Nuclear Energy: DOE's Next Generation Nuclear Plant Project Is at an Early Stage of Development
Published: 2006-09-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Under the administration's National Energy Policy, the Department of Energy (DOE) is promoting nuclear energy to meet increased U.S. energy demand. In 2003, DOE began developing the Next Generation Nuclear Plant, an advanced nuclear reactor that seeks to improve upon the current generation of operating commercial nuclear power plants. DOE intends to demonstrate the plant's commercial application both for generating electricity and for using process heat from the reactor for the production of hydrogen, which then would be used in fuel cells for the transportation sector. The Energy Policy Act of 2005 required plant design and construction to be completed by 2021. This testimony, which summarizes a GAO report being issued today (GAO-06-1056), provides information on DOE's (1) progress in meeting its schedule for the Next Generation Nuclear Plant project and (2) approach to ensuring the project's commercial viability. For the report, GAO reviewed DOE's research and development (R&D) plans for the project and the reports of two independent project reviews, observed R&D activities, and interviewed DOE, Nuclear Regulatory Commission (NRC), and industry representatives.
section_title: What GAO Found
paragraphs: DOE has prepared and begun to implement plans to meet its schedule to design and construct the Next Generation Nuclear Plant by 2021, as required by the Energy Policy Act of 2005. Initial R&D results are favorable, but DOE officials consider the schedule to be challenging, given the amount of R&D work that remains to be conducted. For example, while researchers have successfully demonstrated the manufacturing of coated particle fuel for the reactor, the last of eight planned fuel tests is not scheduled to conclude until 2019. DOE plans to initiate the design and construction phase in fiscal year 2011, if the R&D results support proceeding with the project. The act also requires that DOE and NRC develop a licensing strategy for the plant by August 2008. The two agencies are in the process of finalizing a memorandum of understanding to begin work on this requirement. DOE is just beginning to obtain input from potential industry participants that would help determine the approach to ensuring the commercial viability of the Next Generation Nuclear Plant. In the interim, DOE is pursuing a more technologically advanced approach, compared with other options, and DOE has implemented some (but not all) of the recommendations made by two advisory groups. For example, as recommended by one advisory group, DOE lessened the need for R&D by lowering the reactor's planned operating temperature. In contrast, DOE has not accelerated its schedule for completing the plant, as recommended by the Nuclear Energy Research Advisory Committee. The committee was concerned that the time frame for completing the plant is too long to be attractive to industry, given that other advanced reactors may be available sooner. However, DOE believes the approach proposed by the committee would increase the risk of designing a plant that ultimately would not be commercially viable. GAO believes DOE's problems with managing other major projects call into question its ability to accelerate design and completion of the Next Generation Nuclear Plant.

section_title: Letter
paragraphs: I am pleased to be here to discuss the Department of Energy’s (DOE)  progress on its Next Generation Nuclear Plant demonstration project. My  testimony is based on our report being issued today, entitled Nuclear  Energy: Status of DOE’s Effort to Develop the Next Generation Nuclear  Plant (GAO-06-1056). As you know, the administration’s National Energy  Policy calls for the greater use of nuclear power and hydrogen to meet the  nation’s growing energy needs. The purpose of the Next Generation  Nuclear Plant project is to establish the technical and commercial  feasibility of producing both electricity and hydrogen from an advanced  nuclear reactor. DOE has been engaged since fiscal year 2003 in research  and development (R&D) on such a plant. The Energy Policy Act of 2005  formally established the Next Generation Nuclear Plant as a DOE project  and set further requirements for the project’s implementation, including  obtaining a license from the Nuclear Regulatory Commission (NRC) to  operate the plant and completing the project by fiscal year 2021. DOE  estimates the total cost of the plant to be approximately $2.4 billion. The  act also designated DOE’s Idaho National Laboratory as the lead  laboratory and construction site for the plant and gave it responsibility for  carrying out cost-shared R&D, design, and construction with industry  partners. The Idaho National Laboratory has considerable experience with  nuclear energy technologies. Since 1949, 52 nuclear reactors have been  designed and tested at the site.
DOE has chosen the “very-high-temperature reactor,” which is cooled by  helium gas, as the advanced reactor design for the Next Generation  Nuclear Plant. As its name implies, this reactor would operate at a much  higher temperature than existing nuclear power plants—up to about 950  degrees Celsius (1,742 degrees Fahrenheit). This temperature would be  roughly three times the temperature of a light water reactor, which is  cooled by water and is the technology generally in use in the United States  and around the world. Despite the high temperature, there is general  agreement that a gas-cooled reactor offers the potential for improved  safety. In addition, DOE considers the very-high-temperature reactor to be  the nearest-term advanced nuclear reactor design that operates at  temperatures high enough to generate the heat (called “process heat”)  needed to produce hydrogen. Under the administration’s National  Hydrogen Fuel Initiative, hydrogen is envisioned to be used in fuel cells for  the transportation sector as an alternative to imported oil.
