Conference Paper THE POTENTIAL FOR DISRUPTIVE INNOVATIONS IN NUCLEAR POWER COMPANY WIDE CW-120000-CONF-007 Revision 0

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Atomic Energy of Énergie Atomique du Canada Limited Canada Limitée

Chalk River, Ontario Chalk River (Ontario) Canada K0J 1J0 Canada K0J 1J0 AECL Nuclear Review 1 UNRESTRICTED CW-120000-CONF-007 Revision 0

THE POTENTIAL FOR DISRUPTIVE INNOVATIONS IN NUCLEAR POWER Frederick Powell Adams

ABSTRACT –

The concept of ―disruptive innovation‖ is a management tool that provides a framework for understanding the structure and dynamics of technology markets, especially their sometimes acute response to innovation. The concept was used in a trial assessment of a number of energy technologies, including renewable energy technologies and energy storage as well as nuclear technologies, as they interact in industry and the marketplace. The technologies were assessed and perspectives were provided on their current potential for innovation to disrupt the value networks behind various energy markets. The findings are summarized, and indicate that the concept may provide useful guidance for planning of technology development.

Keywords – disruptive innovation, disruptive technology, photovoltaic, uranium extraction, fuel reprocessing, PWR, PHWR, SMR, MSR, MSRE, LWBR

AECL Nuclear Review 2 UNRESTRICTED CW-120000-CONF-007 Revision 0 Background

The concept of disruptive innovation is a recent development in the analysis of technology and market dynamics [1]. A disruptive innovation creates a new market and value network, which eventually displaces earlier technologies and disrupts the existing market. The market is disrupted by changes in the value network that describes the social and technical resource dependencies between the organizations within an industry. The same concept may be useful for assessing technological development in nuclear related technologies. Identifying the nuclear or other energy technologies with strong potential for disruptive innovation can provide guidance to planners, policy makers and investors in both government and industry in order to maximize economic, environmental and social benefits from their future exploitation.

It is observed and determined through logic and deductive reasoning that technology markets are segmented on the basis of cost and quality, with the largest market segment being for

―mainstream‖ technologies that provide a balance of cost and quality. Higher-cost ―niche‖ technologies may develop in a quality-driven market segment. Innovations to reduce the cost of a niche technology can then displace lower-quality mainstream technologies from the market.

Similarly, lower-quality ―alternate‖ technologies may fill some cost-driven segment of the market. An alternate technology that evolves to higher quality can undermine the market for higher-cost mainstream technologies. Figure 1 illustrates these market processes. A

―sustaining‖ innovation, improves the cost or quality of mainstream technologies, which does not disrupt the market. In the context of nuclear energy, a disruptive innovation may enhance and expand the use nuclear energy, or a particular nuclear energy technology, or it may have the opposite effect, favoring an alternative energy technology. AECL Nuclear Review 3 UNRESTRICTED CW-120000-CONF-007 Revision 0 Method of Approach

Nuclear power began as a niche technology (e.g., nuclear naval submarines) that later displaced mainstream technologies (e.g. coal for baseload electric power plants). In the context of this assessment, nuclear power is currently and predominantly a mainstream technology.

New developments in mainstream nuclear technology are sustaining innovations for the nuclear industry, but may alter the balance between different nuclear technologies in energy markets.

New nuclear technologies may also impact or disrupt the markets for competing mainstream sources of energy (such as the use of fossil fuels).

Conversely, developments in other energy technologies outside the mainstream could impact the total market for nuclear power, or might disrupt energy markets. Thus, the potential for disruptive innovation of technologies in three categories: niche energy technologies, alternate energy technologies, and nuclear technologies are assessed.

Niche Energy Technologies

Niche technologies may be identified by their higher cost and smaller market segment, where the market segment is driven by special needs. A technology where research is being funded but relatively little electrical power is being generated is a niche technology; quality or other special needs are presumed to motivate the research interest. Some niche technologies may develop out of alternate technologies by the application of research to address quality issues, which increases their cost but meets some special need. Overall, the key indicator of potential for disruptive innovation in a niche energy technology is a trend of development toward cost reduction while maintaining its characteristic qualities. AECL Nuclear Review 4 UNRESTRICTED CW-120000-CONF-007 Revision 0 Alternate Energy Technologies

Alternate technologies may be identified by their small market share, despite low cost per unit of power output. Their market segment may be opportunistic, due to issues that usually favour the use of mainstream technologies despite their higher cost. Alternate technologies may be seen as unsophisticated or underdeveloped, or may have quality issues that make them unacceptable in the mainstream market segment. The key indicator of potential for disruptive innovation in an alternate technology is a trend toward solving quality issues without driving costs too high.

Nuclear Technologies

Nuclear technology has established a current position in the mainstream segment of energy markets. Within the nuclear industry, however, there is a network of competing or interdependent technologies, each of which may be seen in that context as a mainstream, niche or alternate technology. Thus, innovations of interest in the nuclear field are those that address the quality or cost issues of a specific nuclear technology to give it higher value within the nuclear industry network. Nuclear technologies may be under research and development for their role in future energy market scenarios. The key indicator of potential for disruptive innovation is a trend of development toward cost and quality that could overtake the current mainstream nuclear or other energy technologies, now or in the future.

Baseline Electricity Costs

Keeping in mind that costs depend on local social, political or economic factors, Ontario retail electricity prices may be used as a baseline for evaluation. The 2013 off-peak retail price to

Ontario domestic consumers was $0.07/kWh, and the on-peak price was $0.13/kWh [2].

