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w.inl.gov

Next Generation Nuclear Plant Business Models for Industrial Process Heat Applications Dr. Michael G. McKellar Michael.McKellar@inl.gov 01 208 526-1346

Technical and Economic Assessment of Non-Electric

Applications of Nuclear,

NEA/IAEA Expert Workshop

Paris, France, April 6, 2013

Outline

• Objectives

• Advantages of HTGR Process Heat

• HTGR Characteristics and Economics

• Economic Model & Assumptions

• Examples • Power Generation

• Gas to Liquid via Methanol

• Steam Assisted Gravity Drainage (Oil Sands)

• Conclusions

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Objectives

• The Next Generation Nuclear Plant (NGNP) Project, led by Idaho National Laboratory, is part of a nationwide effort under the direction of the U.S. Department of Energy to address a national strategic need identified in the Energy Policy Act of 2005—to promote the use of nuclear energy and establish a technology for hydrogen and electricity production that is free of greenhouse gas (GHG) emissions.

• This presentation is a summary of analyses performed by the NGNP project to determine whether it is technically and economically feasible to integrate high temperature gas-cooled reactor (HTGR) technology into industrial processes.

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Advantages of HTGR High-Temperature Process Heat

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• Reducing CO2 emissions by replacing the heat derived from burning fossil fuels, as practiced by a wide range of chemical and petrochemical processes, and co-generating electricity, steam, and hydrogen.

• Generating electricity at higher efficiencies than are possible with current nuclear power generation technology

• Providing a secure long-term domestic energy supply and reducing reliance on offshore energy sources

• Producing synthetic transportation fuels with lower life cycle, well-to-wheel (WTW) greenhouse gas (GHG) emissions than fuels derived from conventional synthetic fuel production processes and similar or lower WTW GHG emissions than fuels refined from crude oil

Advantages of HTGR High-Temperature Process Heat

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• Producing energy at a stable long-term cost that is relatively unaffected by volatile fossil fuel prices and a potential carbon tax, a price set on GHG emissions

• Extending the availability of natural resources for uses other than a source of heat, such as a petrochemical feedstock

• Providing benefits to the national economy such as more near-term jobs to build multiple plants, more long-term jobs to operate the plants, and a reinvigorated heavy manufacturing sector.

HTGR Integration Characteristics

• Plant Rating – 2,400 MWt to 6,000 MWt

• Modular Nuclear Heat Supply System Modules – 350 MWt to 625 MWt

– Provides flexibility in meeting needs of electric grid and industrial process

energy needs and deployment schedule

• Connection to Regional Grid

• Benign Safety Basis to permit collocation with industrial facility or

population centers

– Provides flexibility in siting to maximize applicability

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HTGR Economics Development Approach

• What forms of energy can the HTGR supply

• What does the market need − Identify specific process applications & their characteristics

• Develop integrated plant designs using the HTGR, where appropriate, to supply required energy

• Establish the costs of the integrated plant including the process and the HTGR

• Determine economics & establish the competitiveness of the HTGR integration with the market

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Up to 850°C

High Temperature Gas-cooled Reactors – Application Beyond Electricity

High Temperature Reactors can provide energy production that supports wide spectrum

of industrial applications including the petrochemical and petroleum industries

Reactor Temperature Range Covering Applications Evaluated To-date

The Potential Market (INL/EXT-10-19037, R1, August 2011*)

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Existing Plants – Assuming 50% Penetration of Likely Combined Heat & Power Market -- 2.2 quads*

The Opportunity — Integrating Nuclear High Temperature Process Heat with Industrial Applications

Coal-to-Liquids (24 – 100,000 bpd plants )

Petrochemical (170 plants in U.S.)

Fertilizers/Ammonia (23 plants in U.S.–NH3 production)

Petroleum Refining (137 plants in U.S.)

Oil Sands/Shale60 - 56,000 bpd plants

* Quad = 1x1015 Btu (293 x 106 MWth) annual energy consumption

Hydrogen Production14 - 719 tpd plants

Growing and New Markets – Potential for 13.6 quads of HTGR Process Heat & Power & Electricity Generation

Electricity Generation40 GWe capacity

Co-generation Petrochemical, Refinery, Fertilizer/Ammonia plants and others

75 GWt (125 – 600 MWt modules)

Oil Sands / Oil Shale Steam, electricity, hydrogen & water treatment

60 GWt (~100 -- 600 MWt modules)

Hydrogen Merchant Market 36 GWt (60 – 600 MWt modules)

Synthetic Fuels & Feedstock Steam, electricity, high temperature fluids, hydrogen

249 GWt (415 – 600 MWt modules)

IPP Supply of Electricity

110 GWt (~180 – 600 MWt modules)

10% of the nuclear electrical supply increase required to achieve pending Government objectives for emissions reductions by 2050

* References can be retrieved from the NGNP web site - https://inlportal.inl.gov/vhtrinformation