Over the course of the last several years, two independent groups have  reviewed DOE’s plans for the Next Generation Nuclear Plant. The  Independent Technology Review Group—coordinated by the Idaho  National Laboratory and composed of an international group experienced  in the design, construction, and operation of nuclear systems—issued a  report in 2004 on the design features and technological uncertainties of the  very-high-temperature reactor. The report concluded that the uncertainties  associated with the project appeared manageable and that the project’s  objectives could be achieved. In 2006, as required by the Energy Policy  Act of 2005, DOE’s Nuclear Energy Research Advisory Committee also  completed an initial review of the project. The advisory committee  reviewed DOE’s R&D plans in light of the Independent Technology Review  Group’s report and recommended that DOE accelerate the project. Both  reviews also made recommendations to modify DOE’s R&D plans to  ensure the project’s success.
DOE is managing the Next Generation Nuclear Plant under its project  management process for the acquisition of capital assets, which sets forth  planning requirements that have to be met before DOE may begin design  or construction activities. The goal of these requirements is to complete  projects on schedule, within budget, and capable of meeting performance  objectives. Our reviews of DOE’s management of other major projects  have found that project management has long been a significant challenge  for DOE and is at high risk of waste and mismanagement. In an effort to  improve cost and schedule performance, DOE issued new policy and  guidance on managing and controlling projects in 2000, but performance  problems continue on major projects. For example, we testified in April  2006 that DOE’s fast-track approach to designing and building the Waste  Treatment Plant Project at DOE’s Hanford site in Washington state  increases the risk that the completed facilities may require major rework  to operate safely and effectively and could increase the project’s costs.
My testimony discusses the results of our report being issued to you today  and addresses DOE’s (1) progress in meeting its schedule for the Next  Generation Nuclear Plant and (2) approach to ensuring the commercial  viability of the project, including how DOE has implemented the  recommendations of the two advisory groups. For the report, we analyzed  DOE’s project plans, interviewed DOE and Idaho National Laboratory  officials, and observed R&D efforts at Idaho National Laboratory.  Furthermore, we reviewed the two independent assessments of the project  and how DOE had responded to their recommendations. We also reviewed  NRC documentation related to the development of a licensing strategy for  the Next Generation Nuclear Plant, and we interviewed DOE and NRC  officials regarding licensing issues. We performed our work from April to  September 2006 in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: One of DOE’s strategic goals is to promote a diverse supply of reliable,  affordable, and environmentally sound energy. To that end, DOE is  promoting further reliance on nuclear energy under the administration’s  National Energy Policy. According to DOE officials, the department has  three priorities for promoting nuclear energy. The first priority is  deploying new advanced light water reactors under the Nuclear Power  2010 program. The second priority is the Global Nuclear Energy  Partnership, launched in February 2006. The partnership’s objectives are  to demonstrate and deploy new technologies to recycle nuclear fuel and  minimize nuclear waste, and to enable developing nations to acquire and  use nuclear energy while minimizing the risk of nuclear proliferation. The  third priority is R&D on the Next Generation Nuclear Plant. According to  DOE officials, the department remains committed to this project even  though the Global Nuclear Energy Partnership has assumed a higher  priority.
DOE is engaged in R&D on the Next Generation Nuclear Plant as part of a  larger international effort to develop advanced nuclear reactors  (Generation IV reactors) that are intended to offer safety and other  improvements over the current generation of nuclear power plants  (Generation III reactors). DOE coordinates its R&D on advanced nuclear  reactors through the Generation IV International Forum, chartered in 2001  to establish a framework for international cooperation in R&D on the next  generation of nuclear energy systems. In 2002, the Generation IV  International Forum (together with DOE’s Nuclear Energy Research  Advisory Committee) identified what it considered the six most promising  nuclear energy systems for further research and potential deployment by  about 2030. DOE has selected one of the six advanced nuclear systems— the very-high-temperature reactor—as the design for its Next Generation  Nuclear Plant, in part because it is considered to be the nearest-term  reactor design that also has the capability to produce hydrogen. According  to DOE officials, the very-high-temperature reactor is also the design with  the greatest level of participation among the Generation IV International  Forum members.
