Audit: DOE-OIG-26-25

March 24, 2026

Opportunities Exist to Improve the Department’s Oversight of Demonstration and Deployment Projects

The Department of Energy’s Office of Nuclear Energy (Nuclear Energy) awarded a $1.36 billion cost-share financial assistance award to the Carbon Free Power Project, LLC in October 2020 to demonstrate and commercially deploy an economically competitive and viable first-of-a-kind NuScale Power, LLC Small Modular Reactor plant at the Idaho National Laboratory. In November 2023, the Carbon Free Power Project (Project) was terminated by mutual agreement between the Carbon Free Power Project, LLC and NuScale Power, LLC. We performed this audit to determine whether Nuclear Energy effectively managed the Project and to share lessons that can be applied to current and future awards and Department efforts.

We found that Nuclear Energy did not effectively manage the Project, and lessons learned can be applied to future awards. Specifically, we found that Nuclear Energy did not effectively evaluate critical risks prior to award, structure the award to monitor risks, perform sufficient oversight of the Project, and ensure costs were allowable. We attributed these issues to Nuclear Energy not following existing requirements and guidance regarding merit reviews, project performance risk, risk management and evaluation, reducing perceived bias, and enforcement of award terms. Also, Nuclear Energy agreed to front-load the cost-share, placing the Government at risk of losing almost $143.5 million since the Project terminated.

As a result, Nuclear Energy’s project management failures may have contributed to the Project’s termination. The weaknesses in addressing risks throughout the Project’s life cycle placed Nuclear Energy and the taxpayer at a higher-than-necessary risk of project failure. While Nuclear Energy stated that the Project achieved some useful results in progressing deployment of Small Modular Reactors in the United States, the Project’s key objective was not met, and Government funds of approximately $183 million were spent without key results. We believe that the Department’s senior leadership should take action to ensure that additional taxpayer funds are not put at risk.