Distribution adds $0.04/kWh for urban and $0.06/kWh or more for rural consumers. AECL Nuclear Review 5 UNRESTRICTED CW-120000-CONF-007 Revision 0 The Darlington nuclear generating station had construction cost overruns [2], while the

Pickering A, Pickering B, Bruce A and Bruce B and Qinshan [4] stations had capital costs between $2,700/kW and $3,700/kW, in 2013 Canadian dollars. Assuming a 30-year life and

85% capacity factor, and using a 7% discount rate for cost analysis, the levelized capital cost of nuclear power would be $0.029/kWh to $0.040/kWh. Fuel costs [5] add ~$0.005/kWh, while other operating costs [6] add ~$0.021/kWh. The cost of nuclear power for baseload energy production in Ontario is thus $0.055/kWh to $0.066/kWh, which is consistent with the wholesale price [7] and the off-peak retail price

Assessment Results for Niche Technologies

Photovoltaic solar power has been a relatively strong niche technology with a long historical trend toward lower costs, as research progresses over time and manufacturing efficiencies improve with greater volume [9]. The capital cost of photovoltaic modules was approximately

$1,000/kWpk in 2013, where ―pk‖ indicates peak output in full sunlight. Of course, the economies of scale favor the larger installations for reducing the capital cost per unit of kWpk installed. The installed cost for utility-scale generating capacity was $1,750/kWpk, while the cost for smaller consumer systems was higher, at $2,400/kWpk. Through various technology improvements and larger volume manufacturing production, the cost of photovoltaic modules is expected to be halved by the year 2020 [8] [9]. Installation prices are also falling as installers gain experience and systems become standardized.

Financial incentives for solar power have been offered in Ontario [10]. Photovoltaic systems only make power while the sun shines, and a fixed panel in southern Ontario would receive only

3½ hours or less sunlight per day on average [11], with half as much in December as June [12]. AECL Nuclear Review 6 UNRESTRICTED CW-120000-CONF-007 Revision 0 For a lifetime of 25 years [13] and a 10% discount rate, the utility-scale capital cost of effective solar power capacity in Ontario would be at least $12,000/kW average output, with $0.15/kWh cost to generate energy, which exceeds the on-peak retail price. Hence, power generators in

Ontario will not adopt photovoltaic technology without incentives.

On the other hand, a fixed panel may receive 7 hours of sunlight per day in the American southwest [14]. That could reduce the installed cost of capacity to as little as $6,000/kW average output, or $0.075/kWh for electrical energy in the American southwest. If photovoltaic technology costs were halved by the year 2020, reliable daytime electricity production at

$0.04/kWh could disrupt the energy markets of the American southwest.

Consumer-Level Photovoltaic Power

In some regional markets, consumer photovoltaic power is already competitive with retail electricity prices, even at a capital cost of $2,400/kWpk. For example, changes in currency exchange rates have driven the retail cost of electricity in Australia up to $0.26/kWh [15]. A photovoltaic system with daily exposure to 6 hours of sunlight could generate electricity at a cost of $0.18/kWh, assuming an interest rate of 14% for the consumer, and assuming a lifetime of only 16 years for a consumer-level system. The saving for the consumer can be significant.

The innovation of consumer or community-level photovoltaic power technology could disrupt the value networks that underlie energy markets. In parts of Australia with high insolation, consumer-level solar power is already affecting the value network for electrical utilities [16].

The role of the electrical grid is changing, with consumers using it as a backup supply, or feeding power back to the grid during the day [17]. Market disruption by consumer-level photovoltaic power is likely to be seen first in Australia. AECL Nuclear Review 7 UNRESTRICTED CW-120000-CONF-007 Revision 0 Depending on local energy costs and insolation, the decreasing cost of consumer-level solar power could also disrupt energy markets outside Australia. Ontario energy markets would be relatively difficult to disrupt, given the low retail cost of electricity and the limitations of winter sunlight. However, advances in battery storage technology for backup power systems could also be an enabling technology for consumer-level photovoltaic power. Consumers in rural Ontario may want backup power systems, and already pay distribution charges of $0.06/kWh or more. If the retail cost of electricity were to rise while the cost of photovoltaic modules continues to fall, consumer-level solar power could even have disruptive effects in Ontario energy markets.

Electrochemical Battery Energy Storage

Electrochemical battery energy storage has been aimed at accommodation of renewable energy sources such as wind power, but the same technology could also cover peak demand above the baseload operation of nuclear power stations. Thus, battery energy storage may be considered a sustaining technology for the nuclear power industry.

The cost of a battery depends on the electrochemical technology that it implements. Batteries also need additional electrical systems to connect them to the grid, but those systems typically cost much less than the batteries themselves, last longer, and are common to all battery types.

Hence, they may be neglected in the comparison of different battery technologies. Commodity lead-acid batteries may be used as a benchmark, since they are a mature technology.

Lead-acid golf-cart batteries have a nominal lifetime of 750 charge-discharge cycles at 80% of capacity [18], or almost two years of daily charge-discharge cycles. The cost of storage is

$160/kWh, since a $175 battery (typical retail in 2013) can store 1.1 kWh at 80% of capacity. At a 10% discount rate, the battery capital cost would add $0.25/kWh to the cost of delivering AECL Nuclear Review 8 UNRESTRICTED CW-120000-CONF-007 Revision 0 stored energy over 750 cycles. New electrode technologies may increase the lifetime of lead- acid batteries by a factor of five [19]. The Axion Power ―Powercube‖ is claimed to provide

100 kW of power for 10 hours at a cost of $320,000 [20]. Assuming a 10-year lifetime of daily charge-discharge cycles at 80% capacity, evaluated at a discount rate of 10%, the capital cost still adds $0.15/kWh to the cost of delivering stored energy.

