Serious U.S. taxpayer largesse has gone to the U.S. developer of a high temperature gas-cooled reactor (HTGR), in a major reshaping of a US Department of Energy program, according to a March 1 2023 press announcement . The HTGR developer is none other than X-Energy. Readers may recall the June 2020 edition of the CNWC Newsletter, in which we reported X-Energy had engaged CNWC employer Kinectrics to assist in navigating the Canadian regulatory space. Another CNWC employer, OPG, announced also in 2020 it had teamed up with X-Energy, and its HTGR was short-listed as the technology for the new SMR at Darlington.
And as recently as summer 2022, OPG and X announced they were looking for industrial process heat business in Canada.
The U.S. Department of Energy has increased funding for advanced nuclear R&D and extended it to at least one prospective industrial partner in its latest version of the Advanced Reactor Development Program, which has seen numerous incarnations over the past quarter century. Originally, X-Energy was awarded US$80 million under ARDP in 2021 to develop its HTGR in the U.S. northwest, possibly in collaboration with an area electric utility. According to PowerMag that focus has now shifted to a Gulf Coast facility owned by Dow Chemical. Dow is now a “subawardee” of the $80 million, and will contribute half the project’s value, likely in-kind.
As we make clear in the CNWC Policy Position on Industrial Electrification, opportunities for decarbonizing industrial heat in Canada are limited to applications in which electrification makes sense. These include non-oilsands industrial hot water in applications where the current heat source is natural gas, conventional and controlled-environment agriculture, and data centres. In all these cases decarbonization entails “fuel switching,” from some form of fossil fuel (mostly natural gas) to grid electricity.
The only process heat application of in which fuel switching to nuclear fission could make sense from the viewpoint of scale is the oil sands. Most of Alberta’s baseload electrical supply consists of gas-fired “cogeneration”—oil sands–colocated steam plants. Fission is the only viable non-emitting heat in these applications. However, at this point there is no indication that any oil sands operator has any intention to transition to nuclear fission as the way to decarbonize operations. All are committed to carbon capture. This likely reflects a wide expected cost spread between a kWh of natural gas and a kWh of fission heat.
X-Energy’s new arrangement with Dow could be a harbinger of how technology deals between Canadian utilities and American nuclear technology vendors could play out. While OPG and X-Energy have released a number of statements about their framework agreement to pursue opportunities to implement industrial non-emitting high temperature applications in Canada, the reality is US DOE has the longer purse when it comes to R&D. DOE’s planned investment in this effort alone is larger than the entire R&D budget of Canada’s Natural Science and Engineering Research Council. The ever-shifting focus of X-Energy’s 2021 ARDP strongly suggests the real “market” for HTGRs, at the time of writing, is the market for DOE funds, not industrial customers who might actually use the machine in their normal operations.
X-Energy’s CEO, Clay Sell, is an alumnus of the Global Nuclear Energy Partnership (GNEP), the brilliant but ill-fated GW Bush Administration attempt to solve the light water reactor waste problem via “fast burners.” GNEP’s designers hoped that this end-to-end approach would cement America’s position of global pre-eminence through the LWR fuel cycle. The international partnership—at its height, 28 countries had signed up, including all the NPT weapons states—would enable the transition to zero-carbon energy, while further removing proliferation opportunities.
A year before the Obama administration cancelled GNEP early in 2009, Sell had joined a renewable energy company. In 2019, perhaps recognizing government amenability to infuse massive funds into national U.S. infrastructure, Sell emigrated back to nuclear and joined X-Energy. His personal familiarity with long-standing DOE funding programs for advanced nuclear makes him the perfect CEO for a company that operates in that market.
The lack of specificity in the X-Energy–Dow statement, in terms of which of Dow’s Gulf Coast industrial processes the reactors would decarbonize, likely indicates that what is actually newsworthy in the March 1 announcement is the DOE ARDP funds not just significantly increasing but also going to the X-Dow partnership and not the northwest utility.
Where does that leave X-Energy’s northwest partners, in terms of company focus? And where does it leave OPG? As mentioned, the prospects for nuclear fission providing industrial process heat in any application in Canada look slim, oil sands or not. Until fission is obviously cheaper than natural gas per kWh in, we’re afraid these prospects will stay slim.
As for non-process heat industrial electrification opportunities, OPG is and has for many decades been a major provider of zero-carbon electricity, and with its refurbishment of the Darlington nucear plant and (we hope) refurbishment of Pickering B, will continue to be so for many decades into the future. Should Ontario become a desired location for a data centre, or controlled-environment agriculture, OPG would be a major provider of any such facility’s electricity. That would require drastic reductions in the price of electricity in this province, again something that only companies like OPG are able to provide.
To hear more about the X-Energy Dow arrangement straight from the horse’s mouth, S&P Global is hosting a conversation between X’s Sell and Dow’s Edward Stones. That conversation will occur March 9; register here.