To invest in nuclear, or not to invest in nuclear? We explore the question, and the case for and against through the lens of small modular reactors (SMRs).
Right now, nuclear power is the second largest low-carbon electricity source in the world. Way back in 2018, about 452 operational reactors generated 2,700 Terrawatt hours (TWh) of electricity, supplying roughly 10% of the global electricity demand. And in the United States, nuclear accounts for approximately 19% of our total electricity output.
And that's not all: over the last half-century, nuclear energy has slashed carbon dioxide emissions by an impressive 60 gigatons, which is roughly equivalent to just about two years of global energy-related emissions. So why is it that in many advanced economies, nuclear power has been in decline? As it turns out, there's been 209 nuclear plant shutdowns around the world and very little new investments announced - and right at a moment when low-carbon electricity is more needed than ever.
These are the facts: nuclear power offers a substantial base-load power capacity, and creates virtually zero greenhouse gas emissions. It produces a reliable around-the-clock supply, and has high energy density, which makes it a key player in the fight against climate change. But the significant construction costs, complexity and duration to produce a plant, the still unresolved issue of what to do with radioactive waste, and the potential for catastrophic accidents (overhyped or not) are major drawbacks that hinder its broader adoption.
To truly make the case for (or against) nuclear power, we have to look at where nuclear power is going, not where it's been. A growing majority of energy insiders now see small modular reactors (SMRs) as the future of nuclear (futuclear, if you will). These compact nuclear power plants promise low-carbon power generation, economic competitiveness, and heightened safety features. However, critics warn of the considerable risks, including high upfront costs, long development times, and unresolved waste disposal issues.
Below, we break down the case for (and against) nuclear through the lens of SMRs, and explain how they could benefit the grid - and their potential pitfalls.
SMRs are a type of Generation IV reactor designed to be far cheaper and theoretically safer than previous iterations of nuclear power plants. That's because they're built in "smaller modules" that get constructed together as part of a larger nuclear power plant.
The International Atomic Energy Agency (IAEA) defines SMRs as nuclear reactors with an output of 300 megawatts of electricity (MWe) or less. Current SMR designs range in output from 10 MWe to 300 MWe. Contrast an SMR with traditional reactors, which often exceed 1,000 MWe.
Modular by design, SMRs are meant to be manufactured at an offsite plant and then shipped to their designated site where they can be made operational. Their modularity and smaller scale offer numerous advantages that make SMRs attractive for new nuclear investments.
There’s a wide range of over 50 SMR designs under development around the world (and you can check out a list of them here). These designs fall into the four main categories:
SMRs aren't a new concept. The US Navy has used them to power ships for nearly a century without incident, and two Russian-built 35MW SMRs already power a floating plant off Russia's Arctic coast. Several other nations such as Argentina, Canada, France, and South Korea are all advancing their own SMR technology, with multiple reactors under construction or being licensed.
Now, they are being explored for commercial use. In 2021, China claimed to have connected the world's first SMR to its electrical grid to provide power to the Shandong province. The 200-MW unit from Huaneng Group Co. is less than a fifth the size of the nation's inaugural homegrown reactor design, Hualong One and utilizes helium instead of water for power generation.
In January, the U.S. Nuclear Regulatory Commission approved the first-ever commercialization of SMRs in NuScale's VOYGR system. The VOYGR is a compact light-water reactor design capable of delivering up to 77MW of power per reactor. According to , the company now expects to receive its standard design approval by 2024, and the initial pilot plant will group six of these modules together at the Department of Energy's Idaho National Laboratory by 2029.
A multinational partnership between GE and Hitachi has its own SMR under construction near Toronto, Canada, that aims to be complete by 2028, and another could be built soon after in Oak Ridge, Tennessee. In the UK, Rolls-Royce has a $600M SMR project, but funding for the program may run out by 2024 - long before its plant is connected to the grid.
In January, NuScale became the first small modular reactor certified for NRC approval, getting approved for the design of its 50-megawatt (MW) power module. This module will first be used to power a six-reactor, 462 MW demo plant in Idaho by 2027, which will likely begin operation in 2029.
NuScale Power went public in May of 2022 via the Spring Valley Acquisition SPAC at a valuation of $1.9 billion, with previous funding rounds from companies like Samsung and Segra Capital. Outside the U.S., NuScale signed agreements to deploy more of its SMR plants across 12 countries such as the Czech Republic, Jordan, Poland, and Romania.
NuScale uses existing light water reactor technology, which may have helped it win regulatory approval faster but leaves it to fight up against “economies of scale” due to costs that have only got more expensive the longer the project has gone.
One of NuScale's main competitors is Oklo. Oklo is developing its Aurora SMR as a “15 MWe liquid metal fast fission power plant site”, with plans to scale it to 50 MWe. Inspired by the Argonne National Laboratory’s Experimental Breeder Reactor (EBR) II fast reactor, Aurora has the potential to utilize nuclear fuel more efficiently, thereby reducing the amount of nuclear waste produced.