Batteries using sodium-sulphur technology [21] have a lifetime of up to 2,500 cycles at full discharge [22], and have been proposed to offer scalability to larger capacity. In the year 2010, a

32,000-kWh sodium-sulphur battery was installed in the town of Presidio Texas [23], at a cost of

$25 million, including $10 million for infrastructure. At a 10% discount rate, the battery cost would add $0.27/kWh to the delivery cost of stored energy over 2,500 daily cycles.

Lithium-ion batteries currently have a high cost of $500/kWh, but a nominal lifetime of only 500 charge-discharge cycles [24]. However, lithium-ion battery manufacturing technology is advancing, and battery cost reduction to $200/kWh is expected by 2020 [25]. Improved battery management and advanced lithium-ion battery technology could also double the effective battery lifetime [26]. At a discount rate of 10%, the battery capital cost would add $0.24/kWh to the delivery cost of stored energy over 1,000 charge-discharge cycles, which becomes competitive with the lead-acid battery technology of 2013.

Lead-acid battery technology will remain the most cost-effective electrochemical battery technology until the year 2020 or beyond, depending on advances in electrode technology. For the foreseeable future, the capital cost of electrochemical battery energy storage is expected to remain well above the $0.06/kWh difference between off-peak and on-peak retail prices in

Ontario, which would restrict it to niche applications. However, one such niche application is in AECL Nuclear Review 9 UNRESTRICTED CW-120000-CONF-007 Revision 0 consumer-level photovoltaic power systems, where energy storage for backup power supply could become an enabling technology for disruptive innovation.

Fusion Energy

Fusion energy technology is being developed through various national and international collaborative efforts, because of its potential long-term prospects. However, fusion power with net electrical power generation has not yet been demonstrated on a practical scale. Progress toward practical fusion power is indicated by ongoing research, which is following two main parallel streams of development, and complemented by smaller-scale activities on various alternative concepts.

The laser-based inertial confinement fusion (ICF) approach is to use pulsed laser beams to compress a pellet of deuterium and tritium fuel to very high densities and temperatures, igniting a fusion reaction in the fuel that is briefly sustained by self-heating. The National Ignition

Facility (NIF) project at Lawrence Livermore National Laboratory (LLNL) in the U.S. to demonstrate laser-driven inertial confinement fusion was planned in 1993, and construction began in 1997. The capital cost for the facility, which began operating in 2009, was $3.54 billion [27]. Ignition was not fully achieved by the official end of the research campaign in

2012, although there was further progress in 2013 toward fusion self-heating of the target [28].

The magnetic confinement approach is to use electro-magnetic fields to contain deuterium- tritium plasma at low densities and high temperatures, and heated by various approaches to initiate fusion reactions. The International Thermonuclear Experimental Reactor (ITER) project to demonstrate fusion in a tokamak-type magnetic fusion reactor is now under way, with the experimental campaign planned for completion by the year 2030 [29]. A demonstration AECL Nuclear Review 10 UNRESTRICTED CW-120000-CONF-007 Revision 0 prototype generating station (DEMO) is to be built after ITER. Based on analysis of current knowledge, the projected capital cost for a fusion generating station with 2,000 MWe electrical output is approximately $10 billion [30], or $5,000/kW. Using a 7% discount rate and assuming a 30-year lifetime at 80% capacity factor, the capital cost would contribute $0.057/kWh to the cost of generated electrical power. The estimated cost is not so low as to be disruptive on economics alone, but positive public perception towards fusion because of other attributes (e.g., reduced production of radioactive waste) may give fusion power an advantage over existing nuclear power technologies in certain energy markets.

Alternative fusion power reactor concepts outside these two mainstream approaches have not had the same levels of visibility or support as the laser-based ICF and the tokamak-type magnetic confinement systems. Although the tokamak concept displaced the stellerator concept in the late 1960s, the evolving stellerator design has been attracting renewed interest [29]. Stellerators do not rely on electrical currents in the plasma, and improvements in magnetic field coil modelling and design have narrowed the advantage of tokamaks in plasma confinement. The use of a stellerator design for the DEMO reactor would be a disruptive innovation in the nuclear research ―market‖. Similarly, other alternative fusion concepts could also have the hidden potential for disruptive innovation in the research market, given appropriate development.

Examples of fusion technologies that have been studied less intensively include variants of the tandem magnetic mirror concept [31], imploding liners / magnetized target fusion (MTF) [32],

[33], and dense Z-pinch devices [34]. AECL Nuclear Review 11 UNRESTRICTED CW-120000-CONF-007 Revision 0 Smart Grid, Consumer Efficiencies and Electric Passenger Vehicles

Smart meters and other smart-grid technologies [35] are being developed to manage the variations in consumption of electrical power. Financial incentives have also been used to promote the adoption of energy-efficient technologies by consumers in Ontario [36]. Electric vehicles that are recharged during off-peak hours could also have a demand levelling effect.

While these various technologies can help sustain mainstream technologies such as baseload nuclear power generation, there does not appear to be potential for disruptive innovation.

However, smart-grid technologies could disrupt markets for higher-cost dispatchable energy technologies.

Tidal Power and Wave Power

The potential exists for generating electrical power from tidal flow using barrage dams [37] or open water using turbines [38]. Development is ongoing but is geographically limited. For example, the total generating capacity of tidal power in the Bay of Fundy has been estimated at only 300 MW. Devices have also been developed to extract kinetic energy from ocean waves, with a wider but still geographically limited range, and project costs have exceeded $5,000/kWpk

[39].

Assessment Results for Alternate Technologies

Pumped Energy Storage Systems

Pumped hydraulic energy storage is an alternative to grid-scale battery energy storage.

However, pumped storage is generally limited to geographic areas that permit the practical construction of upper and lower reservoirs at suitable elevations. The largest pumped storage system in use is the Bath County system in Virginia, U.S.A. [40]; the lower reservoir covers 500 AECL Nuclear Review 12 UNRESTRICTED CW-120000-CONF-007 Revision 0 acres, and accommodates a run time of 11.3 hours at 3,000 MWpk [41], or 34,000 MWh of storage, at an initial capital cost [42] that would convert to roughly $100/kWh in 2013 dollars.

