By Timothy Gardner and Manas Mishra
(Reuters) - (This Nov. 8 story has been corrected to show that the Energy Department provided $600 million to NuScale and others to commercialize small reactor technology, not $600 million provided to NuScale, in paragraph 2)
NuScale Power said on Wednesday it has agreed with a power group in Utah to terminate the company's small modular reactor project, dealing a blow to U.S. ambitions for a wave of nuclear energy to fight climate change and sending NuScale's shares down 20%.
In 2020, the Department of Energy approved $1.35 billion over 10 years for the plant, known as the Carbon Free Power Project, subject to congressional appropriations. The department has provided NuScale and others about $600 million since 2014 to support commercialization of small reactor technologies.
NuScale had planned to develop the six-reactor 462 megawatt project with the Utah Associated Municipal Power Systems (UAMPS) and launch it in 2030, but several towns pulled out of the project as costs rose.
John Hopkins, NuScale's president and CEO, said in a release that the company will continue with its other domestic and international customers to bring American small modular reactor (SMR) technology to market and increase the U.S. nuclear manufacturing bases.
NuScale hopes to build SMRs in Romania, Kazakhstan, Poland and Ukraine. Critics have warned that Russia's takeover of the Zaporizhzhia nuclear plant in Ukraine -- along with repeated shelling near it, power cuts, and perils to the plant's water cooling resources -- means that reactors, which can release toxic, radioactive materials when disasters strike, should not be built in the region.
NuScale's Utah plant was expected to be the first SMR to win a license from the U.S. Nuclear Regulatory Commission for construction. But NuScale said it appeared unlikely the project will have enough subscription to continue toward deployment.
NuScale said in January the target price for power from the plant was $89 per megawatt hour, up 53% from the previous estimate of $58 per MWh, raising concerns about customers' willingness to pay.
An Energy Department spokesperson said it was unfortunate news, but added, "We believe the work accomplished to date on CFPP will be valuable for future nuclear energy projects.
"While not every project is guaranteed to succeed, DOE remains committed to doing everything we can to deploy these technologies to combat the climate crisis and increase access to clean energy," the spokesperson said.
Existing U.S. nuclear plants, which are larger, provide nearly half of the virtually carbon-free power generated in the U.S.
SMRs are meant to fit new applications such as replacing shut coal plants and being located in remote communities.
Backers have said the design was safer than today's reactors, but critics have said SMRs still produce hazardous nuclear waste.
So far, only NuScale's SMR design has been approved by the NRC.
The public U.S. money for NuScale was awarded through a non-competitive funding vehicle that came before the energy and climate bills passed during the Biden administration.
(Reporting by Manas Mishra in Bengaluru and Timothy Gardner in Washington; Editing by Shounak Dasgupta, Krishna Chandra Eluri and Leslie Adler)