Utility Led Nuclear Power Projects: The Future In ASEAN?
Energy is fundamental to the functioning of modern society. According to the International Energy Outlook by the U.S. Energy Information Administration's (EIA), worldwide energy consumption is expected to rise by 50% by 2050. Nuclear power presents a promising solution to meet these needs. Nuclear energy can deliver stable, carbon-free base-load electricity to support economic growth and development. As populations expand and countries industrialize, nuclear power provides the scalable energy supply required to electrify homes, fuel manufacturing, and build critical infrastructure. Compared to other options, nuclear energy offers a proven carbon-free technology that can be deployed widely to help satisfy the world's growing appetite for electricity.
There has been growing interest lately in enabling nuclear energy across the ASEAN region, especially among utility companies looking to decarbonize. This is attracting international vendors to form partnerships in the area. For example the Indonesian state-owned firm Pupuk Kalimantan Timur (PKT), which is collaborating with several Danish companies, including Copenhagen Atomics and Topsoe, to explore green ammonia production using small modular reactor (SMR) technology. Their goal is to establish a $4 billion facility that generates 1 million tonnes of carbon-free ammonia per annum, employing green hydrogen from water electrolysis instead of traditional fossil fuels. Meanwhile, NuScale, a U.S. SMR company is discussing the potential deployment of its technology with both the Indonesian and Philippine governments.
PT PLN (Persero) a state-owned electricity company in a press release on 31 October 2021 announced that it is in the process of making an energy transition, innovating to decarbonize to achieve carbon neutral by 2060. This effort is illustrated by the roadmap for the Zero Carbon 2060 scenario. Currently, steam power plants still dominate the PLN generation system with a contribution of around 68%. PLN aims to start operating nuclear-based power plants in 2040 with a share of 4 percent.
Nuclear power has historically been government-driven, but there is growing interest from private companies and utilities, SMR technology, as they aim to reduce carbon emissions. Unfortunately, some major companies in the ASEAN region have faced challenges in pursuing nuclear power projects due to the lack of an established national nuclear power program by their governments. In this case, Public-private partnerships(PPPs) can play an important role in enabling utilities to lead nuclear power projects, by bringing private sector financing and expertise. PPPs allow flexibility in structuring collaborations between private companies/utilities and governments. Governments have constraints like elections that can slow nuclear power development, so utilities taking the lead can help push progress. PPPs involve long-term partnerships between public agencies and private companies for infrastructure projects.
The Fermi Energia project in Estonia demonstrates how private entities can take the initiative to propel the nuclear power project forward instead of waiting for the government to formulate processes and take charge of procurement. Fermi Energia, a privately owned company, has undertaken feasibility studies, technology evaluations, and more to advance SMR deployment in Estonia. While coordinating with the Estonian authorities, Fermi Energia have done feasibility studies, licensing reviews, and technology evaluations. In February 2023 they selected the GE Hitachi BWRX-300 as their preferred SMR technology. The Fermi Energia example demonstrates a more entrepreneurial approach to advancing nuclear power, with the private sector taking more initiative while still coordinating with the government on licensing, regulations, etc.
During a recent conversation with George Borovas, Head of Global Nuclear Practice at Hunton Andrew Kurth LLP, Mr. Borovas highlighted that utility companies looking to adopt nuclear power can learn from Fermi Energia's approach. Gaining government support and public acceptance for nuclear energy can be challenging. A systematic process for utilities considering adopting SMRs as part of their energy program is suggested. The first step involves narrowing down the potential SMR designs based on commercial availability and suitability for the specific geography and grid. Then, supported by advisors with knowledge of vendor engagement, they could approach the chosen vendors with a Request for Information (RFI) that outlines their objectives, timeline, desired criteria, and relevant details about their current infrastructure, like retiring coal plants. After collecting information about each vendor's technology, implementation plan, necessary support, and financing options, profiles can be created for each vendor to begin discussions and negotiations. Mr. Borovas stressed that utilities should avoid becoming overly focused solely on technology as it is crucial to also consider other factors such as financing terms, vendor support, and expected government guarantees.
Utility-driven processes can occasionally circumvent governmental procurement constraints, thus enabling more flexible, parallel, and competitive discussions. These utilities can subsequently compile their findings into a matrix for an easier comparison of all the vendors. Ultimately, utilities can use this process to maintain the nuclear option while the government is still considering the adoption of nuclear energy. This approach takes limited risk and resources but can greatly influence the final decision.
Utility companies interested in nuclear energy can take a more proactive approach, similar to Fermi Energia in Estonia, by engaging directly with SMR vendors while also advocating to governments. This allows momentum towards nuclear power to build from both private sector enthusiasm and government policy evolution. Public-private partnerships enable sharing of financial and technical capabilities between companies and governments to make projects viable.
Overall, with the right partnerships and proactive strategy, utilities and private companies can drive progress on deploying safe, clean nuclear energy to combat climate change and sustainably power our future.