At a discount rate of 10%, assuming daily operation at 80% of stored energy capacity and 85% charge-discharge efficiency, the capital cost adds only $0.04/kWh to the delivery cost for stored energy.

Within Canada, a pumped storage system has been proposed at Marmora, Ontario, using a former iron mine for the lower reservoir, with five hours run time at 400 MWpk [43] or

2,000 MWh of storage. The capital cost of the proposal was $700 million [44], or $350/kWh of storage, adding $0.14/kWh to the delivery cost for stored energy. A larger pumped storage system has also been proposed for a former iron mine at Atikokan in northwestern Ontario. As a technology to balance energy supply and demand, pumped storage could displace higher-cost dispatchable energy technologies from energy markets, such as power plants operating on hydrocarbon fuels. However, it is a sustaining technology for nuclear power, with no potential for disruption of existing markets.

Woody Biomass Fuels

Biomass fuel is the largest form of renewable energy used world-wide, mostly in unsophisticated implementations (e.g., use of firewood and charcoal for heating and cooking) [45]. Quality issues associated with biomass fuels, such as difficulties in fuel handling or combustion, impede their wider usage. However, low-quality biomass fuels can either be converted into liquid fuels with added value, or be used as a substitute for fossil fuels in thermal generating power stations to provide high-quality, dispatchable generating capacity. AECL Nuclear Review 13 UNRESTRICTED CW-120000-CONF-007 Revision 0 The woody biomass price in North America was $35 to $52 per ton (dry) in the year in 2011

[46], or $0.039/kg to $0.057/kg. Assuming 30% electrical generation efficiency from wood heat at 4.5 kWh/kg, fuel costs would be $0.030/kWh to $0.043/kWh in 2013. Switchgrass [47], poplar and willow are being developed as short-rotation energy crops. Experience on tree plantations in Sweden has shown that yields of 5,000 kg dry wood per year per hectare can be obtained [48]. Double this yield has been obtained in some cases, depending on location and forestry practices [49]. Given a 4.5-kWh/kg thermal energy and 30% electrical efficiency,

5,000 kg/year supports 0.7 kW average electrical power output. Given land at $1,000 per hectare with a 7% discount rate, the capital cost to provide a steady supply of fuel at

5,000 kg/year/ha could be on the order of $0.01/kWh.

A 200-MWe thermal power station at Atikokan in Northwestern Ontario is being converted from coal to woody biomass fuel [50]. However, the Atikokan generating station will burn wood pellets rather than chips or other loose material, which greatly increases the fuel cost.

Innovations to produce low-effort energy crops with 5,000 kg/year/ha yield in northern Ontario, and power generating stations capable of using biomass from these crops directly, could disrupt markets for higher-cost dispatchable energy technologies. In addition, the positive public perception of using woody biomass instead of imported fossil fuels for power generation, given the reduced net emissions of air pollutants, solid waste, and greenhouse gases, along with the additional local economic revenue generated by the consumption of locally grown woody biomass , could increase the probability of market disruption.

AECL Nuclear Review 14 UNRESTRICTED CW-120000-CONF-007 Revision 0 Wind Power

The installed cost of American wind-power projects has varied around $1,300/kWpk in recent years [51], [52], and shows no clear trend. The wholesale price for electricity generated by wind power in American markets has varied with economic factors over past years, with the 2012 national average being $0.04/kWh [52]. The wind-power capacity factor is the ratio between average energy output and installed capacity, and is 32% in North America [52], [53]. The capital cost of average generating capacity is thus approximately $4,000/kW average electrical output, which contributes $0.046/kWh to generating cost at discount rate of 10%; wind power is only viable in certain markets. Other factors being equal, wind power capacity factor depends on location; the capacity factor in Germany, for example, is less than 20% [53].

Wind power shows little potential for further reduction of cost or elimination of quality issues, and no potential for disruptive innovation in the larger energy markets. Wind power now generates 30% of electricity for Danish consumers, but their retail price was $0.415/kWh in

2013 [54]. On the other hand, wind power may have the potential to disrupt the prospective market for small modular reactors in remote, northern communities [55]. The implementation of wind power in northern climates also requires development, but research is ongoing [56].

Ocean Thermal Energy Conversion

The temperature differential between the surface and deep waters of the ocean could provide a large energy source, but the low temperature difference reduces efficiency. Ocean thermal energy conversion, also known as OTEC, has been demonstrated on a small scale [57], but the costs are over $8,000/kW [58]. The technology does not show the potential for disruption of the larger energy markets. AECL Nuclear Review 15 UNRESTRICTED CW-120000-CONF-007 Revision 0 Assessment Results for Nuclear Technologies

Uranium Extraction

Mines with higher-grade ore generally have lower production costs, which tend to drive down the price of uranium. As of 2011, the known uranium resources recoverable at $130/kg were over 5 million tonnes [59], much of which could be recovered at less than $80/kg; the price of uranium in 2013 was close to $100/kg [60]. Uranium prices may increase, but no shortage of supply is expected before the year 2050, even if usage were to double [61].

Over 4,000 million tonnes of uranium is available from seawater, but at the low concentration of three micrograms per litre [62]. There has been considerable research into its extraction, and the current state of development suggests that uranium could be extracted from seawater at a cost below $1,000/kg [63], but it has not been scaled to commercial applications. Research into uranium extraction is ongoing, and it has been projected that the potential exists for the cost to be reduced to $300/kg, with further incremental advances [62].

