Xcel Energy Considering Nuclear Operator Role at Idaho NuScale SMR Plant

Xcel Energy is exploring a role as operator of the 462-MWe Carbon-Free Power Project (CFPP), potentially becoming a key member of the first-of-its-kind small modular reactor (SMR) power plant that is under development at an Idaho National Laboratory (INL) site in Idaho Falls. The development is another sizable step for the six-module NuScale Power VOYGR project.

Xcel Energy Nuclear Services Holdings, the investor-owned utility's nuclear operations arm, on March 2 signed a term sheet agreement with the project's developer Utah Associated Municipal Power Systems (UAMPS), committing both parties to work toward a potential long-term maintenance and operating (M&O) contract that could be signed as early as this summer. UAMPS, a Utah state energy services interlocal agency, is developing the project under its wholly owned subsidiary CFPP LLC.

While the term sheet agreement lists several tasks and items to be further negotiated, developed, refined and agreed upon," the final scope of work and services that the utility could perform under an M&O contract could include direct operations, the companies said. Xcel Energy, however, also agreed to support UAMPS and Fluor, an engineering and construction giant that is NuScale's majority owner, as the companies engage with the U.S. Nuclear Regulatory Commission (NRC) and prepare submittal of a combined license application (COLA) for the project.

CFPP has said it expects to submit the COLA to the NRC in early 2024 in accordance with the regulatory agency's 10 CFR 52 requirements, though an update in late February suggests the COLA development project remains slightly ahead of schedule and under budget." This February, the company also completed field investigation activities at the INL site. CFPP's development and construction schedule ultimately anticipates that the full plant will be commercially operational in 2030.

UAMPS Developing OEM, EPC Contracts

UAMPS says it has also made progress in developing contracts with NuScale as its original equipment manufacturer (OEM) and Fluor, which it is considering as the project's engineering, procurement, and construction (EPC) contractor. Fluor in January 2021 signed a cost-reimbursable development agreement to provide estimating, development, design, and engineering services to develop the site-specific cost estimates for the VOYGR-6 plant.

Under the new term sheet agreement, Xcel Energy will notably provide numerous pre-operation services," including serving as a key consultant on the design and construction of the plant, UAMPS said. Xcel Energy will also take responsibility for refining operating cost estimates as well as developing an operational and governance model, quality assurance, training, emergency planning, human resources, and security programs."

UAMPS, meanwhile, has so far signed up 27 of its 50-member pool-mainly in Utah, Idaho, Nevada, and New Mexico-as participants in the CFPP. It is now reportedly in discussions with new potential CFPP participants in Montana, Wyoming, Arizona, and Washington.

Subscription recruitment is focused on ensuring transmission solutions exist to wheel the power from the CFPP site at Idaho National Laboratory to interested utilities in Washington and Oregon," the entity reported in late February. A number of promising options are being explored, including exchange opportunities. Transmission service requests have been filed."

UAMPS is also monitoring new transmission line proposals by large utility organizations, including Bonneville Power Administration, PacifiCorp, and Idaho Power Co. In addition, Due diligence is underway between UAMPS and outside utilities interested in joining the project," it said.

A New Nuclear Prospect for Xcel Energy

In a statement on Wednesday, Xcel Energy Executive Vice President and Chief Operations Officer Tim O'Connor suggested Xcel's interest in operating the novel nuclear facility is related to its vision to provide customers with 100% carbon-free electricity by 2050. The major U.S. regulated power and natural gas delivery company today serves customers in eight Midwestern and Western states, including portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. As part of its sustainability efforts, Xcel Energy projects that about 80% of its energy will come from carbon-free resources by 2030. By 2034, it expects to have shut down all its coal generation-a resource on which it depended for 25% of its total generation in 2021.

However, in its Feb. 23-issued 2021 annual report, the company noted the pace of achieving its carbon-free vision will be governed by reliability and customer affordability."

By 2030, Xcel Energy projects that approximately 80% of its energy will come from
carbon-free resources. It expects to be coal-free by 2034. Source: Xcel Energy, 10-K filing, Feb. 23, 2022.

According to resource plans filed in Minnesota and Colorado, Xcel is planning to add nearly 10 GW of additional renewables over the next decade, as well as a major transmission expansion as it pursues coal exits by 2030 in Minnesota and 2034 in Colorado and Texas. While it expects to rely on natural gas as a primary dispatchable resource for reliability and resiliency as more renewables come on the system, it has suggested nuclear's share of its generating fleet will remain steady at 12% in 2030.

The company currently owns three nuclear reactors, all in Minnesota: the 1971-built 617-MW Monticello 1, the 521-MW Prairie Island 1, and the 519-MW Prairie Island 2 (the Prairie Island reactors began commercial operation in 1973 and 1974, respectively). The company's nuclear fleet offered about 1,700 MW of total 2021 net summer dependable capacity into its Northern States Power system. On Feb. 8, the Minnesota Public Utilities Commission approved a 10-year extension for the Monticello nuclear facility. Monticello's operating license, however, is slated to expire in 2030, while licenses for the Prairie Island reactors will expire in 2033 and 2034.

Xcel Energy on Wednesday noted that it already has a memorandum of understanding outlining a teaming agreement with NuScale Power to explore becoming a preferred plant operator for future NuScale VOYGR small modular reactor plants." The CFPP would be the first such plant," it said.

[W]e understand the need for new technologies to achieve this vision," O'Connor said on Wednesday. We're excited to explore an agreement with UAMPS and provide our industry-leading expertise to potentially operate new nuclear plants as this cutting-edge technology moves forward."

-Sonal Patelis a POWER senior associate editor (@sonalcpatel,@POWERmagazine).

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