HTGR Capital Costs

• 75% of Capital Cost Covered by 10 Components – Reactor Building

– Reactor Vessel

– Reactor Initial Core

– Reactor Metallic Internals

– Reactor Graphite Internals

– Reactor Cavity Cooling System

– Core Refueling Equipment

– Heat Rejection System

– Heat Transport System

– Power Conversion System

• Indirect Costs 46% of Direct Costs – Construction Services (20%)

– Home Office & Engineering Services (16%)

– Field Office & Engineering Services (10%)

• Owners Costs 12% of Direct Costs

• Contingency 20% of Direct + Indirect Costs

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Plant Capital Costs • Correlations Developed (INL TEV-

1196)

– Phase, Demo, FOAK, NOAK

– Module Rating

– Plant Rating, number of modules

– Operating Temperature

– Type of Heat Transport System

– Type and number of Power Conversion Systems

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Project Model

• General – HTGR plant a separate business entity from industrial plant(s)

– Long term energy supply arrangement/contract(s)

– Potential multiple industrial plants

– Potential electricity supply to the grid • Normal operations / supply of excess energy

• HTGR – Potentially owned or partially owned by Industrial plant owner

– Operated by an experienced nuclear plant operator

– Financing arrangements affect energy pricing / return

– Requires long term near full capacity contract / demand

• Industrial Plant Owner – Price supports return

– What is, if any, value of long term stability in price and security of supply?

– What is, if any, value of insulation from future governmental policies on carbon?

Project Model

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Interfacing HTGR & Process economic models are used to evaluate specific applications

HTGR Economic Model (INL/EXT-12-24143, Jan 2012)

• Prepared by INL and used for establishing the economic viability of integrating HTGR in industrial processes and for generation of electricity

• The industrial process and the HTGR plant are modeled; the project can be evaluated in two ways that either separates the economics of the process from that of the HTGR or integrates the process and HTGR economics as follows:

– The HTGR supplies energy to the process at a calculated price and the process economics are evaluated at that price, or

– The HTGR is fully integrated into the process and the economics are evaluated by comparing the calculated product pricing with the market

• Structure, methods, financial modeling factors recommended by and results reviewed by:

– NGNP Industry Alliance, Ltd. Senior Advisor Group

– Entergy

– Technology Insights

– Several potential end users including petro-chemical companies, oil sands producers, ammonia producers

– Personnel associated with the structuring of financing packages for nuclear power plants and SMRs

– Personnel from the U.S. DOE loan guarantee office

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HTGR Economic Model Methodology

• Discounted cash flow analysis from project initiation through decommissioning of the plant. – Costs*

• Design, licensing, construction and commissioning of the modules using a phased approach with varying construction and startup times

• Debt and interest on debt during construction

• Operating costs including debt payments, continuing capital expenditures & outage costs including refueling

• Tax and decommissioning costs, including escrow of D&D costs

– Capacity factor considers module construction & commissioning phasing, refueling, planned outages and un-planned outages

– Revenues* from sale of the commodities based on plant capacity factor

• Calculation returns: – Internal Rate of Return on Equity, Net Present Value, Net Income and

simple pay back period

*Inflation and escalation factors can be applied to each cost and revenue element

Assumptions: Economic Analyses

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• Plant economic life: 30 years (excludes construction time)

• Construction period – Fossil plant: Three years

– HTGR plant: Three years per reactor with 6 months stagger between reactor

• Start-up assumptions for “nth-of-a-kind” HTGR – Operating costs: 120% of estimated operating costs

– Revenues: 65% of estimated revenue

• Plant availability: 90%

• Internal rate of return (IRR): 12%

• Inflation rate: 3%

• Interest rate on debt: 8%

• Repayment term: 15 years

• Reactor capital cost assumptions for HTGR modules: – $2,000/kW(t) for plants with one or two modules

– $1,400/kW(t) for plants with three or more modules

Assumptions: Economic Analyses

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• Tax basis assumptions – Effective U.S.

income tax rate: 38.9%

– U.S. state tax: 6%

– U.S. federal tax: 35%

• MACRS depreciation: 15-year plant life

• Simplified business model in which a single entity owns and operates the industrial and associated HTGR plants

Economics of Application – Comparison with Natural Gas

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Note: A $10/MT tax on CO2 emissions is equivalent to an increase of $0.50/MMBtu

natural gas price.

Electricity Generation

• High Temperatures provide several options for power conversion systems (INL-TEV-988)

– Subcritical, Super-Critical and Super-Super-Critical Rankine

– Direct and Indirect Brayton

– Brayton Combined Cycle

– One and Two-Stage Super-Critical CO2 Combined Cycle

• Net Efficiencies up to ~ 49% are Projected

• Example – Subcritical Rankine – 4-600 MWt Modules

– 750 C Reactor Outlet Temperature

– 17 MPA, 540 C Steam Conditions

– ~42% Net Efficiency

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Electricity Generation HTGR & NGCC

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Electricity Generation HTGR, NGCC & IGCC

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Electricity Generation Cost Comparisons HTGR, LWR, NGCC w/CCS

