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Jordan Garcia, a deputy utilities manager in Los Alamos, New Mexico, is facing an energy crunch that is typical in the American West. For decades, the county-run utility relied on a cheap and steady mix of coal and hydroelectric power. But the region’s dams are aging and drought-parched, and its coal plants are slated to retire.

The county is aiming to fully decarbonize its grid by 2040, and the city has been tapping more solar lately, but batteries are arriving slowly, and Garcia worries about heat waves that strain the grid after the sun goes down. Wind power? He’d take more of it. But there aren’t enough wires stretching from the state’s windy eastern plains to the mesa-top community. “For us it’s pretty dire,” he says.

For the past few years, Garcia has been counting on a unique nuclear experiment to come to the rescue. In 2017, Los Alamos signed up to join a group of other local utilities as an anchor customer of the first small modular reactors, or SMRs, in the US, created by a company called NuScale. The design, which calls for reactors only 9 feet in diameter, had never been built before, but the initial cluster planned in Idaho Falls, Idaho, was promised to be much cheaper than a full-scale reactor and to offer affordable carbon-free energy 24/7.

NuScale Power ModuleTM Courtesy of NuScale Power To Garcia, this felt like a homecoming. Los Alamos, a town with the motto “Where discoveries are made,” is the birthplace of the atom bomb, and experimental reactors ran not far from downtown for much of the 20th century. But it had never actually used nuclear power to keep the lights on.

This month, Los Alamos and other local utilities across the West were facing a weighty decision: whether to pull the plug on their nuclear dream. NuScale had informed members of the group, Utah Associated Municipal Power Systems, or UAMPS, that the estimated costs of building the six 77-MW reactors had risen by more than 50 percent to $9.3 billion. For Garcia, that translated into a jump in the cost of energy from $58 to $89 per megawatt-hour.

The price jump was not rooted in the arcana of nuclear physics, but the mundane details of big construction projects: copper wire up 32 percent, steel piping up 106 percent. Higher interest rates made everything more expensive over the course of construction, which is scheduled to wrap up in 2030. Without extra subsidies from the new Inflation Reduction Act—on top of $1.4 billion already committed to the project by the US Department of Energy—the price to energy users in places like Los Alamos would have doubled.

The sticker shock put the small towns in a tricky position. The higher price means towns can choose to walk away from their contracts. But in a region where power officials are keenly aware of a future that includes more heat waves and drought, and less coal power, some see few alternatives for quickly replacing that always-on electricity. The new price tag may put the project on track to exceed the cost of renewables and natural gas, but the past year’s supply chain disruptions have made nuclear more appealing, showing just how volatile energy prices can be, regardless of the source.

Some utilities say the SMRs look like their only option for “firm” power that can be ramped up or down as needed. Other towns worry that exiting the project could stomp on the first green shoot of a nuclear energy renaissance, causing a “domino effect,” as an official in Hurricane, Utah, put it at a recent council meeting. The project’s power output is only 20 percent subscribed, and UAMPS says it will need to reach 80 percent for planning and construction to proceed next year.

Many a “nuclear renaissance” has fizzled.

NuScale’s reactor is not so much a revolution in the way nuclear energy is produced, but in the way it is built. The design calls for a light water reactor—essentially the same atom-splitting engineering found within the majority of big nuclear power plants around the world. While the costs of operating these large designs are often reasonable, utilities spend decades paying off enormous upfront construction costs, which consistently soar far over budget. Only two reactors are being built in the US: a pair of 1100-MW units at the Vogtle plant in Georgia, now seven years delayed and $20 billion over their $14 billion budget.

NuScale hopes its smaller reactors can avoid that fate. They are small enough to manufacture in factories, assembly-line-style, and ship to project sites on trains or trucks. Requiring less land and water should make it easier to find suitable places to put them. Last month, the company was the first of dozens of companies working on SMRs to have a design approved by US regulators. That makes NuScale first in the race to leap from a “paper napkin” reactor, as critics sometimes deride SMRs, to a real one, though the Idaho project involves a revised design that will need its own approval.

The project has hit roadblocks before. It began with 36 utilities signed on, but that number has fluctuated and dropped to 27 last year. In 2020, several municipal utilities dropped out in response to a construction delay and cost increases. Some later rejoined the project after the US Department of Energy upped its commitment to offset some of the costs.

Critics say those price revisions are a sign SMRs are heading down the same path as projects like Vogtle. For nearly a century, the nuclear power industry’s mantra was that building bigger plants would drive down costs. While existing plants aged and new construction withered, SMR companies began promoting a different philosophy, says David Schlissel, an analyst at the Institute for Energy Economics and Fiscal Analysis, claiming that constructing many small reactors would teach builders how to make them more cheaply.

But the evidence for progress is flimsy, says Schlissel, who notes that his 50-year career has spanned many a “nuclear renaissance” that fizzled. When that philosophy was applied in France, where dozens of reactors were built in the 1980s, costs still increased. Claims that “modularity” will help make construction more efficient are also suspect, he adds. The new Vogtle reactors involved nearly 1,500 “modular” components that were largely constructed offsite.