The United Kingdom is actively considering ways to maximize value created from drawing down its reactor-grade plutonium stockpiles, which account for roughly half of global volumes of plutonium separated from reprocessed nuclear fuels. Recycling the plutonium in a mixed oxide, or MOX, fuel capable of being consumed in existing nuclear reactors after slight modifications was thought to be the obvious route. That was the government's plan as recently as 2011, but the program to manufacture MOX fuels at Sellafield (where the plutonium stockpiles reside) was canceled due to cost overruns and questions about technology deployment.
Luckily, General Electric (NYSE:GE) arrived on the scene shortly after the government went back to the drawing board. The company's Generation IV fast neutron reactor design, named PRISM, is capable of consuming plutonium directly while generating 100x more power than MOX fuels. It earned a nod as a "credible" alternative to other potential solutions, but the advanced reactor isn't the only option being considered. What's keeping the United Kingdom from handing its plutonium stockpiles to General Electric?
No easy decision
The United Kingdom's Nuclear Decommissioning Authority, or NDA, recently recommended three competing reactor designs as potential solutions: two requiring MOX fuels and PRISM. The NDA also admitted that the three reactor designs "have pros and cons and that no 'perfect' solution exists. It may be that a multi-track approach offers best value for money." That could lead to some pretty interesting events heading into summer 2015, when the government will formally review the recommendation and decide the next step in the process for disposing of the plutonium stockpiles.
While the selection of a final solution isn't expected for several years, and may very well be a combination of multiple reactor designs and technologies, General Electric knows the stakes are high. Eric Loewen, Chief Consulting Engineer at GE Hitachi Nuclear Energy, has suggested that the government "hold an open and transparent competition between the three different [plutonium] reuse options" by 2016. Could General Electric win any potential showdown? Let's see what each reactor has to offer.
Technology Option 1, MOX in Light Water Reactors
The United Kingdom could modify light water reactors, or LWRs -- the most widely used reactor designs in the world -- to consume MOX fuel. Such an approach could make use of existing infrastructure, potentially alleviating the need for costly new construction. While this technology option has been considered by many other nuclear-powered countries, only France has managed to deploy it successfully for everyday commercial operations. Indeed, the United Kingdom would need to enlist France's AREVA to make this option viable.
But France has an interesting policy on what happens to MOX fuels after use. Instead of reprocessing and recycling the used fuel, the country has decided to store the wastes and wait to dispose of them more completely in Generation IV fast neutron reactors, such as PRISM from General Electric. Should the United Kingdom choose this option it must be ready to swallow cost overruns for uncertain outcomes, quell public concerns when transporting plutonium from Sellafield, and acknowledge that Generation IV reactors are likely needed to address the new problem of creating additional nuclear wastes (that still contain plutonium).
Technology Option 2, Candu EC6 Reactors
Candu Energy has developed the Candu EC6 reactor, which is a Generation III heavy water reactor. The design was also considered to be credible option for disposing of plutonium stockpiles thanks to proven design and use, ease of attaining operating licenses, job creation potential, and the fact that 47.5% of the company's total workforce is stationed in the country. The company is even offering to have reactors operational by 2025 to generate electricity -- and revenue -- earlier than other reuse options, although they wouldn't use MOX fuels until years later.
The "locality score" for Candu EC6 may be off the charts, but costs may not be far behind. The United Kingdom would need to build four 700-MW reactors; each requiring 100 metric tons of MOX fuel (containing 2% plutonium) every year. The used MOX fuel would then need to be stored onsite for 100 years before being sent to a geological repository. Should the United Kingdom choose this option it would need to explain to taxpayers why 2,800 MW of costly nuclear power is the most valuable option for the nation and deal with the backlash over rising volumes of used nuclear fuel.
Technology Option 3, PRISM
General Electric's Generation IV reactor is based on a 20-MW experimental reactor that operated successfully at Argonne National Laboratory. The U.S. Department of Energy spent $77 million on its design, but the Nuclear Regulatory Commission shelved its application when fast neutron reactor development was abandoned. The company has stayed the course, however, and is once again working with the DOE to commercialize the design.
PRISM comes with several potential advantages. First, as with all fast reactors, PRISM can more fully realize the energy potential from nuclear fuel (whether uranium or plutonium) by fissioning isotopes created during the nuclear fuel cycle. Second, the passive safety systems (derived from its unique design and slower chain reactions) allow the reactor to cool itself without human interaction in the event of a pump malfunction or loss of power. And third, once plutonium stockpiles are completely consumed, PRISM can begin consuming used nuclear fuels from existing reactors -- a far cheaper (net revenue creator, actually) and safer option than geological storage.
General Electric is hoping that size matters, too. At just 311 MW, PRISM is considered a small modular reactor, meaning it's about one-fifth the size of traditional reactors. That allows it to be constructed in factories and assembled onsite with lower upfront capital costs. In other words, a PRISM power plant could be constructed at Sellafield and completely alleviate the need for transporting plutonium off site.
Consider how the PRISM's smaller size and unique design (fast neutron reactor) are advantageous for the United Kingdom. In order to consume the nation's entire plutonium stockpile, General Electric would need to build just two PRISMs (622 MW), while Candu Energy would need to build 2,800 MW of Candu EC6 reactors. While more power would be generated from the latter option, most of it would come from uranium in the MOX fuel. In fact, PRISM could extract enough energy from the plutonium stockpiles at Sellafield to power the entire United Kingdom for 100 years. Candu EC6 would only extract enough energy from the stockpiles for one year of the country's electricity needs. That's 100x more energy from plutonium for a fraction of the upfront costs!
Should the United Kingdom choose this option, it would be the first nation to deploy PRISM, and perhaps any Generation IV reactor, for commercial use. It could very well be among the safest nuclear reactors ever designed, but remaining regulatory paperwork could scare the country away from going all-in.
What does it mean for investors?
PRISM reactors represent a multibillion opportunity for General Electric investors in the next several decades. Revenue would be generated upfront from building or licensing the technology, perhaps paid for by existing nuclear decommissioning funds, and over the life of a power plant through electricity sales. While costs to generate that power remain high, the United Kingdom has already guaranteed rates for one new nuclear project. Why? It values the avoidance of carbon dioxide emissions -- and I would expect more governments to begin doing the same soon.
As demonstrated in the comparisons above, the technological pros and cons vary. Keep in mind that the United Kingdom must make a decision based on a multitude of factors, including technology, economics, climate change policy, international trade laws, regulatory approvals, and the like. In the event that General Electric gets to go head-to-head with the other two technology options in the next two years, PRISM's advantages would need to outweigh any uncertainties from more detailed engineering design, which has yet to be completed.
However, if MOX fuels are used in any capacity as part of the country's plan, then the United Kingdom would essentially be trading its plutonium stockpiles for used MOX fuel stockpiles, thus creating a new problem. The new wastes could only be reliably disposed of by completing the nuclear fuel cycle -- a distinct advantage of Generation IV reactors. Therefore, even in a field of challenging variables, it would be most economical to pursue flexible, next-generation technologies such as PRISM, which provide the most value to taxpayers.
Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, CAPS page, previous writing for The Motley Fool, and follow him on Twitter to keep up with developments in the synthetic biology field.
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