Furthermore, the very-high-temperature reactor builds on previous  experience with gas-cooled reactors. For example, DOE conducted R&D  on gas-cooled reactors throughout the 1980s and early 1990s, and two gas- cooled reactors have previously been built and operated in the United  States. The basic technology for the very-high-temperature reactor also  builds on previous efforts overseas, in particular high-temperature gas- cooled reactor technology developed in England and Germany in the  1960s, and on technologies being advanced in projects at General Atomics  in the United States, the AREVA company in France, and at the Pebble Bed  Modular Reactor company in South Africa. In addition, Japan and China  have built small gas-cooled reactors.
section_title: DOE Has Made Initial Progress Toward Meeting Near-Term Milestones for the Next Generation Nuclear Plant
paragraphs: DOE has developed a schedule for the R&D, design, and construction of  the Next Generation Nuclear Plant that is intended to meet the  requirements of the Energy Policy Act of 2005, which divides the project  into two phases. For the first phase, DOE has been conducting R&D on  fuels, materials, and hydrogen production. DOE also recently announced  its intent to fund several studies on preconceptual, or early, designs for the  plant. DOE plans to use the studies, which are expected to be completed  by May 2007, to establish initial design parameters for the plant and to  further guide R&D efforts.
DOE is planning to begin the second phase in fiscal year 2011 by issuing a  request for proposal that will set forth the design parameters for the plant.  If R&D results at that time do not support the decision to proceed, DOE  may cancel the project. Assuming a request for proposal is issued, DOE is  planning to choose a design by 2013 from among those submitted by  reactor vendors. Construction is scheduled to begin in fiscal year 2016,  and the plant is expected to be operational by 2021. In addition, DOE is  planning for the appropriate licensing applications for the plant to be  submitted for NRC review and approval during the second phase of the  project. See figure 1 for the overall Next Generation Nuclear Plant project  schedule.
As scheduled by DOE, the Next Generation Nuclear Plant project is  expected to cost approximately $2.4 billion, part of which is to be funded  by industry. According to DOE officials, the department budgeted about  $120 million for the project from fiscal years 2003 through 2006. This  amount includes about $80 million for R&D on the nuclear system of the  plant and about $40 million for R&D on the hydrogen production system.
Initial research results since DOE initiated R&D on the Next Generation  Nuclear Plant project in 2003 have been favorable, but the most important  R&D has yet to be done. For example, DOE is planning a series of eight  fuel tests in the Advanced Test Reactor at Idaho National Laboratory. Each  test is a time-consuming process that requires first fabricating the fuel  specimens, then irradiating the fuel for several years, and finally  conducting the postirradiation examination and safety tests. DOE is at the  beginning of the process. In particular, DOE officials said they have  successfully fabricated the fuel for the first test and addressed previous  manufacturing problems with U.S. fuel development efforts in which  contaminants weakened the coated particle fuel. However, the irradiation  testing of the fuel in the Advanced Test Reactor has not yet begun. The  first test is scheduled to begin early in fiscal year 2007 and to be completed  in fiscal year 2009. The eighth and final test is scheduled to begin in fiscal  year 2015, and the fuel testing program is scheduled to conclude in fiscal  year 2019. As a result, DOE will not have the final results from all of its  fuel tests before both design and construction begin. While DOE has  carefully planned the fuel tests and expects favorable results, a DOE  official acknowledged that they do not know if the fuel tests will  ultimately be successful.
DOE is also at the beginning stages of R&D on other key project areas  such as the hydrogen production system for the plant and materials  development and testing. For example, Idaho National Laboratory  successfully completed a 1,000-hour laboratory-scale test of one of two  potential hydrogen production systems in early 2006. DOE ultimately plans  to complete a commercial-scale hydrogen production system for  demonstration by fiscal year 2019, which will allow time to test the system  before linking it to the very-high-temperature reactor. DOE also has  selected and procured samples of graphite—the major structural  component of the reactor core that will house the nuclear fuel and channel  the flow of helium gas—and designed experiments for testing the safety  and performance of the samples. Nevertheless, much of the required R&D  for the graphite has not yet begun and is not scheduled to be completed  until fiscal year 2015.
Regarding licensing of the plant, DOE and NRC are in the process of  finalizing a memorandum of understanding that will establish a framework  for developing a licensing strategy. As required by the Energy Policy Act of  2005, DOE and NRC are to jointly submit a licensing strategy by August  2008. NRC has drafted a memorandum of understanding and submitted it  to DOE, but its approval has been delayed by additional negotiations on  details of the agreement. Nevertheless, NRC has already taken certain  other actions to support licensing the Next Generation Nuclear Plant. In  particular, NRC has been developing a licensing process that could be  used for advanced nuclear reactor designs and that would provide an  alternative to its current licensing framework, which is structured toward  light water reactors.