Given that a pressurized heavy water reactor (PHWR) can extract 7.5 MWd of heat and generate

55,000 kWh of electrical energy per kilogram of natural uranium [64], a uranium price of

$1,000/kg adds only $0.018/kWh to the cost of electric power generation. Uranium extraction is therefore a sustaining technology for nuclear power in general, and could be a ―qualified‖ disruptive innovation for advanced fuel cycles that are based on reprocessing. Advances in uranium extraction technology impact the value networks that support research into fuel re- cycling and advanced fuel cycles. AECL Nuclear Review 16 UNRESTRICTED CW-120000-CONF-007 Revision 0 Heavy Water Production

A major difference between PHWR and pressurized light water reactor (PWR) or boiling light water reactor (BWR) technologies in the overall energy market is the capital cost of the heavy water in PHWR power stations, which represent a significant fraction of the PHWR capital cost.

Thus, changes in this cost could have a significant effect on the competition between these technologies in that market. The potential impact on markets would be limited by the possible reduction in PHWR capital costs.

The current cost of heavy water is at least $350 per kilogram [65]. A 730 MWe PHWR contains

472.5 tonnes of heavy water [66], which costs at least $165 million, and adds at least $225/kWpk to the capital cost. Even at a 7% discount rate and 92% capacity factor, heavy water capital costs add at least $0.002/kWh to the cost of PHWR output. That cost exceeds the operating cost of uranium at $100/kg. Heavy water production or purification technology is an area of ongoing research, and new methods have been developed that could reduce costs to $200/kg [67]. Thus, heavy water production technology is a sustaining technology for the use of PHWRs and for nuclear power in general, while it could be disruptive by impacting the market for competing nuclear technologies, such as light water reactors (LWR).

Uranium Enrichment

Uranium enrichment has previously seen several disruptive innovations, with high-speed gas centrifuges replacing gaseous diffusion to become the mainstream technology of 2013. A relatively new process for separation of isotopes by laser excitation, the SILEX process [68], promises high separation efficiency, and is being commercially developed [69]. This could lead to a disruptive innovation in the field of uranium enrichment. This may be expected to benefit AECL Nuclear Review 17 UNRESTRICTED CW-120000-CONF-007 Revision 0 PWRs and BWRs, which use enriched uranium fuel, but the PHWR design could also benefit from low-cost enrichment of its fuel. In general, advances in uranium enrichment are sustaining technologies for all forms of nuclear power. The reduction in the cost of nuclear power would be relatively small, with no potential for disruption of larger energy markets.

Small Modular Reactors

The benefit often claimed for small modular reactors (SMRs) is their reduced need for local support. Small reactors may be manufactured at a plant for shipment to site in one or more modules. The modules need not be very small, if they can be shipped and installed at a coastal site. Some designs even eliminate on-site refuelling; the entire core module is simply replaced.

In some remote residential communities of northern Canada, the retail cost of electricity is $0.40 to $1.0 per kWh [74], due to the high fuel cost of diesel-generator sets. Very small gas-cooled and liquid-metal-cooled SMRs (less than 20 MWe) under development by various companies

(e.g., General Atomics [71], Gen4 Energy[72], LeadCold Reactors AB [73]) could generate electricity for such communities, as well as for off-grid mining operations. This technology may have the potential to disrupt local markets for conventional heat and power sources (i.e., diesel fuel) in these remote communities.

More generally, modular designs can reduce site-dependent construction and operating costs. It is conceivable that modular reactors manufactured at lower cost in Asia could be exported and installed in Europe at lower cost than construction on site. India has a number of relatively small

(220 MWe) PHWRs, and construction has begun for a pair of small pebble-bed gas-cooled reactors (105 MWe) in China [70]. Development of low-cost modular reactor designs could AECL Nuclear Review 18 UNRESTRICTED CW-120000-CONF-007 Revision 0 disrupt the value network behind existing markets for the on-site construction of nuclear generating stations.

Nuclear Fuel Designs

High-Burnup Fuel

At the beginning of the 1970s, a pressurized water reactor (PWR) could produce

235 20 MWd/kgU using fuel enriched to 2.5% ( U/U by weight) [75]. A PHWR that used natural uranium could produce 7.5 MWd/kgNU burnup, with double the uranium utilization [64].

Incremental advances in fuel design have led to PWRs producing up to 50 MWd/kgU and less frequent refuelling, at 4.2% average enrichment [76]. Performance studies show little economic benefit from higher enrichment, and the 5% enrichment of feedstock hampers further development [77], [78]. PHWRs still use natural uranium fuel.

Research into slightly enriched fuel for PHWRs has often focused on advanced fuel cycles that require reprocessing facilities [79]. PHWR burnup has been calculated as 16.5 MWd/kgU at

0.98% enrichment reprocessed uranium [80]. By interpolation, even 0.78% enrichment could yield 9.8 MWd/kgU burnup and increase refuelling intervals by 30%. The operation of existing or new PHWR generating stations may be significantly improved, but it would still be a sustaining technology with little potential to disrupt existing markets for nuclear power.

High-Temperature Fuel

Certain types of composite fuels have particles of fissile material coated with inert ceramics and embedded in an inert matrix [81], for better thermal conductivity and better retention of fission products in the fuel. These advanced fuel types may be difficult to use in PWRs [82], but could more easily be used in PHWRs, and are an enabling technology for various types of very-high- AECL Nuclear Review 19 UNRESTRICTED CW-120000-CONF-007 Revision 0 temperature reactors [83]. Operation at very high temperatures enables higher thermodynamic efficiency [84]; an increase from 30% thermodynamic efficiency to 50% could reduce fuel costs by 40%. However, a reduction from $0.005/kWh PHWR fuel costs to $0.003/kWh would likely be negated by the increased capital cost of a very-high-temperature reactor. In scenarios with a uranium price of $520/kg, PWR fuel costs of $0.015/kWh [85] would be reduced by

$0.006/kWh. Thus, it appears that high-temperature fuel designs or other composite fuels may be a sustaining technology for nuclear power in scenarios with high uranium cost, or in response to demand for enhanced durability and tolerance under postulated accident scenarios. It provides little potential for disruptive innovation of energy markets, especially at current uranium prices.

