Holtec bets on small nuclear reactors in its IPO filing

Nuclear giant Holtec International is betting big that its 300-megawatt small modular reactors are the future of atomic energy.

On Friday, the Florida-headquartered firm filed paperwork with the Securities and Exchange Commission in order to sell shares in the company on the Nasdaq.

Across hundreds of pages, the disclosure document outlines the 40-year-old Holtec’s plans to transform itself from the industry’s undertaker — manufacturing canisters to safely store radioactive spent fuel and decommissioning shuttered nuclear plants — to its midwife, producing and operating new electrical stations. This transition comes as nuclear energy regains popularity in the U.S. as a way to meet booming power demand without creating more planet-warming pollution.

Developers have traditionally offset nuclear’s high up-front costs by building ever-larger reactors to capture the economies of scale. Since the early 2000s, however, a number of companies have proposed building small modular reactors that can be constructed identically and in batches. SMRs could generate about a third of the electricity of conventional large-scale plants, but, proponents argue, would bring down costs through assembly-line repetition rather than physical scale.

That cost reduction has yet to be proven out in the real world with actual plants. But in its S-1 filing, Holtec said, ​“SMRs will offer scalable, cost-effective solutions for new capacity with enhanced safety features, reduced construction timelines and reduced land and transmission infrastructure needs as compared to traditional, larger-scale reactors.” It noted that a single-unit SMR plant would only need 15 acres of land and take a mere three years to build. By contrast, the big reactors on the grid today can take up hundreds of acres, and construction typically drags on for nearly a decade.

Holtec’s SMR-300, as the pressurized-water reactor is named, ​“is expected to receive regulatory approval for deployment in 2029” and reach its first deployment ​“in the early 2030s,” according to the filing.

The company said it expects SMRs to play ​“a meaningful role in the expansion of nuclear capacity,” noting that they can ​“complement large-scale nuclear generation through lower upfront costs” and more flexible planning around how much power is needed.

For example, smaller reactors may be better suited for converting some old coal-fired stations into nuclear plants. The DOE has been researching the idea for years, given that nuclear and coal are both thermal resources that operate with similar rates of frequency and therefore use similar equipment to generate electricity from steam — which in nuclear plants is made from the heat created by splitting atoms and in coal plants is made from heat created by burning the black rocks. Converting a 400-MW coal plant into a similar-size nuclear reactor makes more financial sense than using a bigger reactor, which could require costly transmission upgrades and more space.

“We believe that our SMR-300 plant can become a favored nuclear generation source over large reactors because of certain advantages,” the company said in its filing.

The future of restarts

The company will also operate at least one conventional reactor, the 800-MW unit it’s currently restoring at its Palisades nuclear station, in western Michigan. That project — the nation’s first effort to return a permanently shuttered nuclear reactor to service — could be completed within months, though its contract to sell power to the local grid won’t kick in until next year.

Holtec hopes to combine its plant-restart strategy with its SMR vision. It’s planning to deploy two SMRs at the Palisades site; if that works out, the company has said it may build SMRs at New Jersey’s Oyster Creek nuclear plant, which it’s been in the process of decommissioning for eight years.

Holtec owns three other defunct nuclear plants — Massachusetts’ Pilgrim, Michigan’s Big Rock Point, and New York’s Indian Point — that it could also try to rebuild. The Trump administration has called for reconstructing Indian Point, but Albany remains opposed to the controversial proposal.

Local opposition isn’t Holtec’s biggest hurdle, however. That would be competition from the nuclear behemoths in Russia and China. Virtually every Western nuclear developer is facing an uphill battle to compete with the Kremlin’s state-owned Rosatom, by far the biggest international vendor of nuclear technology in the world, and China’s two state-owned nuclear companies, which are building more than three dozen reactors at home and are expected to enter the export game soon.

Still, among its domestic rivals, Holtec may be the best positioned to hold its own on a global playing field. It is an established company with profitable enterprises in a dozen countries across four continents, and has experience managing infrastructure so sensitive it’s overseen by a dedicated agency, the U.S. Nuclear Regulatory Commission. The company has facilities with electrical equipment on-site that can be potentially used to deploy SMRs. It also has won significant support from the federal government, both in the form of a $1.52 billion loan the Department of Energy provided to finance the Palisades restart and the $400 million the agency gave the company to support construction of its first SMR-300s.

“We began work in 2011 on a small modular reactor solution, and drawing on our in-house capability to design, license, manufacture, construct, and commission nuclear systems, honed through decades of turnkey supply, we are now uniquely positioned to launch the development of our small nuclear reactor,” Krishna Singh, Holtec’s founder and chief executive, said in a letter to prospective investors.