Nuclear Power Needs Leadership, but Not from the Military

By Michael J. Ford, Ahmed Abdulla, M. Granger Morgan

For much of the atomic age, the United States led the world in developing and deploying nuclear technologies. Despite building the world’s largest fleet of reactors—99 of which remain operational—and seeding most of the designs built worldwide, US commercial nuclear development has dramatically slowed. Indeed, the nuclear power industry now faces unprecedented—arguably existential—challenges. The nation’s demand for electricity has decreased, and the power distribution grid is rapidly becoming decentralized. Nuclear power is having trouble competing in current deregulated energy markets dominated by low-cost natural gas and renewable energy sources. The industry hasn’t been able to build new power plants within budget and in a timely manner, as recent efforts in South Carolina and Georgia illustrate. There are concerns about safety, waste management, and nuclear proliferation. And efforts to develop advanced reactors that might meet these challenges have lagged. The industry can’t afford major research and development, and efforts by the Department of Energy, once a prime mover in reactor development, have been moribund as a result of inadequate funding and leadership.

The decline of nuclear power creates huge challenges for important US policy goals on two fronts. First, national security experts are debating the consequences of a world where China and Russia become preeminent in nuclear science and technology, thus diminishing the ability of the United States and other western countries to set the rules for controlling access to nuclear material and technology. In addition to deploying existing designs domestically and exporting them, China and Russia have extensive and well-financed programs to develop the next generation of advanced, non-light water reactor concepts, many of which were first demonstrated decades ago in US national laboratories. Unfortunately, neither of these countries has displayed a commitment to maintaining and strengthening the international control regime.

Second, despite the challenges it faces, nuclear power remains a proven low-carbon technology. Many energy and climate experts think that without a portfolio of low-carbon energy options that includes at least some nuclear power, the nation and the world will be hard pressed in coming decades to sufficiently cut emissions of the warming greenhouse gases that drive climate change. But those assessments do not reflect nuclear power’s grim realities on the ground.

Often when US industries have found themselves in especially dire straits, they have suggested intimate cooperation between the Department of Defense (DoD) and technology vendors to restore their vitality. In the case of nuclear power, national security arguments are being offered to justify diverting large sums of public money through DoD to catalyze the development and deployment of small modular reactor (SMR) technologies. Such arguments have flowed from a variety of sources, including the director of research and development at Southern Company; defense-focused organizations such as the Center for Naval Analyses, Defense Science Board, and National Defense University; clean energy experts at Sandia National Lab; and organizations such as Third Way that include nuclear advocacy as part of their clean energy program.

Two decades ago, some in the industry recognized that continuing to build large, complex reactors made little sense. Companies proposed shifting to a class of smaller systems: small modular reactors with a nominal power output of less than 300 megawatts of electricity. Their costs would be both more affordable and more predictable—assuming they managed to exploit factory fabrication and modular construction, the way airliners and gas turbines have—somewhat ameliorating nuclear power’s steep economic cost. In the United States, more than 30 companies are pursuing SMR variants. Most face monumental challenges, lacking as they do the resources or experience to proceed. None has a guaranteed order book that could underpin the commercialization of either a reactor or its manufacturing infrastructure. The Department of Energy is helping one vendor develop a light water SMR plant in Idaho and may consider signing a power purchase agreement for some of the electricity it generates. It may also support another project in Tennessee by the same company. Despite these efforts, some observers see DoD as the only institution capable of providing a large enough market to justify commercial production, at least in the short term.

We also see SMRs as theoretically attractive, and we believe that DoD can play a role—though a supporting role—in strengthening US fission innovation. However, resorting to national security arguments and placing DoD in the lead is neither a sustainable nor wise way to revitalize the nation’s brittle nuclear enterprise. Indeed, a counterargument could be made that this proposed fix could actually weaken national security by diverting DoD’s focus and dollars to a lower priority mission. As to the role that DoD might usefully play, we offer three suggestions.

DoD and nuclear development

The introduction of commercial nuclear power in the United States was intimately tied to the military’s quest for rapid nuclear development. After all, construction of the first commercial demonstration plant near Shippingport, Pennsylvania, was overseen by Admiral Hyman Rickover himself. Building Shippingport was in Rickover’s interest at the time, before the Navy’s nuclear future was secured and before nuclear power was known well enough to engender strong feelings, one way or another. This approach generated both political momentum for nuclear development and the industrial supply chain for the light water reactor designs his naval program pioneered.