Thorium-Bearing Fuel

Thorium has been studied for advanced fuel cycles, due to its advantages over fuel cycles based on plutonium production from uranium fuel. The thorium fuel cycle has lower production of

―minor actinides‖, such as isotopes of americium and curium, which present the long-term radiological hazard in spent fuel [86]. The thermal capture cross-section of 232Th is also higher than 238U [87], which can improve breeding efficiency, or increase refuelling intervals. The

Shippingport light water breeder reactor (LWBR) [88] was operated from 1977 to 1982 with 233U mixed in thorium fuel [89], [90]. Operation increased the fissile material in the fuel rods over five years, which successfully demonstrated net breeding as well as an extended refuelling interval. However, there was no subsequent commercial implementation of thorium fuel technology.

Using thorium to improve operating margins in once-through fuel designs could be highly beneficial [91], but thorium-based fuels should always contain enough 238U to denature the 233U AECL Nuclear Review 20 UNRESTRICTED CW-120000-CONF-007 Revision 0 produced [92], so that proliferation risk never becomes an issue. Gains need not be large: some

PHWR operators have adopted ―37M‖ fuel bundles (37-element PHWR fuel bundles modified to have a smaller centre element) for slightly better operating margins [93]. While thorium-based fuels could be a disruptive innovation in the context of reactor fuel types, and a sustaining technology for nuclear power, it does not appear that it would be disruptive in the larger energy markets.

Summary

Fuel for existing PWRs is highly developed, with limited potential to improve economics while preserving performance. Advanced composite fuels could mitigate a future increase in uranium costs by enabling very-high-temperature reactor designs. The use of composite fuels to improve durability or accident tolerance of fuel for PHWRs or possibly PWRs would also be a sustaining technology. Fuel for existing PHWRs has greater scope for improvements such as composite fuels or thorium-bearing designs, but has little potential for disruptive innovation.

Nuclear Fuel Cycles

Advanced fuel cycles that have been proposed for future use include fuel reprocessing as a component. Spent fuel may be recycled to recover enriched uranium, or reprocessed to separate plutonium and other actinides. The simplest alternative is to store the spent fuel indefinitely, or until it is economically attractive to recycle.

Enriched Uranium Recycling

The economics of recycling spent PWR fuel depend on the burnup, the 236U content and the cost of natural uranium, but may be favourable even at a uranium price of $100/kg [94]. PHWR reactors can operate using 235U recovered from spent PWR fuel to produce a fuel equivalent to AECL Nuclear Review 21 UNRESTRICTED CW-120000-CONF-007 Revision 0 natural uranium [79]. Simpler methods to purge volatile fission products from PWR fuel have also been proposed as a source of fuel (e.g., DUPIC) for PHWR reactors [95]. However, recycling has limited potential, and is considered a sustaining technology for nuclear power.

Spent Fuel Repository

A permanent spent nuclear fuel repository was proposed to be established at the Yucca Mountain site in Nevada, U.S.A., but the planning and political processes have been particularly slow and difficult [96]. That difficulty appears to suggest the need for an innovation of some kind, but the technical proposal was on track for success [97]. Research has also been undertaken in Canada for the long-term storage / disposal of spent fuel in repositories [98]. The availability of an operational permanent spent fuel repository could help address public concerns and improve public perception of nuclear power, but that would make it a sustaining technology, with little potential for disruptive innovation in energy markets.

Without a repository the storage of spent fuel becomes an issue for nuclear operators, which carries some cost. The provision of instruments, equipment and facilities for the handling and temporary storage of spent fuel is a significant business market today, which could be disrupted by an innovative implementation of a permanent spent fuel repository. AECL Nuclear Review 22 UNRESTRICTED CW-120000-CONF-007 Revision 0 Plutonium Reprocessing

Plutonium recycling from PWR fuel is generally not economical, even if the price of uranium were $520/kg [99]. The extraction of plutonium from spent fuel for use in new reactor fuel can also be a form of nuclear waste destruction, and some operators reduce waste by reprocessing, but the benefit is offset by the negative public image of plutonium [100]. The dangers of plutonium have been greatly exaggerated in popular accounts [101], and the public opinion of plutonium has been profoundly negative.

Plutonium production in fast breeder reactors has economic advantages, if the price of uranium exceeds $100/kg. At $520/kg, fast-breeder plutonium fuel costs would be $0.005/kWh lower than PWR once-through uranium fuelling [85]. It might displace once-through fuelling based on cost, but high capital cost and the business risk of a decrease in uranium price remain major impediments. Plutonium re-processing technology has shown no apparent potential to disrupt larger energy markets at current uranium prices. It could mitigate the increase in reactor operating costs from a higher price for uranium, but that makes it a sustaining technology.

Minor Actinide Reduction

Reprocessing technology that incorporates actinide destruction in the fuel cycle and decreases the waste stream could help address public concerns about nuclear power. On the other hand, it is not clear how re-processing the spent fuel to remove actinides would diminish political or other local resistance to the implementation of a permanent repository for the remaining spent fuel wastes. Minor actinide reduction technology would only mitigate the impact of restrictions on actinide disposal, and would not even be a sustaining technology, otherwise. It appears AECL Nuclear Review 23 UNRESTRICTED CW-120000-CONF-007 Revision 0 unlikely to have economic advantages over a spent fuel repository that accepts actinides, and does not appear to have the potential to disrupt any nuclear or other energy technology.