Oklo's efficient, compact approach enables a lower initial investment, with each plant costing around $60 million, and aligns with Oklo's solar or wind farm-like operational model. The company argues this approach should deliver competitive returns while maintaining safety and efficiency.
In July, Oklo announced plans to list its shares via a special purpose acquisition company (SPAC) merger in the U.S. at an $850 million valuation. Oklo is chaired by tech investor and OpenAI CEO Sam Altman, and the SPAC, AltC Acquisition Corp (which Altman also co-founded) aims to provide Oklo with up to $500 million when the merger is completed. The funds are expected to bolster Oklo's supply chain and aid in establishing new pilot manufacturing facilities, such as one planned in Idaho for 2027 and another two set for southeast Ohio.
Earlier this year, Oklo submitted for regulatory approval to the Nuclear Regulatory Committee (NRC), but was denied due to "information gaps." Oklo has actively worked on these issues and planned to submit a new application before May 2024 for the Idaho plant and by 2025 for the two additional Ohio plants.
In addition to Oklo and NuScale, there’s also TerraPower. Founded by Bill Gates in 2006, TerraPower designs its own sodium-based fast reactors that are complemented by molten slate energy storage systems. The company announced a raise of $750 million in August of last year to build out its first 345MW “Natrium” demonstration reactor in Kemmerer, Wyoming by 2028. However, those plans may have been delayed to 2030 due to uncertainty about fuel sourcing.
The storage component of TerraPower’s project is interesting. According to the company, it has the potential to ratchet up the system’s output to 500 MW when necessary, sufficient to power roughly 400,000 residences. The $4 billion project is scheduled to begin in 2024, according to the company, and will fund the project via a public-private partnership with the U.S. Department of Energy to substantiate the reliability, constructability, and operational mechanics of the Natrium technology.
In late 2022, TerraPower and PacifiCorp unveiled plans to erect up to five additional Natrium reactors by 2035. According to PacifiCorp, it’s expected that two Natrium reactors and energy storage systems will be operational by 2033, and the expansion will result in an estimated 1,500 MW of advanced nuclear energy from a total of three Natrium reactors, inclusive of the Kemmerer plant.
Terrestrial Energy’s integral molten salt reactor just passed Phase 2 of its pre-licensing Vendor Design Review with the Canadian Nuclear Safety Commission. While not an official review, it helps firms to verify if their design will be acceptable to the Canadian nuclear regulatory requirements before the official process begins. The twin reactor and generator configuration Terrestrial Energy is working on now is designed to have a potential output of up to 390 MWe.
Kairos Power recently received its own approval from the NRC; a safety evaluation for its Hermes low-power demo reactor set to be deployed at Oak Ridge, Tennessee. Kairos’ SMR is an advanced fluoride salt-cooled high temperature reactor. Salt cooling is a technology from the 1960s that hasn't yet been commercialized, but which could allow for smaller, safer, and cheaper reactors due to its high-temperature, low-pressure characteristics. NucNet reported that this demo reactor will provide “operational data” to support a larger scale commercial version in the future.
GE Hitachi recently signed a contract for the deployment of its BWRX-300 SMR back in January, which at the time the company claimed was the first commercial contract for a grid-scale SMR in North America.
It also has ongoing projects such as early licensing efforts for deployment in Oak Ridge, Tennessee, a potential mid-2030s deployment in Saskatchewan, a pre-licensing process for a fleet of BWRX-300s anticipated to go online in Poland by the end of the decade, and has memos of understanding with entities across Canada, Poland, the U.K., U.S., and Sweden.
Most recently, GE Hitachi announced it will work with Ontario Power Generation to deploy four total BWRX-300s at the Darlington New Nuclear Project site in Ontario. A Canadian pre-review of GE Hitachi also found no fundamental barriers to licensing, so the Darlington project is set to come online in 2030.
In a strategic pivot away from the hefty financial burdens tied to traditional nuclear facilities, the industry is gravitating towards SMRs as a financially savvy alternative. The paradigm shift, underscored by the prohibitive capital outlays required for full-scale nuclear plants, is tailored to accommodate not just the needs of diminutive electricity grids but also to democratize investment in nuclear energy.
SMRs have the potential to revolutionize the nuclear power industry by offering quicker, cheaper, and safer power plant construction and operation due to their small size, and the sheer electricity generated from these SMRs could be enough to provide electricity for an estimated 30,000 local households.
Traditional reactors, with their mammoth construction costs, erect formidable barriers to entry, deterring potential investors with the specter of financial peril and the added complications of project delays. In contrast, SMRs emerge as a beacon of fiscal prudence, demanding significantly less upfront capital and thereby enticing a broader investor demographic. This strategic realignment not only promises to amplify nuclear energy's footprint in locales previously deemed uneconomical but also offers a modular solution capable of scaling from rural enclaves to urban expanses, heralding a new dawn for nuclear energy accessibility.
Where traditional reactors demand enormous upfront investments and long construction periods that span years, SMRs offer the benefit of modular technology and factory fabrication. SMRs are built off-site and shipped to their final location, ready for installation. This modular design allows for incremental capacity additions, allowing operators to match generation with demand. This avoids overcapacity and wasted resources.