In addition to developing a licensing strategy, NRC will need to enhance its  technical capability to review a license application for a gas-cooled  reactor, such as the Next Generation Nuclear Plant. In 2001, NRC  completed an assessment of its readiness to review license applications  for advanced reactors. The assessment identified skill gaps in areas such  as accident analysis, fuel, and graphite, which apply to gas-cooled  reactors. Furthermore, NRC identified a “critical” skill gap in inspecting  the construction of a gas-cooled reactor. As a result of its 2001 assessment,  NRC issued a detailed plan in 2003 to address the gaps in expertise and  analytical tools needed to license advanced reactors, including gas-cooled  reactors. However, NRC has since taken limited steps to enhance its  technical capabilities related to gas-cooled reactors because, until  recently, it had not anticipated receiving a license application for a gas- cooled reactor.
section_title: DOE Is Pursuing a More Technologically Advanced Approach Than Other Options in an Effort to Ensure the Plant’s Commercial Viability
paragraphs: DOE is beginning to obtain input from potential industry participants that  would help DOE determine its approach to ensuring the commercial  viability of the Next Generation Nuclear Plant. In the interim, DOE is  pursuing a more technologically advanced approach—with regard to size,  fuel type, and the coupling of electricity generation and hydrogen  production in one plant—compared with the recommendations of the  Independent Technology Review Group and the Nuclear Energy Research  Advisory Committee. These technological advances require substantial  R&D on virtually every major component of the plant. For example, the  advanced uranium fuel composition that DOE is researching is not proven  and requires fundamental R&D.
The Independent Technology Review Group cautioned that attempting to  achieve too many significant technological advances in the plant could  result in it becoming an exercise in R&D that fails to achieve its overall  objectives, including commercial viability. Another key factor likely to  affect the plant’s commercial viability is the time frame for its completion.  For example, the plant’s commercial attractiveness could be affected by  competition with other high-temperature gas-cooled reactors under  development and potentially available sooner, such as one in South Africa,  although these other reactor designs would also need to be licensed by  NRC before being deployed in the United States.
DOE acknowledges the risk of designing and building a plant that is not  commercially viable and has taken initial steps to address this challenge.  For example, DOE has established what it considers to be “aggressive but  achievable” goals for the plant, such as producing hydrogen at a cost low  enough to be competitive with gasoline. Furthermore, DOE is beginning to  obtain industry input to help the department develop an approach for  ensuring the commercial viability of the plant. DOE initiated two efforts in  July 2006 to obtain input from industry on the design of the plant and the  business considerations of deploying the plant. Specifically, DOE  announced its intent to fund multiple industry teams to develop designs  (and associated cost estimates) for every aspect of the plant, including the  reactor and hydrogen production technology, by May 2007. In addition,  DOE began participating in meetings with representatives from reactor  vendors, utilities, and potential end users in order to obtain their insight  into the market conditions under which the plant would be commercially  viable. Until DOE develops a better understanding of the business  requirements for the Next Generation Nuclear Plant, DOE is conducting  R&D to support two distinct designs of the very-high-temperature  reactor—pebble bed and prismatic block—rather than focusing on one  design that may ultimately be found to be less commercially attractive.
As recommended by the Independent Technology Review Group, DOE  revised its R&D plans to lessen the technological challenges of designing  and building the Next Generation Nuclear Plant. Most importantly, it  reduced the planned operating temperature of the reactor from 1,000  degrees Celsius to no more than 950 degrees Celsius. According to Idaho  National Laboratory officials, this small reduction is significant because it  enables DOE to use existing metals rather than develop completely new  classes of materials.
DOE, however, has not adopted other recommendations—in particular to  revise its R&D plans to focus on a uranium dioxide fuel kernel, which has  been more widely used and researched than the advanced uranium  oxycarbide fuel kernel DOE is currently researching. The Independent  Technology Review Group considered DOE’s fuel R&D plan on an  advanced uranium fuel composition more ambitious than necessary and  concluded that focusing on the more mature fuel technology would reduce  the risk of not meeting the schedule for the plant. Nevertheless, DOE has  continued to focus on the advanced uranium oxycarbide fuel because it  has the potential for better performance. DOE officials also told us that  the most significant challenge with regard to the fuel is not its composition  but rather the coatings, which is independent of the fuel kernel  composition. To respond to the recommendation, DOE decided to test the  performance of the two types of fuel kernels side-by-side as part of its fuel  R&D plan.
