Biden Lives! Nuclear Power Welfare from U.S. Department of Energy

“What’s lacking are the products – the SMRs. It’s not the government’s job to pick winners and losers in the race to develop the products. That’s how free markets are supposed to work.”

The Department of Energy last Tuesday (March 24) announced a $900 million pot of money to “de-risk the deployment of Generation III+ light-water small modular reactors (Gen III+ SMR).” Energy Secretary Chris Wright said (although it’s more likely someone wrote the words for him), “America’s nuclear energy renaissance starts now.”

Really? The new solicitation is a dead ringer for the Biden administration’s October 2024 $900 SMR solicitation, in many cases word-for-word, including a ‘two-tier’ structure: $800 million for the first, $100 million for the second. The residue of the Biden initiative has been scrubbed from DOE’s website, probably in hopes that no one would remember it.

But Wright gave away the secret in his news release, which stated, “Applications are due on April 23, 2025, at 5:00 p.m. ET. Previous applicants who applied to the 2024 solicitation must resubmit their proposals following the new guidance to receive consideration. New applications are also welcome.”

It either case, it’s bad government policy. It puts taxpayer money into enterprises that are fully capable of succeeding or failing without it.

Mirage of SMRs

Anyone who has been paying attention to small modular reactors over the years, as The Quad Report has done, knows that lack of investment is not a problem for serious SMR developers. TerraPower, a Bill Gates venture, has close ties to the United Arab Emirates. The company recently announced it is going global with its unique SMR design. Gates is not out on a corner with a tin cup.

Oklo is backed by Sam Altman of OpenAI and is publicly traded. Chris Wright surely knows this. He sat on the Oklo board before being named the head DOE. Oklo’s stock took a beating on Monday, Baron’s reported, “after the nuclear start-up posted a widening annual loss and noted that ‘significant’ financial losses were expected for the near future.” That’s the market speaking.

NuScale Power has Fluor money and is publicly traded. The customers for the power – particularly the data center developers, including Microsoft and Amazon – have plenty of money.

What’s lacking are the products – the SMRs. It’s not the government’s job to pick winners and losers in the race to develop the products. That’s how free markets are supposed to work.

But that’s not the way the federal government has worked for the last 50+ years when it comes to energy, particularly nuclear energy. The new, allegedly “conservative” administration is no different. Their practice is no-fault capitalism.

The first nuclear era died for a number of reasons, many of them decisions made by the partnership of government and industry – the vendors and the utilities – who were determined to overcome market forces. They were seduced by the concept of “economies of scale,” which they didn’t understand. “Learning by doing” was swamped by a rush to differentiate what were experimental designs. [1] They deluded themselves about the pace of growth of demand (sounds familiar today). They were blinded by engineering hubris.

DOE will likely go forward with its almost billion-dollar boondoggle. The reactor vendors will certainly take the public money. But it will surely make no difference in whether they succeed or fail. The pressure will be on the DOE to posture about its “successes,” while the market will tell the tale.

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[1] As Vaclav Smil noted (Energies, 1999: p. 152):

As the U.S. utilities opted for many individualized designs, rather than for a standard reactor, and as they began to build concurrently dozens of new plants, construction costs escalated, and they were pushed up further by changing requirements of new safety regulations.”

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This is a slightly revised version of what was originally posted at The Quad Report, the blog site of electricity expert Kennedy Maize. Other posts by Maize at MasterResource are here.

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Source: https://www.masterresource.org/maize-kennedy/nuclear-welfare-us-doe/