In a case that could cast a cloud on the Hoosier state’s nuclear power ambitions, higher steel prices and interest rates could drive up the price of electricity at the nation’s first small modular nuclear reactor plant to nearly twice previous estimates.
Project developers for the Utah Associated Municipal Power Systems Carbon Free Power Project, a planned 462-megawatt electric plant powered by six small modular reactors, told at least one UAMPS member that prices could run up to $100 per megawatt hour, nearly double the projected $58 per megawatt hour.
By comparison, the average price for electricity from all sources combined in the grid that serves Indiana and 14 other states, the Midcontinent Independent System Operator, reached $116 per megawatt hour at its peak.
Renewable energy on its own also experienced large price increases due to supply chain difficulties, pushing utility scale solar energy and onshore wind energy rates to $45 and $46 per megawatt hour, respectively.
The projected costs for the Carbon Free Power Project include a 30% investment tax credit provided by the Inflation Reduction Act.
The Carbon Free Power Project has not yet begun construction but is scheduled for completion by 2029. Without the credit, the project cost could have been $120 per megawatt hour, according to a power manager from one of the 27 UAMPS members signed on to purchase electricity from the project.
“To me, it was kind of a punch in the gut,” said Scott Hughes, power director for Hurricane City, Utah at a power board meeting Oct. 5. “When they told us, I was like, ‘Oh, my gosh. What are we going to do?’ There’s nothing good about it in any way we look at it, but everything’s going up. The next question is, okay, what are we going to do instead? What if the project fails?”
Hughes said that no UAMPS members have backed out of the project yet and that prices may fall before the project’s 2029 opening.
Higher costs for fossil fuels and inefficient plants have also caused energy rate increases at Indiana utilities, including the Northern Indiana Public Service Co., AES Indiana, CenterPoint Energy and Duke Energy Indiana.
Indiana legislators passed a law earlier this year that permitted the construction of small modular reactors plants in the state as long as the utility seeking to build the plant also sought federal permits for its construction.
The law also added small modular reactors to the list of clean energy projects eligible for financial incentives, including recovery of costs through rate increases for utility customers.
The bill’s proponents pointed to the Carbon Free Power Project as proof of a growing industry about to take off, but opponents said they were concerned about the potential for cost overruns that would be passed on to ratepayers and about sunken costs from failed projects.
The Carbon Free Power Project has experienced several budget setbacks and timeline delays since the project began in August 2020.
The project was initially planned to cost $4.2 billion for 720 megawatts of power produced by 12 small modular reactors. The project received a multi-year $1.4 billion award from the U.S. Department of Energy to complete the plant in October 2020, and UAMPS said the funding would ensure the cost of energy would be $55 per megawatt hour.
Several months after receiving the award, UAMPS revised the project cost to $6.1 billion, reduced the number of SMRs to be installed to six and delayed the project by three years.
Several utilities in Indiana, including AES Indiana and CenterPoint Energy, said they are considering adding small modular reactors to their resource plans. Duke Energy Indiana is in talks with Purdue University to explore the feasibility of using a small modular reactor to power the university’s West Lafayette campus.