Summary

Plutonium reprocessing cannot compete with the cost of uranium mining in the year 2013. Fast- breeder reactors could mitigate the negative effect of rising uranium costs on nuclear power after

2035, but their advent may be delayed indefinitely by advanced uranium extraction technology.

Actinide burning technology is of interest only if a permanent spent fuel repository would not otherwise accept it, and if interim storage were too costly. Simple recycling of uranium PWR fuel has greater potential, but is still only a sustaining technology for nuclear power.

Molten Salt Reactors

Molten salt reactors use a fuel comprising uranium in salts (e.g., UF4, LiF, BeF2) that melt at high temperature, and have the advantage that the molten fuel is accessible for continual re- processing. The first molten salt reactor was the Aircraft Reactor Experiment [102] at Oak

Ridge National Laboratory (ORNL) in the 1950s. Molten salt reactors remain of interest because of their potential for fuel breeding, which motivated the Molten Salt Reactor Experiment at

ORNL in the 1960s [103], and is one of the candidate technologies in the international

Generation IV Program (Gen-IV) for the next generation of nuclear reactors to operate as advanced burners with enhanced safety, proliferation resistance, efficiency and economics [104].

Molten salt reactor technology competes with other breeder and advanced burner reactor technologies, including liquid-metal-cooled and high-temperature gas-cooled fast breeder reactors [103], which are also considered Gen-IV technologies [105]. Since this is an area of ongoing research with little commercial application at present, any innovation would only AECL Nuclear Review 24 UNRESTRICTED CW-120000-CONF-007 Revision 0 influence the direction of research into advanced burner reactors, breeder reactors and advanced fuel cycles. This does not sustain any existing nuclear or other energy technology, although it has the potential to sustain the use of nuclear power in the future if and when it is put into practical, commercial implementation.

Externally Driven Sub-Critical Systems

An externally driven sub-critical system operates much like existing nuclear reactors, but requires an external source of neutrons to sustain the chain reaction in the core. The power of the system is generally proportional to the neutron input, and diminishes quickly when the neutron input is removed. This provides a highly effective reactor control and shutdown mechanism, and key parameters such as coolant void reactivity or power coefficient of reactivity would be less of a concern for a system that remained sub-critical in all postulated accident scenarios. A reactor producing 2,000 MW thermal power (nominally 600 MW electric power) at

10 mk (1000 pcm) sub-critical would need 1.6 × 1018 neutrons per second (1% of the fission rate) to sustain it.

A fusion reactor operating with deuterium-tritium fuel also generates high-energy (14 MeV) neutrons and can be used to drive a subcritical fission system that is integrated into a hybrid fusion-fission reactor (HFFR). There have been many design studies for this type of system, generally aimed at fuel breeding [105], or for actinide burning [106], but the fusion reactor component of such a system has not yet been demonstrated.

Neutron generation by a 1,000 MeV proton beam on a high-atomic-number target (e.g., Pb-Bi)

is a relatively mature technology [107], and can produce twenty neutrons per proton [108]; a beam of 8 × 1016 protons per second, or 13 mA, would yield the needed 1.6 × 1018 neutrons per AECL Nuclear Review 25 UNRESTRICTED CW-120000-CONF-007 Revision 0 second. The Spallation Neutron Source (SNS) at Oak Ridge National Laboratory [109] has a proton beam of 1.4 mA at 1,000 MeV. It was completed in 2006 at a cost (in 2013 Canadian dollars) of $1.6 billion [110], with the accelerator being roughly one quarter of the total cost [111], [112].

An accelerator with 1,000 MeV beam energy, 13 mA beam current and 30% electrical efficiency would also need 43 MW of electric power. Thus, sub-critical operation adds at least 20% to capital costs of the power plant, while reducing output by roughly 7%. Sub-critical operation permits higher burnup of nuclear fuel, but fuel costs are a small fraction of total cost. Even at a uranium price of $1000/kg, fractional gains in fuel economy would not make up for the increased cost per unit electrical energy output.

The enhanced control and shutdown capabilities that arise from reactor operation in a sub-critical state may not necessarily improve public attitudes toward the use of nuclear power, but regulatory agencies tend to be more amenable to technical solutions than the public. The margin to criticality of a driven sub-critical system could be credited in jurisdictions where regulatory guidance is based on inherent parameters such as reactivity coefficients. This would still only mitigate the impact of regulatory restrictions, and would not even be a sustaining technology, otherwise. There is no other indication of trending toward disruptive innovation.

Thermal Energy Storage

The consumer demand for electricity follows a daily cycle, as reflected in the retail price of electricity at different times of day in Ontario [113]. Running a nuclear generating station at reduced power is not economically optimal, due to high fixed costs. For a nuclear reactor that generates steam for turbines, excess heat from the reactor could simply be stored for later use. AECL Nuclear Review 26 UNRESTRICTED CW-120000-CONF-007 Revision 0 Similar thermal storage solutions already exist in other areas, such as the molten salts used to carry and store heat from solar power concentrators [114], [115]. Thermal energy reservoirs of this type could be integrated into nuclear power stations for load following.

The turbine and generator capacities need to meet the typical day-time peak demand, but the reactor only needs to meet the mean demand, which is roughly 10% lower [113]. The remaining demand can then be met using heat from a reservoir storing less than 1½ hours of reactor thermal power. This would be saved from the night before, when the off-peak demand is as low as 20% below the mean power demand.

Nuclear thermal energy storage could be a sustaining technology for nuclear energy (PWRs or

PHWRs). As a technology to balance energy supply and demand, sufficient nu clear thermal energy storage capacity could displace some higher-cost dispatchable energy technologies from energy markets, such as power plants operating on hydrocarbon fuels. However, it shows no potential for disruption of existing markets.

