To that end, DOE is  promoting further reliance on nuclear energy under the administration’s  National Energy Policy. DOE Has Made Initial Progress Toward Meeting Near-Term Milestones for the Next Generation Nuclear Plant

DOE has developed a schedule for the R&D, design, and construction of  the Next Generation Nuclear Plant that is intended to meet the  requirements of the Energy Policy Act of 2005, which divides the project  into two phases. DOE plans to use the studies, which are expected to be completed  by May 2007, to establish initial design parameters for the plant and to  further guide R&D efforts. DOE is planning to begin the second phase in fiscal year 2011 by issuing a  request for proposal that will set forth the design parameters for the plant. As a result, DOE will not have the final results from all of its  fuel tests before both design and construction begin. Nevertheless, much of the required R&D  for the graphite has not yet begun and is not scheduled to be completed  until fiscal year 2015. Regarding licensing of the plant, DOE and NRC are in the process of  finalizing a memorandum of understanding that will establish a framework  for developing a licensing strategy. As required by the Energy Policy Act of  2005, DOE and NRC are to jointly submit a licensing strategy by August  2008. DOE Is Pursuing a More Technologically Advanced Approach Than Other Options in an Effort to Ensure the Plant’s Commercial Viability

DOE is beginning to obtain input from potential industry participants that  would help DOE determine its approach to ensuring the commercial  viability of the Next Generation Nuclear Plant. In the interim, DOE is  pursuing a more technologically advanced approach—with regard to size,  fuel type, and the coupling of electricity generation and hydrogen  production in one plant—compared with the recommendations of the  Independent Technology Review Group and the Nuclear Energy Research  Advisory Committee. As recommended by the Independent Technology Review Group, DOE  revised its R&D plans to lessen the technological challenges of designing  and building the Next Generation Nuclear Plant. The Nuclear Energy Research Advisory Committee also recommended  that DOE re-evaluate the project’s dual mission of demonstrating both  electricity and hydrogen production. Instead, DOE’s R&D is currently supporting both missions, and DOE  officials said they consider the ability to produce hydrogen (or to use  process heat for other applications) key to convincing industry to invest in  the Next Generation Nuclear Plant rather than advanced light water  reactors similar to the current generation of nuclear power plants  operating in the United States. In addition,  DOE officials said that even if the schedule is not accelerated, increasing  the funding for the project would enable additional R&D to be conducted  to increase the likelihood that the plant is completed by fiscal year 2021. Finally, DOE’s history of  problems managing large projects on budget and within schedule raises  concerns about the department’s ability to complete the Next Generation  Nuclear Plant in the time frame set forth in the Energy Policy Act of 2005,  and accelerating the schedule would only add to these concerns.
Why GAO Did This Study

Under the administration's National Energy Policy, the Department of Energy (DOE) is promoting nuclear energy to meet increased U.S. energy demand. In 2003, DOE began developing the Next Generation Nuclear Plant, an advanced nuclear reactor that seeks to improve upon the current generation of operating commercial nuclear power plants. DOE intends to demonstrate the plant's commercial application both for generating electricity and for using process heat from the reactor for the production of hydrogen, which then would be used in fuel cells for the transportation sector. The Energy Policy Act of 2005 required plant design and construction to be completed by 2021. This testimony, which summarizes a GAO report being issued today (GAO-06-1056), provides information on DOE's (1) progress in meeting its schedule for the Next Generation Nuclear Plant project and (2) approach to ensuring the project's commercial viability. For the report, GAO reviewed DOE's research and development (R&D) plans for the project and the reports of two independent project reviews, observed R&D activities, and interviewed DOE, Nuclear Regulatory Commission (NRC), and industry representatives.

What GAO Found

DOE has prepared and begun to implement plans to meet its schedule to design and construct the Next Generation Nuclear Plant by 2021, as required by the Energy Policy Act of 2005. Initial R&D results are favorable, but DOE officials consider the schedule to be challenging, given the amount of R&D work that remains to be conducted. For example, while researchers have successfully demonstrated the manufacturing of coated particle fuel for the reactor, the last of eight planned fuel tests is not scheduled to conclude until 2019. DOE plans to initiate the design and construction phase in fiscal year 2011, if the R&D results support proceeding with the project. The act also requires that DOE and NRC develop a licensing strategy for the plant by August 2008. The two agencies are in the process of finalizing a memorandum of understanding to begin work on this requirement. DOE is just beginning to obtain input from potential industry participants that would help determine the approach to ensuring the commercial viability of the Next Generation Nuclear Plant. In the interim, DOE is pursuing a more technologically advanced approach, compared with other options, and DOE has implemented some (but not all) of the recommendations made by two advisory groups. For example, as recommended by one advisory group, DOE lessened the need for R&D by lowering the reactor's planned operating temperature. In contrast, DOE has not accelerated its schedule for completing the plant, as recommended by the Nuclear Energy Research Advisory Committee. The committee was concerned that the time frame for completing the plant is too long to be attractive to industry, given that other advanced reactors may be available sooner. However, DOE believes the approach proposed by the committee would increase the risk of designing a plant that ultimately would not be commercially viable. GAO believes DOE's problems with managing other major projects call into question its ability to accelerate design and completion of the Next Generation Nuclear Plant.