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and NGCC w/CSS Plants

Natural Gas to Gasoline via Methanol: Power and Process Heat Integration

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DME Synthesis

Gasoline

PurificationSyngas

Methanol

Synthesis

Gasoline

SynthesisDME

Crude

MeOH

Crude

MTG

Products

Gasoline

LPG

Natural Gas

Reforming

Air Separation

Natural

Gas

O2

N2

Air

Sulfur

Removal

Natural

Gas

Steam

Water

Treatment

Power

Production

Cooling

Towers

General Plant Support

Light Fuel Gas

DME Synthesis

Gasoline

PurificationSyngas

Methanol

Synthesis

Gasoline

SynthesisDME

Crude

MeOH

Crude

MTG

Products

Gasoline

LPG

Nuclear Power

for Syngas

Compressors

Nuclear Heat Integration

Nuclear Power Integration

Natural Gas

Reforming

Air Separation

Natural

Gas

O2

N2

Air

Sulfur

Removal

Natural

Gas

Steam

Nuclear Heat

for Reforming

(700°C)

Nuclear

Power for

ASU and Gas

Compression

Fuel Gas

Water

Treatment

Power

Production

Cooling

Towers

General Plant Support

Exhaust

Natural Gas to Gasoline via Methanol: Integration Results

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Natural Gas to Gasoline via Methanol: Capital Costs

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Conventional Total Capital Cost = $1,694,000,000

HTGR Integrated Total Capital Cost = $3,031,000,000

Total Capital Cost (+50% HTGR) = $3,648,000,000 Total Capital Cost (-30% HTGR) = $2,661,000,000

Natural Gas to Gasoline via Methanol Results: IRR vs. Gasoline Price

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Natural Gas to Gasoline via Methanol Results: Gasoline Price vs. Natural Gas Price

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Natural Gas to Gasoline via Methanol Results: Carbon Tax vs. Gasoline Price

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Natural Gas to Gasoline via Methanol Results: Natural Gas vs. Gasoline Price w Carbon Tax

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Natural Gas to Gasoline via Methanol Results: Sensitivity Analysis

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Steam-Assisted Gravity Drainage: Heat & Power

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Steam-Assisted Gravity Drainage: Results

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Steam-Assisted Gravity Drainage: Total Capital Cost

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• Conventional TCI = $4,800,000,000

• HTGR Integrated TCI = $11,300,000,000

Steam-Assisted Gravity Drainage: After Tax Cash Flow & % TCI Spent Each Year

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• IRR = 12%

Steam-Assisted Gravity Drainage: Bitumen Price vs. Natural Gas Price

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Steam-Assisted Gravity Drainage: Carbon Tax

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• Low Natural Gas Price = $4.50/MSCF

• Average Natural Gas Price = $5.50/MSCF

• High Natural Gas Price = $12.00/MSCF

• 12% IRR

Steam-Assisted Gravity Drainage: Sensitivity Analysis

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Hybrid Energy Systems Process Integration

Energy Systems Dynamics

Research & Testing

Process Modeling, Life-Cycle, and Economic

Assessments

GW-hr Battery

Storage

SMR-

1. NuScale LWR

2. GE Prism MSR

3.

Biomass

Drying &

Torrefaction

(200 - 300 C)

Grid

Wind Farm

Wind Farm

Wind Farm

Electricity

SMR-Renewable-Biomass HES

a

RIT

ROT

Hydrogen Production

Gas

Reforming

H2

Variable Power Generation

Shannon

Lee

Diana

Tom

Bob

(with Rick)

Fast Pyrolysis

(450 - 500 C)

Hyrdotreatment

UpgradingStorage

Gases

Bio-Oils

Dynamic System Modeling

Optimized Analysis – System Integration

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HES Example: Nuclear Hybrid System to Offset Fluctuations in Wind or Solar Power

Steam turbine

generators

Methanol

synthesis

Steam

generation

Nuclear energy

Methane

reforming steam

Natural gas

Reliable base or

intermediate power

Synfuel carbon

fuel

power heat

Wind energy

Hybrid Energy Systems Integrate

• Energy sources

• Industrial Processes

Via

• Storage

• Power Production

• Process Heat

• Instrumentation and Control

Conclusions

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• Integration of HTGRs to Process Heat Applications is economically feasible for some applications (CTL, SAGD)

• On a cost per power basis, larger reactor units are more economical than small units

• On a cost per power basis, reactor clusters (2 or more units) are more economical than a single unit

• Higher reactor temperatures allow for higher power production and potential cost savings

• The cost of the reactor has the biggest impact on capital cost.

• The price of the product is not significantly changed whether the heat application and HTGR are owned by a single entity or if owned by separate entities.

• Carbon taxes economically promotes HTGR-integrated process heat applications

• Hybrid Energy Systems provides a means to effectively integrate renewable energy, nuclear energy, and process heat applications through storage, process heat, power production, instrumentation and control.

HTGR Process Heat Integration Team

• Rick Wood, INL

• Anastasia Gandrik, INL

• Larry Demick, NGNP Alliance

• Eric Robertson, INL

• Michael McKellar, INL

• Mike Patterson, INL

• Lee Nelson, INL

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