Other Technologies Not Assessed

In this exercise, several technologies have been identified and assessed for their potential to cause a disruptive innovation in energy markets. However, this list should not be considered exhaustive, as demonstrated by the later suggestion of additional technologies relevant to the use of nuclear power, which are mentioned here. These technologies have not yet been assessed in detail. They appear likely to be sustaining technologies for nuclear power, but could be highly disruptive for some energy markets. It is therefore expected that these technologies, along with others that may yet be identified, would be assessed in more detail in future exercises. AECL Nuclear Review 27 UNRESTRICTED CW-120000-CONF-007 Revision 0 Direct Energy Conversion

The assessment of nuclear technologies implicitly assumed the use of steam turbines or similar systems to drive generators for electrical power production using heat from nuclear reactors.

Research is ongoing into high-efficiency thermo-electric converters, and may have the potential to make more efficient use of heat from nuclear reactors or other sources. Thermionic energy converters have also been used to generate electrical power from nuclear heat. Magneto- hydrodynamic power conversion may be an efficient way of extracting energy directly from the hot plasma of a fusion device. Innovations in direct energy conversion technologies could displace the steam turbines as currently implemented in most nuclear power plants, but have not been evaluated in this exercise.

Hydrogen-Economy Technologies

The assessment of energy technologies implicitly assumed that power generation and consumption would be carried out through the medium of electrical power. Research is ongoing into using hydrogen as a medium for the storage and distribution of energy, as well as a chemical feedstock. In particular, nuclear power can produce hydrogen through pyrolysis or high- temperature electrolysis. Solar power or wind power can also be used to generate hydrogen, and fuel cells can generate electricity when needed. Technologies of the hydrogen economy also include the use of hydrogen to produce high-quality hydrocarbon fuels for vehicular applications.

Innovations in hydrogen-economy technologies could thus disrupt the existing market for electrical power, but have not been evaluated in this exercise. AECL Nuclear Review 28 UNRESTRICTED CW-120000-CONF-007 Revision 0 Conclusions

The concept of ―disruptive innovation‖ was used as the basis for a trial assessment of the potential of various energy technologies for innovations to disrupt the value networks underlying energy markets. Figure 2 tabulates the results of the trial assessment. Thermal energy storage showed the greatest potential to disrupt other energy technologies in favor of nuclear power.

Innovations in uranium extraction could disrupt or delay the use of other nuclear technologies in energy markets, but would sustain the use of nuclear power in energy markets.

The findings could be altered by new information, particularly the inclusion of additional niche or alternate technologies. The technology with greatest potential for disruptive innovation cannot be identified if it is not included in the scope of the assessment. It was also found that certain technologies have the potential to cause a more regional, rather than a global disruption of energy markets. The only energy technology found to have great potential for disruptive innovation is consumer-level photovoltaic power, and it is much more significant for regions with high insolation. Thus, different results may also be found if the assessment has the alternative perspective of a different market.

The concept of disruptive innovation was found to be of interest for assessing the relative importance of technologies in different fields, in support of strategic planning for science and technology. The exercise may be most useful for ranking a given set of technologies, in the context of a specific technologically driven market. Niche technologies or alternate technologies with the potential for disruptive innovation may provide better research and development opportunities than the mainstream technologies that they would displace.

AECL Nuclear Review 29 UNRESTRICTED CW-120000-CONF-007 Revision 0

 Lower Quality Niche Technology

Coal 

Gas Nuclear

Higher Cost Cost Higher Hydro Lower Cost Lower

Alternate Other  Technology

Higher Quality 

Figure 1 – Disruptive Innovation in the Energy Market

The energy market is dominated by mainstream technologies, which are most cost effective. The

―Other‖ category shows market penetration by niche technologies such as solar power, or alternate technologies such as such as biomass energy. Niche technologies disrupt the market by innovations to lower costs, while alternate technologies can disrupt the market by innovations to raise quality, such as dispatchability.

AECL Nuclear Review 30 UNRESTRICTED CW-120000-CONF-007 Revision 0

Technology Disrupted Sustains Technology Assessed Energy Nuclear Nuclear Niche Technologies Utility-Scale Solar Power Limited Limited No Consumer Photovoltaic General* General* No Electrochemical Batteries Limited Limited Yes Fusion Power None Limited No Smart Grid Limited None Yes Consumer Efficiencies None None Yes Electric Cars None None Yes Tidal and Wave Power None None No

Alternate Technologies Pumped Energy Storage Limited None Yes Woody Biomass Fuel Limited None No Wind Power None None No Ocean Thermal Energy None None No

Nuclear Technologies Uranium Extraction None Limited Yes Heavy Water Production None Limited Limited Uranium Enrichment None None Yes Small Modular Reactors None Limited Yes

Fuel Designs High-Burnup Fuel None Limited Limited High-Temperature Fuel None Limited Limited Thorium-Bearing Fuel None Limited Yes

Fuel Cycles Uranium Recycling None None Yes Spent Fuel Repository None None Yes Plutonium Reprocessing None Limited Limited Minor Actinide Reduction None None No

Molten Salt Reactors None None No Driven Sub-Critical Systems None None No Thermal Energy Storage Limited None Limited

* Consumer-level photovoltaic power could impact energy markets in general, but effects may be more significant in regions with higher solar insolation.

Figure 2 –Potential for Disruptive Innovation in Energy Markets

―General‖ indicates the potential for innovation that could disrupt the value network behind existing markets for energy technologies in general, although not all regional energy markets may be affected. ―Limited‖ indicates that some energy technologies or nuclear technologies could be affected, but some others would not be. AECL Nuclear Review 31 UNRESTRICTED CW-120000-CONF-007

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