Resorting to national security arguments and placing DoD in the lead is neither a sustainable nor wise way to revitalize the nation’s brittle nuclear enterprise.

Once Shippingport was completed, the government established a firebreak—imprecise and imperfect—between the civilian and military nuclear programs. Political leaders saw much value in distinguishing the sunny side of the atom from its more sinister one. The civilian nuclear industry welcomed this separation. Acutely aware of the association between nuclear power and the bomb, it stressed in its literature, for example, that nuclear power plants cannot explode.

The separation was further promoted by the fact that the Navy had achieved its goal of developing a mature nuclear propulsion system and a fairly limited number of carefully managed plants that had proven themselves remarkably safe. Civilian industry, on the other hand, was projecting thousands of reactors. Because the Navy would not develop and deploy these, it had no way of vouching for their safety and security, and it worried that accidents at nuclear power plants might rebound on its program. Separating the two enterprises helped shield a successful naval nuclear program from any accidents that might occur at commercial facilities. Ostensibly, the civilian and military programs have since maintained that separation, though there remains much cross-pollination.

Should DoD assume a key role in developing SMRs, there are two types of reactors that it might conceivably pursue. The first is a very small reactor (vSMR) that the military could use on “forward operating bases” or perhaps some main operating bases in support of combat operations. The second is a larger reactor that the military could use to supply power for its domestic (and perhaps international) bases in order to isolate them from potentially vulnerable public electric grids.

There are also a variety of program models that DoD could adopt in developing and acquiring SMRs, though we see two as most likely. First, the military could initiate a tightly controlled development process, akin to that used in major defense acquisition programs such as the Joint Strike Fighter or the Littoral Combat Ship. Second, it could “bid for service,” offering commercial vendors the opportunity to deliver power to military installations without tightly controlling development and deployment. The economic and political implications of the two models differ greatly. It is highly likely that DoD would choose the first model for acquiring vSMRs, whereas either model might conceivably work for larger SMRs that power bases. Regardless of model, the practical and normative challenges of such an undertaking would be enormous.

Practical arguments

If DoD were to consider acquiring a fleet of SMRs, it would start by assessing its need for them and identifying the key mission performance parameters they would need to satisfy. DoD manages the development of new programs through its Joint Capabilities Integration and Development System, which starts by identifying either new threats or gaps in current capabilities. Assuming a valid gap is identified, the process then moves through material solutions analysis—essentially looking at all possible alternatives to fill that gap. There is little evidence that the SMR designs that would emerge from this analytic process would be appropriate for wide commercial deployment. In fact, most of the evidence suggests quite the opposite.

The operational requirements and performance standards that would be critical in a vSMR slated for use in forward operating bases would most likely yield a very small reactor (nominally less than 10 megawatts of electricity), blunting its broad commercial desirability. In addition to their small size, these reactors would likely be developed with other characteristics that may prove troublesome for commercial industry or regulatory bodies. First, they would need to have a long core life, which means they would require fuel “enriched” with uranium-235 to a higher level than used in commercial reactors. Second, they would have to be transportable and thus rugged. Third, for variants that are small enough to be deployed in remote or forward operating bases, the design might have to employ very modest containment structures. Fourth, they would be designed to absorb shocks and to continue operating in spite of these. Fifth, control systems would most likely have to be automated to a great degree, because it costs money to train personnel, and DoD would not look kindly on SMRs that turn forward operating bases into superbly guarded power plants that have more plant operators than warfighters.

Though SMRs designed to provide power to US military bases could be larger, it is likely that DoD would still want substantially different technical specifications from those of commercial reactors. As with vSMR variants, sound arguments can be made for more highly enriched cores to lengthen refueling intervals, greater ruggedness to support defense and security resilience, and robust standalone control systems to limit vulnerability to cyber and physical risks.

