries or you want to go to Sub-Saharan Africa where their expressing interest in SMRs, but have no established operators you have to be able to offer the operating piece, at least to help them stand themselves up as an operator. You can do that with partners. There are several utilities in the US and internationally that would be willing to support us. We must also be cognizant that other countries, specifically Russia and China, are already offering this type of model to foreign countries and it is very attractive to newcomer countries that need that type of support. Holtec wants to be able to offer a Western alternative to compete with that model. In such a case, I could see in 10 to 20 years Holtec being the premier supplier of nuclear reactors around the world. But right now, our focus is on the first project.

Q: Moving on to the DOE Loan Program, you entered phase two of that process to qualify for a $7.4 billion DOE loan in November last year. Can you tell us about the project viability phase and where you are now with DOE on that?

A: We’ve been going back and forth on some questions.

The original application that was approved for phase one was to expand our existing factory in Camden, build a new advanced SMR factory, and construct four SMR-160 plants. We currently have three factories in the US: one in Ohio, one in Pennsylvania and one in Camden, New Jersey. The Camden facility is the newest; it was designed to produce SMR-160s. But we want to expand the capability there to produce them faster and to also manufacture some of the subcomponents that otherwise would be purchased externally.

The new advanced SMR factory that was the second part of the application would be four or five times larger than our existing facility in Camden. The new factory would be able to produce all of the nuclear mechanical components at a rate of six SMRs a year. It would be heavily automated. We've done a lot of engineering work, specifying the type of equipment we need, again, utilizing our existing factory expertise to be able to do that. We haven't chosen the location.

Probably the location would correspond to the location of our first project. We like the idea of Oyster Creek, for example, because it's an hour and a half from our factory and so in terms of doing a first-of-a-kind project, there's a lot of benefit to having your engineers and your factory so close.

Q: DOE Loan Programs Office (LPO) Director Jigar Shah told us in January that a reactor vendor needs maybe 20 orders to qualify for a DOE loan. For Holtec, what needs to happen between now and qualification to lock in that kind of commitment?

A: The DOE Loan Program Office wants to make sure that any project or investment is commercially viable to ensure the loan can be paid back. There are several ways to manage that — I haven't heard of this specific [metric] of 20 orders. I don't think that's come out in the discussions that we've had with LPO, but I know that they definitely are focused on: “If we give you a loan, we want to be able to see that it's commercially viable.”

In terms of the order book, I think we have discussions ongoing with around 20 different potential clients. I think a lot of the clients outside of the US would strongly like to see a first project in the US, so they're almost like contingent orders.

In terms of what you actually need to put in front of the Loan Program Office. I think we're still having some of those discussions because, of course, any banker wants to see finalized, signed contracts. Those finalized signed contracts are difficult to get until you have the reference projects for which the loan itself is intended to enable. It's kind of the chicken and egg discussion and those discussions are ongoing.

Q: You've said Holtec wants to build and assemble the reactors on-site. Is that still correct? The question is how much of the reactor would be preassembled and how much is built on site?

A: I know some reactor vendors talk about reactor modules that are going to be factory manufactured and delivered to the site and they make it sound like there will be no construction. For SMRs, there's a lot of hype around this. I think for microreactors it's more feasible, but the point is, if you look at any of the SMR vendors, there's still a significant civil structure that they're going to put these equipment modules into and that means you are still going to have a significant amount of civil construction. We have ongoing discussions with our construction partners on which parts to modularize in terms of prefabricated structures and how to eliminate some of the challenges you can have with tolerances and site fit-up. I can't give you a percentage right now and that percentage would probably vary depending on the site — e.g., the limiting size of components we can ship. Particularly in Europe, there are more restrictions on the size of equipment or modules that you can ship. The degree of modularization will also depend to some degree on the cost of construction labor.

Another way we are looking at driving down the costs of the SMR-160 is through factory automation of the components. In our factories today we produce several different product lines. Our custom manufacturing facilities are set up to produce heat exchangers and other nuclear components with different sizes and geometries for each unit. We have been automating this line to some degree, but the flexibility needed to handle the different types of products is limiting. We have another product line, which is the canister systems that we produce for spent fuel, where we produce around 150 units a year. For this product line, we’ve designed and built automated assembly lines and custom robotic tooling to meet our throughput needs - what you find is that when you can get to scale with a product-specific automated manufacturing line your costs come way down and your quality goes up. This is what we want to achieve for SMRs, to develop a modern purpose-built factory to drive down the cost of the major mechanical components.

Q: How will you mitigate unplanned construction pitfalls?

A: The key is that we have a lot better tools these days to improve planning. This is why we've gone to Kiewit and to Hyundai. The key points are always ensuring the design is complete before construction begins, checking for interferences, and ensuring subcomponents fit together before they get to the site. We do this today to some degree for our existing business lines, for example heat exchanger replacement. Before, you had to take hand measurements at the facility looking for interface data, which are hard to translate into an interface mapping of a 3D object. What we do now if we are replacing a piece of equipment, is perform a full 3D scan of the facility. The scanning technology today obtains accurate dimensions. Then you can take that model back home to your engineers and they can actually look at and simulate how the equipment is going to come in and out of the building, where are the mechanical connections, the pipe work. You can do that virtually before you do it physically.

The Kiewits and the Hyundais of the world, this is what they do — they check all of the interfaces and fit-ups to ensure that things come together the way you intend. That's why we wanted to have experienced construction partners, to make sure that they bring that experience to our projects.

Q: How complete is the SMR-160 design?

A: It's hard to boil it down to percentage cause the percent complete really depends on the specific system that you're looking at. There’s the [nuclear steam supply systems], I&C, then there's the balance of plant, and there are a lot more subsystems within that. We intend to be ready and we're working under our DOE ARDP [Advanced Reactor Demonstration Program] funding award to complete the preliminary safety analysis report and the detailed design of the plant by the end of this year, early next year. The balance of plant design is ongoing for our standard plant. The standard plant for us is based on several reference sites, but it's a standard layout for the balance of plant. Hyundai is working on that now.

We're using bounding site criteria with the hope the standard design is not going to change when it gets to a specific site to a great extent. But of course, when you get to the site, the soil conditions will be different, the locations and the layout are going to have to change. So, the full detailed design and construction specification for that specific plant is going to have to wait until you have this specific site.

Q: Is Holtec still on target to file its application for the SMR-160 with the NRC in 2024? 

A: That's currently the target. We expect the preliminary safety analysis report to be ready, as I said, which includes the design, the safety calculations, and everything. We've decided to go with Part 50 [NRC rule for construction and licensing]. Most of the advanced design reactors, including the other awardees under the ARDP program, are following Part 50. The reason the industry is doing that is because we believe the Part 50 process is a better process specifically for the first–of–a–kind plant, where it's a two-step process. But what that also means is that we don't intend to submit an application to the NRC until we submit the construction permit application for a specific site, and most likely, that application will not be directly from Holtec, it will be from a utility applying as the operator. As discussed prior, it could be one of Holtec's subsidiary companies if we become an operator, in which case we would submit it on our own behalf for a decommissioning site that we have.

If we go forward with Oyster Creek, for example, we already have an existing environmental monitoring program for decommissioning. About two years ago we looked at that to make sure it would be suitable for licensing a new plant. We made some tweaks to the program. So we're doing everything we need for Oyster Creek in terms of the environmental monitoring to get ready to submit [the construction permit application]. So, if the commercial piece comes together, we would be ready to submit it in 2024. We have several parallel strategies in the US to get our first deployment, noting we're also focused on the UK as another first deployment opportunity.

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