GAO finds nuclear demo best practices could set new standard for clean energy projects

October 3, 2022, 12:00PMNuclear News

The Department of Energy’s management of its commercial-scale reactor demonstration projects has “generally been consistent with requirements to address risk,” according to a Government Accountability Office (GAO) report published recently. The GAO found that the DOE has met existing project management requirements, and that the two offices managing the awards—the Office of Nuclear Energy (NE) and the Office of Clean Energy Demonstrations (OCED)—plan to introduce additional project management tools, such as external independent reviews. The GAO recommended that the DOE adopt those plans as institutional best practices for other large energy projects, and the DOE concurred.

Good things come in threes: The report considered all three demonstrations currently underway after a combined $4.6 billion in cost-shared awards were granted in fiscal year 2021: the NuScale Power small modular light water reactor demonstration called the Carbon Free Power Project (CFPP), planned for Idaho National Laboratory land; and two non–light water reactor demonstrations under the Advanced Reactor Demonstration Program (ARDP)—TerraPower’s Natrium sodium fast reactor, to be built on a retiring coal plant site in Wyoming, and X-energy’s high-temperature gas-cooled Xe-100, planned for construction in Washington state, near Energy Northwest’s Columbia light water reactor.

The GAO’s review began in September 2021 and has included interviews with officials from NE, OCED, and the Nuclear Regulatory Commission, and with representatives of NuScale, TerraPower, and X-energy, among others.

The NuScale project and the two ARDP demos are different from each other in three ways, the GAO notes: the award process (the NuScale award was not competitive, while the ARDP awards were), the award term (NuScale is 10 years, while the ARDP terms are between six and seven years), and the cost-share structure (NuScale has a total federal cost share of 23 percent, front-loaded with the government providing 70 percent for the first four years, while the ARDP demos include a consistent 50 percent cost share).

New demos, new demo office: The OCED was created under the Bipartisan Infrastructure Law and established in December 2021. While NE is managing the NuScale demo, the OCED is managing both ARDP demos and will take charge of other major clean energy projects, including deployments of nuclear, hydrogen, energy storage, and carbon capture technologies.

“DOE has taken several actions to manage risks associated with its three nuclear energy demonstration awards,” according to the GAO report. “Specifically, DOE uses existing project management practices such as budget controls, milestone tracking, and other procedures to manage risks. In addition, the Office of Nuclear Energy and the newly established Office of Clean Energy Demonstrations plan to use additional project management practices, such as external independent reviews, to oversee the awards.”

DOE officials told GAO interviewers that because OCED is not a technology-focused office, “its processes could help mitigate optimism bias when conducting oversight of DOE’s large demonstration projects.”

OCED officials plan to use some of the money appropriated for the two ARDP awards to help establish the office’s oversight practices, including funding for subject matter experts and independent project reviewers, according to the report.

DOE response: In a joint letter dated August 26, assistant secretary for nuclear energy Kathryn Huff and acting director of OCED Kelly Cummins replied to the GAO’s report, agreeing with the recommendation that the DOE “coordinate and institutionalize” their oversight processes.

“NE is taking steps to document its processes for providing oversight of large nuclear demonstration projects, including the use of external independent reviews, and for ensuring close cooperation between NE and OCED to ensure effective and appropriate federal oversight of new reactor demonstration projects,” they wrote, while OCED “is creating a center of excellence for demonstration project management oversight that will improve oversight and add consistency to the application of project management practices across DOE’s large demonstration project portfolio.”

According to Huff and Cummins, “This [OCED] approach includes, but is not limited to, ensuring appropriate front-end planning, providing adequate time for due diligence to identify and mitigate technical and financial risks before federal funding is committed, building project management expectations and requirements into Cooperative Agreements, and establishing an independent project review capability to provide objective reviews at regular intervals and at key decision points.”

In addition, they noted, “DOE is establishing a Demonstration and Deployment Advisory Board to provide transparency, share lessons learned, and ensure consistency of the application of oversight practices across DOE’s portfolio of large demonstration projects.”

Timeline: According to the report, as of May 2022, the first delivery of power to the commercial grid by NuScale’s CFPP is anticipated in December 2029, while for TerraPower that date is September 2028. The date for first delivery of power by the X-energy demo is cited as December 2027 in the report, which notes that date has not yet been updated to reflect pandemic delays.

According to the GAO report, one stakeholder interviewed said that “the timelines for these demonstration projects are challenging, in part because of how long it may take to get through the NRC licensing process.”

Under the DOE’s regulations, each awardee must submit a continuation application with a progress report containing schedule and budget details to continue a project at the end of each award budget period. While NuScale’s budget period is every two years, the budget period for the two ARDP awards is every year.

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