The Nuclear Energy Research Advisory Committee also recommended  that DOE re-evaluate the project’s dual mission of demonstrating both  electricity and hydrogen production. Although the advisory committee did  not recommend what the project’s focus should be—electricity generation  or hydrogen production—it wrote that the dual mission would be much  more challenging and require more funding than either mission alone.  Instead, DOE’s R&D is currently supporting both missions, and DOE  officials said they consider the ability to produce hydrogen (or to use  process heat for other applications) key to convincing industry to invest in  the Next Generation Nuclear Plant rather than advanced light water  reactors similar to the current generation of nuclear power plants  operating in the United States.
Moreover, a key Nuclear Energy Research Advisory Committee  recommendation was to accelerate the project and deploy the plant much  earlier than planned by DOE in order to increase the likelihood of  participation by industry and international partners. Representatives of the  Nuclear Energy Institute, which represents utilities that operate nuclear  power plants, also told us that accelerating the project would increase the  probability of successfully commercializing the plant. As one possible  approach to acceleration, the advisory committee further recommended  that DOE design the Next Generation Nuclear Plant to be a smaller reactor  that could be upgraded and modified as technology advances. However,  DOE officials consider the advisory committee’s schedule high risk and  doubt that the degree of acceleration recommended could be achieved.  Furthermore, according to DOE officials, a smaller reactor would require  the same R&D as a larger reactor but would not support future NRC  licensing of a full-scale plant, which is critical to the plant’s commercial  viability.
Idaho National Laboratory officials also consider the schedule proposed  by the advisory committee to be high risk, potentially resulting in the need  to redo design or construction work. Nevertheless, the laboratory has also  proposed accelerating the schedule, though to a lesser extent than  recommended by the advisory committee. According to laboratory  officials, if DOE does not begin design sooner than currently planned, too  much R&D and design work will be compressed into a short time frame  after DOE begins design in fiscal year 2011, and the department will not be  able to complete the plant by fiscal year 2021. Consequently, the  laboratory has proposed beginning design earlier than planned by DOE,  which would also reduce the scope of the R&D by focusing on fewer  design alternatives. The laboratory’s proposed schedule would result in  completing the plant up to 3 years earlier than under DOE’s schedule.  While the laboratory’s proposed schedule would slightly reduce the  project’s total cost estimate, it would require that DOE provide more  funding in the near term. For example, in fiscal year 2007, Idaho National  Laboratory estimates that R&D on the very-high-temperature reactor  design would need to be increased from $23 million (the amount requested  by DOE in its fiscal year 2007 budget submission) to $100 million.
DOE officials believe that the laboratory’s current proposed schedule is  the best option for the plant and stated that they would consider  accelerating it if there were adequate funding and sufficient demand  among industry end users to complete the project sooner. In addition,  DOE officials said that even if the schedule is not accelerated, increasing  the funding for the project would enable additional R&D to be conducted  to increase the likelihood that the plant is completed by fiscal year 2021.  For example, DOE officials stated that its current R&D plans for the very- high-temperature reactor design could support doubling the department’s  fiscal year 2007 budget request of $23 million. However, DOE has limited  funding for nuclear energy R&D and has given other projects, such as  developing the capability to recycle fuel from existing nuclear power  plants, priority over the Next Generation Nuclear Plant.
section_title: Concluding Observations
paragraphs: While DOE is making progress in implementing its plans for the Next  Generation Nuclear Plant, these efforts are at the beginning stages of a  long project and it is too soon to determine how successful DOE will be in  designing a technically and commercially viable plant. As we note in our  report, it is also too soon, in our view, to support a decision to accelerate  the project. Accelerating the schedule would require that DOE narrow the  scope of its R&D and begin designing the plant before having initial  research results on which to base its design decisions. This could result in  having to redo work if future research results do not support DOE’s design  decisions. In addition, DOE has only recently begun to systematically  involve industry in the project. Such input is critical to key decisions, such  as whether DOE should design a less technologically advanced plant that  is available sooner rather than a larger, more technologically advanced  plant that requires more time to develop. Finally, DOE’s history of  problems managing large projects on budget and within schedule raises  concerns about the department’s ability to complete the Next Generation  Nuclear Plant in the time frame set forth in the Energy Policy Act of 2005,  and accelerating the schedule would only add to these concerns.
Mr. Chairman, this concludes my prepared statement. I would be happy to  respond to any questions that you or other Members of the Subcommittee  may have.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact me at (202)  512-3841 or wellsj@gao.gov. Raymond H. Smith Jr. (Assistant Director),  Joseph H. Cook, John Delicath, and Bart Fischer made key contributions  to this testimony.
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