With federal action lagging, U.S. states are stepping up to deploy small modular reactors to meet demand and advance clean energy goals.
Large energy systems generally involve a substantial land footprint leased from federal agencies, necessitate environmental impact studies conducted by a federal agency, and require navigating interstate transmission lines and a multitude of federal regulations. The patchwork of federal regulations, when juxtaposed against an array of state policies, regulations, and local ordinances, causes uncertainty and delays, even when state and federal policymakers are in political harmony.
States Step in as SMR Enablers
This situation represents an advantage for small modular nuclear reactors (SMRs), which require a smaller land footprint and less water. They can be sited more readily near data centers and industries to provide dense, reliable energy. More SMR developers and their sponsoring utilities have begun engaging with state legislatures, touting the economic growth and jobs that data centers and heavy manufacturing may bring. The result can be quid pro quo benefits in the form of state tax credits, simplified or more relaxed local ordinances, cost-sharing, and other ways to underwrite the significant capital investments in the first fleet of small modular reactors.
For example, Indiana state legislators have introduced bills that range from giving tax credits to SMR developers in the state to bypassing some local ordinances to supporting the construction of new plants on the site of old ones. Elsewhere, Virginia, home to twenty-five percent of U.S. data centers and a global internet traffic and network infrastructure hub, often dubbed the data center capital of the world, gets thirty-two percent of the state’s electricity from nuclear energy. Logically, the Virginia state legislature is considering the economic rationale of allowing utilities to recover costs through their customer base in order to build SMRs competitively. Virginia utilities, Dominion Energy and Appalachian Power, have campaigned on behalf of SMRs to the state legislature and the public utility commission.
SMR Legislation is Picking up Speed Nationwide
Likewise, legislators in North Carolina are introducing a bill that will allow Duke Energy to pass on the cost of SMRs under construction to users amid surging data center demand. This is a bold step given the uncomfortable precedent set in neighboring South Carolina, where energy users are still paying the bill for a $9 billion nuclear project that never became operational. Utah, which pulled the plug on its unfinished NuScale project, is undeterred and unequivocal about the benefits of building SMRs with a new developer, Holtec International.
Illinois, the largest producer of nuclear energy in the United States, has had a moratorium on new nuclear plants since 1987. In 2023, it rolled back parts of the moratorium, allowing nuclear reactors 300 megawatts or less to be built. More recently, state legislatures introduced Senate Bill 1527, which is looking to remove the moratorium on large nuclear power plants in the next eight to ten years. Massachusetts is introducing a similar bill that would repeal the 1982 moratorium, which was part of a worldwide freeze on nuclear energy development. State legislators have pointed to the development of small modular reactors but not to the revival of the Pilgrim Nuclear Power Plant, which was decommissioned in 2019. A closed-down nuclear site can be a viable site for new SMR development, utilizing the old site boundaries and connectivity with the electric grid. ISO New England, the state’s grid operator, has published a study estimating that adding around fifteen gigawatts of SMRs to the state power supply could help New England states achieve their 2050 decarbonization targets. This scenario would require fifty-seven percent less construction and result in thirty-three percent lower capital costs compared to a scenario with alternative development and no new nuclear generation. Wisconsin legislators have introduced three bills, one of which would require the state public service commission to conduct a nuclear power siting study to support legislation for the deployment of SMRs in the future.
Many of these bills are still under consideration and may not see the light of day. Further, who will foot the bill for the first fleets of SMRs and how remains a controversial issue. The causal effect of bringing new data centers to states’ economic growth is not fully ascertained, and neither is the time frame for bringing SMRs online. A bill in Arizonaallowing large industrial energy users to build SMRs without a certificate of environmental compatibility was vetoed. Allowing such an exemption was considered putting “the cart before the horse,” despite its promises to attract industriesand data centers to rural Arizona.
Federalism in Action
Securing optimal sites for building SMRs is increasingly dependent on building relationships with state legislators. After making headway in federal energy policy and featuring in executive orders, small modular reactors are going local. Federal policy is more likely to focus on regulatory efficiency and not much by way of federal deployment. Increasingly, states are coming forward to fill that role. In a subtle display of the power of federalism, some states are taking on the task of legislating SMRs into their energy portfolios to meet their qualitative and quantitative energy goals for 2050.
About the Author: Rashmi Singh
Rashmi Singh has been Chief Lending Officer of a San Francisco-based commercial bank, with a certificate in Clean Energy Systems from MIT and a Master’s in Energy Law from Texas A&M University.
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