The characteristics outlined above would most likely be endorsed by many reactor designers, and some experts have called for DoD to be an early leader to ensure technical specifications such as these are tailored to meet unique DoD requirements. But it is difficult to overstate how politically unpalatable some of them would be to the Nuclear Regulatory Commission. This is especially true of any move toward higher fuel enrichment. Should they be incorporated into one system, we have great difficulty envisioning a license being granted without institutional reforms so deep that they would be sufficient to enhance nuclear power’s prospects on their own, weakening the case for the military’s involvement. Of course, since DoD regulates its own reactors, it would not have to deal with these institutional constraints. However, the argument that its role as first mover could accelerate the commercial licensing process is not very compelling.

Moreover, any SMR fit for DoD’s needs would likely be too expensive for a commercial utility to deploy. As noted above, the same requirements and standards on which DoD would insist might render commercial variants economically uncompetitive in most of today’s markets. In fact, the military variant itself might not be deployed widely: even if the political will did materialize, and substantial appropriations were forthcoming, and industry eagerly participated, the likelihood of successful project execution is still modest. Given the long history of cost overruns and waste in defense acquisition, the empirical record is now so robust that this statement is almost axiomatic.

SMRs designed to serve a military base would face an even greater challenge since they could be attacked on the same economic grounds as commercial reactors. The arguments in favor of vSMR deployment—that they could minimize the need for long fuel supply lines and thus fill a warfighting capability gap, for example—evaporate when considering large, domestic bases. Even assuming that such a need could be identified and that it justifies new program development, defense programs must be competitive when possible. Unless resilient, independent supply were given far more weight than it now receives, there is little guarantee that a nuclear design would win the day for base power supply any more than it is dominating deregulated energy markets. Other generating sources such as combined cycle natural gas constitute viable alternatives if sound dual-fuel management practices are adopted. In short, SMRs would remain victims of their poor economic competitiveness, absent a hard, statutory mandate or an overly rigid performance parameter that forces a nuclear solution. Regardless, the existence of ready substitutes makes this program a recurring target for the DoD budgeter’s ax: it would consistently be the last program in and the first one out of any submission to Congress.

Any SMR fit for DoD’s needs would likely be too expensive for a commercial utility to deploy.

One often-cited advantage of having the military act as first mover is its looser restrictions on siting large infrastructure. But even this is not guaranteed to help nuclear power. The military is now the only government institution trusted by a plurality of US citizens. It is certainly sensitive to the fact that this well of trust is not bottomless and that goodwill needs to be cultivated among communities in which it operates. One way of cultivating this goodwill is to follow state environmental guidelines and processes when they do not compromise the defense mission. This is to say that the siting of small reactors would likely still become an issue for DoD in a range of locations, not just those with some of the largest concentrations of military installations, such as Hawaii or California, that reject nuclear power outright.

Should a fleet of SMRs developed by DoD somehow succeed in fulfilling its (poorly defined) mission, and should it succeed in spawning a following within Congress, another prosaic question—that of intellectual property ownership and program management—would emerge. Once DoD had deployed several dozen SMRs, and once the infrastructure that supports these SMRs was developed, even following a “fee for service” model, the military might consider bringing the entire enterprise in-house. This would effectively create another Naval Reactors program and would surely engender strong opposition. Given the contentious nature of budget battles across the services, the military does not need additional fiefdoms. The creation of Naval Reactors was initially highly controversial, and any SMR fleet that relied extensively on DoD development and deployment would undoubtedly create another such mini-empire. For such a program not to devolve into a fiasco, a similarly vigorous level of project management, situational awareness, and political lobbying would be required. Military organizations that have been created to address more critical warfighting needs, such as the Joint Improvised Explosive Device Defeat Organization, grew far beyond their original mandate and expected scope. If commercial development lags or fails to materialize, there is also the very real possibility of developing another industrial base component that is entirely reliant on the military for support, much like shipbuilding. Parts of the military-industrial complex already resemble a monopsony, with programs maintained to support the nation’s industrial base despite often-limited warfighting impact: the controversy surrounding the USS Zumwalt-class guided-missile destroyer, which many critics have called a boondoggle, serves as a prime example.

The organizational troubles do not end once the overall management structure is defined. Whether managed in-house or by a contracted vendor (as with the Navy nuclear labs), another fiefdom would almost certainly be created in the form of a waste-management organization. Given the absence of a national geological repository, this would effectively force the military into the political imbroglio that is nuclear waste management and storage. Even a small fleet of a few dozen SMRs would quickly saddle the military with an unenviable job. Complicating things further, this waste would likely not be under International Atomic Energy Agency safeguards. It would be logical for other nuclear powers to assume that it is potentially weaponizable and alter their own strategic doctrines accordingly. Alternatively, DoD could lobby for a transfer of responsibility to the Department of Energy, which would simply add to that organization’s already challenging waste management task.

