The Business Case for SMRs on DOD Installations

U. S. Federal Agencies have been directed to reduce all use of Fossil Fuel Energy in Buildings by 2030. The Department of Defense (DOD) has additional requirements to significantly reduce Greenhouse Gas Emissions and achieve energy independence for military installations over the next few decades. Installations are empowered to reach these ambitious goals with execution of long term contracts with service providers for power and industrial processes as long as their operating expenditures are lower than costs of existing services. This paper will explore the business case conditions for how Small Modular Reactors (SMRs) located on U.S. Army installations by a servicing utility could provide a viable energy alternative to the DOD for meeting these objectives. A systems perspective is critical toward understanding the potential for SMRs to enable pursing the parallel objectives of reducing fossil fuel usage, making installations energy self-sufficient, and reducing greenhouse gas emissions with long term operations at lower costs. The potential for meeting greenhouse gas emission goals will be analyzed in terms of quantifying the reductions in current emissions footprint of installations that would be achieved with shifting to non-carbon prime energy sources such as SMRs. Actual costs for meeting the energy needs of Army military installations in the U.S. will form the basis for defining the life cycle cost profiles to enable the base commanders to justify long term services contracts. As with any commercial power plant, the upfront costs for construction and startup testing, combined with lower system operating costs, will provide the basis for analyzing required economic lengths of contracts. To navigate the bumps of any new nuclear system, SMR power generating plants must be structured as a “Win-Win” proposition from both private and public sector perspectives. For the private investor, the contract must be constructed to allow for recovery of capital and operating costs by private investors with sufficient return on investment to undertake this type of business opportunity. For the government to engage in the deal, the contract must conform to capital lease requirements for federal contracts, but also demonstrate sufficient savings over existing leased utility services to enable execution of the contract by the military base. A systems approach that addresses life cycle costs at this early stage for SMRs will provide critical insight for Megawatt level power generating systems servicing small towns and communities similar in size to a military base. With the economic framework sufficiently defined to enable public sector commitments, program funding may be more forthcoming for completing SMR development, licensing and permitting phases on a prudent but expedited timeframe.