Jordan Garcia, a deputy utilities manager in Los Alamos, New Mexico, is facing an energy crunch that is typical in the American West. For decades, the county-run utility relied on a cheap and steady mix of coal and hydroelectric power. But the region’s dams are aging and drought-parched, and its coal plants are slated to retire.
The county is aiming to fully decarbonize its grid by 2040, and the city has been tapping more solar lately, but batteries are arriving slowly, and Garcia worries about heat waves that strain the grid after the sun goes down. Wind power? He’d take more of it. But there aren’t enough wires stretching from the state’s windy eastern plains to the mesa-top community. “For us it’s pretty dire,” he says.
For the past few years, Garcia has been counting on a unique nuclear experiment to come to the rescue. In 2017, Los Alamos signed up to join a group of other local utilities as an anchor customer of the first small modular reactors, or SMRs, in the US, created by a company called NuScale. The design, which calls for reactors only 9 feet in diameter, had never been built before, but the initial cluster planned in Idaho Falls, Idaho, was promised to be much cheaper than a full-scale reactor and to offer affordable carbon-free energy 24/7.
To Garcia, this felt like a homecoming. Los Alamos, a town with the motto “Where discoveries are made,” is the birthplace of the atom bomb, and experimental reactors ran not far from downtown for much of the 20th century. But it had never actually used nuclear power to keep the lights on.
This month, Los Alamos and other local utilities across the West were facing a weighty decision: whether to pull the plug on their nuclear dream. NuScale had informed members of the group, Utah Associated Municipal Power Systems, or UAMPS, that the estimated costs of building the six 77-MW reactors had risen by more than 50 percent to $9.3 billion. For Garcia, that translated into a jump in the cost of energy from $58 to $89 per megawatt-hour.
The price jump was not rooted in the arcana of nuclear physics, but the mundane details of big construction projects: copper wire up 32 percent, steel piping up 106 percent. Higher interest rates made everything more expensive over the course of construction, which is scheduled to wrap up in 2030. Without extra subsidies from the new Inflation Reduction Act—on top of $1.4 billion already committed to the project by the US Department of Energy—the price to energy users in places like Los Alamos would have doubled.
The sticker shock put the small towns in a tricky position. The higher price means towns can choose to walk away from their contracts. But in a region where power officials are keenly aware of a future that includes more heat waves and drought, and less coal power, some see few alternatives for quickly replacing that always-on electricity. The new price tag may put the project on track to exceed the cost of renewables and natural gas, but the past year’s supply chain disruptions have made nuclear more appealing, showing just how volatile energy prices can be, regardless of the source.