Finally, should a DoD sponsor tightly control reactor development, as the Navy does, it is likely that the details of these SMR designs would become classified due to the nature of their end use. Even if DoD refrains from exercising strict control over the program and instead relies extensively on commercial industry, creating a commercial variant would be difficult, and exporting to other nations would be virtually impossible outside a handful of allies. Despite efforts to reform the US export control system, it is still notoriously difficult for US companies or researchers to engage with foreign commercial entities and researchers on nuclear power. A reactor attractive enough for DoD to buy in numbers large enough to exploit learning economies would likely have enough classified equipment, materials, technology, and expertise to greatly limit its export potential.

Normative and policy arguments

In addition to the host of practical challenges outlined above, there are compelling normative arguments to be made against relying on the military to revivify the nuclear enterprise, regardless of the development model. First, this job rests far outside the military’s remit. The military develops new technologies when they are the only available solution to a problem. If a competitive and suitable commercial option is available, the military can and often does acquire and adapt that technology to meet its needs, supporting the national economy in the process. Examples include the purchase of low-emission vehicles for official government fleets and the Boeing 737-derived P8 Poseidon Maritime Patrol Aircraft. Such cases are far removed from the scenarios proposed for military leadership in SMR development. In addition to being overcommitted, the military is facing acute and evolving threats. There are national imperatives to which it could attend, but it is not realistic to suggest that SMRs rank (or should rank) high on this list. Even conceding that a security case could be made for vSMRs and SMRs—namely on forward operating bases and for independent, secure, and reliable power on US bases, respectively—these would not rank near the top of a list of new priorities when compared with existing or emerging needs and threats.

In our view, those who support a leadership role for the military in this venture misrepresent or misunderstand the role that it plays in sustaining the nation’s industrial supply chain. The military certainly relies on the country’s civilian industrial base and its human capital in developing new systems. It often adjusts its plans to sustain troubled companies if their loss would render critical capabilities extinct and thus threaten national defense. These actions require careful judgment and create political controversy even when costs are limited and the technologies are actual combat systems.

Perhaps the closest analog is the shipbuilding industry. To maintain US capabilities in this field, the military provides extensive support to Electric Boat and Huntington-Ingalls Shipbuilding, and a number of other shipyards that are almost exclusively tied to government projects. Years ago, when the shipbuilding industry was in danger of collapsing, threatening the supply of critical components, the military stepped in to secure those supplies, paying a premium for some components in the process. Though this approach may not be ideal, it at least acknowledges the structural realities of the US and global economies, instead of exploiting the military as an instrument for changing them. The situation for nuclear power is markedly different. The future of the nuclear Navy is not in doubt, and the argument that the collapse of civilian nuclear power will endanger that future is unconvincing. The Navy relies on a more limited reactor supply chain, has its own design and research laboratories, supports its own extensive computing capabilities, and trains its own operators. If anything, the civilian industry is enriched by that infrastructure and the infusion of former nuclear navy operators, not the reverse. Were a core capability to degrade, the military could rescue that capability at far less cost than developing an entire complex commercial venture.

Often, both advocates and critics of nuclear power note that the firebreak between the civilian and military nuclear programs is artificial. But no matter how imprecise or imperfect, this firebreak has substantial normative value. It ensures that power and weapons remain separate enough for evolutions in the latter not to compromise or cloud the future of the former. Maintaining this separation is perhaps the easiest way to guarantee that US-made SMRs are exportable while ensuring that qualitative US military superiority in reactor development is maintained. Also, if the boundary were eroded, it would make it far more difficult for the United States to restore its standing with respect to international controls on the development and use of civilian nuclear power and fuel cycles.

There are fundamental civic values at stake too. At a time when the nation’s civic and political norms rest on precarious ground, using the military to rescue a commercial industry—especially one that has so consistently failed to assuage public concerns about its products—might further degrade the social fabric from which the military derives legitimacy. Should the proposed SMR rollout by DoD succeed, that might prove even more problematic, given that the Republic was designed to prevent large concentrations of political power. It would also undercut the Department of Energy by underscoring its failure to develop advanced nuclear designs, much as the Department of State’s leadership and effectiveness in international relations have been undercut by DoD’s expansion into its bailiwick in Iraq and Afghanistan. This undertaking would substitute a US military role in technocratic planning for a national industrial strategy and a functioning political system. The United States is certainly in need of nation-building at home, with an emphasis on rebuilding large swaths of public infrastructure, but the military should complement this process and not lead it.

Finally, adopting this model would amount to an admission of failure on the nuclear industry’s part. Defaulting to the national security argument in an effort to salvage the commercial nuclear industry concedes the failure of the technical and economic arguments in favor of the technology. The nuclear energy enterprise is at a critical juncture, its problems are unlikely to abate in the near future, and most of these are fundamentally economic and political. The deregulation of the electricity markets has yielded utilities that focus on short-term profits and neglect long-term, structural challenges. Every lender with the assets to finance generation expansion is similarly preoccupied with short-term profits. Moreover, US energy markets remain warped: where policies favor low-carbon power, they often exclude nuclear technologies. These are profound problems that deserve attention, and fixing them will benefit nuclear power, the nation, and the climate.

Ways for DoD to help

If pressing DoD to play a leading role in developing and deploying commercial nuclear technologies is unwise and potentially counterproductive, what role can it play? We suggest three modest policy changes that might help DoD buttress the enterprise without burdening it with the responsibility for SMR development.

First, federal policies governing the length and budgeting parameters of federal power purchase agreements (PPAs) with commercial utilities ought to be amended or clarified to ensure that long-term agreements are recognized as a viable option. Modifications to budgeting rules that would enable funding to be spread over many years (not over a single year, as is typically required) would give DoD greater flexibility to enter into these agreements. These could then provide commercial SMR developers with the stable source of income necessary to raise capital for first-of-kind reactor deployment. Much as the Department of Energy is considering long-term PPAs for two of its national laboratory facilities, utilities serving large military installations could sign long-term agreements with these installations to hedge against large upfront development costs. Key to this would be clear policy guidance from DoD that supports 30-year PPAs for nuclear, which are already allowed by the General Services Administration for DoD. This option could help ensure long-term commitments to nuclear power from within the commercial nuclear industry and venture capital providers.

Second, the Navy ought to explore the possibility of supporting development of human capital in the nuclear field by expanded teaming with academia and industry. Formal collaboration in areas such as operator training, student fellowships at the Bettis and Knolls nuclear power laboratories, and advanced degree options for nuclear-trained officers at select academic institutions would benefit both military and civilian nuclear programs. This may help offset reductions in enrollment at some nuclear engineering programs and keep them viable while the industry works to find its footing.

Third, the military has great interest and experience in enhancing the resilience of electric power grids. Given the growing interest in distributed generation, microgrids, and SMRs, modest collaborations would help civilian groups learn about critical and potential vulnerabilities and gain confidence in deploying strategies and technologies that can increase the resilience of these systems.

The Navy ought to explore the possibility of supporting development of human capital in the nuclear field by expanded teaming with academia and industry.

To date, the military has expressed only modest interest in small reactors, and as we note earlier, may opt to back away from them if budget cuts are required. However, a high-tech SMR program that deploys a civilian-operated fleet of reactors around the country could sustain skilled, high-paying jobs winning broad congressional support. This would make them hard to kill once they are embedded in the budget—even if military support wanes.

There is a way forward that could help the nuclear industry, enhance international control regimes for nuclear power and fuels, and aid in addressing climate change. But the way is not to treat DoD as a venture capital firm. Advocates of DoD leadership in the SMR business must acknowledge the enormous challenges that face their proposal. Building a “great SMR fleet” with DoD as its core customer may shore up the leaky nuclear ship for a time, but it might also bring the industry very near the type of shoal water that made the US shipbuilding industry a monopsony. Committing the military to another too-big-to-fail development effort would not rescue the commercial nuclear enterprise. In fact, it may weaken national security, forcing the Department of Defense to support an entire new industry instead of focusing on a host of emerging threats. Supporters of this strategy must think carefully about what the nation may gain and lose over the long term should their proposed remedy succeed.