They are also designed to have a shorter construction time and benefit from economies of scale that will supposedly drive down costs and speed up return on investment (although the reality is far from that simple). Each identical unit manufactured can decrease costs and construction time, unlike conventional nuclear plants where each project has unique design elements that cause costs to exceed projections.
Plus, their compact size makes it possible to deploy SMRs in areas where space or infrastructure limitations would preclude the construction of a traditional nuclear power plant. They can be shipped easily and even used for specialized applications like oil exploration or military bases.
Because of their small scale, SMRs promise significant safety benefits over traditional nuclear plants. SMRs are designed with advanced safety features that make use of passive safety systems. Passive safety systems can leverage natural forces such as convection and gravity, enhancing resilience against meltdowns. These systems require no active controls or operational intervention to avoid accidents in case of malfunction.
The NuScale Power Module, for example, claims it can shut down and self-cool, indefinitely, with no operator action, no AC or DC power, and no additional water. This inherently safe design can make nuclear energy more palatable to the public, who often view nuclear power with apprehension due to the potential for catastrophic accidents.
Lastly, as with traditional nuclear power, SMRs provide a source of continuous, reliable, carbon-free energy. This makes them a viable tool in the fight against climate change. As we shared at the beginning, nuclear power has already offset millions of tons of carbon dioxide that would otherwise be produced by fossil fuels. They can also replace decommissioned coal-fired plants on brownfield sites like what Bill Gates is doing in Wyoming (more on that below).
The first of these SMRs to hit the grid will be NuScale's flagship SMR power plant, which just received approval to be built at the Idaho National Laboratory. NuScale is planning to package six of these higher-capacity reactors together, for a total plant capacity of 462 MW.
The average household in the U.S. uses about 10,632 kilowatt-hours (kWh) of electricity per year, according to the U.S. Energy Information Administration. If NuScale's first plant produces 462 MW, it could supply power to approximately 381,000 homes This is a basic simplification and assumes constant demand and supply, but it provides a rough idea of the scale of power delivery.
Despite the potential benefits of nuclear power, several challenges persist. These include high upfront costs, long construction times, management of radioactive waste, risks of accidents, and public perception. Since the case for nuclear power is focused on these advanced nuclear reactor designs, let's look at the barriers against nuclear through that lens, too.
As the author and writer Tyler J. Kelley writes for Undark, the main barrier to nuclear power is misunderstandings around the perceived safety of nuclear energy as a whole. This fear is driven largely by a misinterpretation of risk, often spurred by negative media portrayal and associations with nuclear weaponry. For example, a recent survey revealed that nuclear power was perceived as the highest risk technology, far surpassing its actual statistical risk. Most recently this culminated in the overestimation of risk of nuclear disaster at the embattled Zaporizhzhia Ukrainian power plant.
Although nuclear power does have downsides, such as destructive and toxic uranium mining and challenging spent fuel disposal, data indicates that nuclear is safer and less environmentally impactful than many alternatives. Large nuclear plants, such as the ones at Fukushima and Three Mile Island, have proved hard to make safe at a reasonable price. But this is the challenge SMRs hope to solve. Despite the layered redundancy of safety systems in nuclear power plants and relatively low carbon emissions and fatality rates associated with nuclear power, public fear and misconception surrounding the technology remain.
And then there’s the cost. Despite the projected cost benefits, SMRs face stiff economic headwinds. Nuclear power plants of any kind are incredibly expensive to deploy. The entire nuclear industry has stagnated in terms of innovation since the 1970s. While today's nuclear plants are cost-effective to run, new plants are expensive to build.
The industry has not seriously pursued alternatives to water cooling (until recently), which has contributed to high costs, large plant designs, and lengthy construction timelines. As Jonathan Rauch writes for The Atlantic, the industry became "very formal, very bureaucratic, very slow, driven by safety concerns", much like the space industry before companies like SpaceX started to disrupt it.Like the early space industry, the nuclear power industry suffers from high costs and schedule overruns.
The first new nuclear power plant in over 30 years just began cranking out power in Georgia earlier this year. Seven years late and $17B over budget, the plant sparked controversy over the economic viability of commercial nuclear power. It took 10 years to complete construction, and the project’s final price tag jumped past its original $14 billion projection to reach over $30 billion.
Despite their cost advantages, similar cost overruns have already been seen at NuScale and TerraPower's Wyoming reactor project. Consider how costs have already started to balloon for NuScale. NuScale's path toward regulatory approval began in 2008, costing the company about half a billion dollars. The design approval for its reactor alone required about 2 million pages of supporting documents and took over two years to finalize after submission.
In Mid-2021, the company had claimed its target power price for its Idaho plant would be $55 megawatt-hours (MWh). But by January of 2023, the company said due to a 75% increase in estimated construction costs, the price is now estimated at $89 per MWh – and that’s with an extra $30 per MWh break via the Inflation Reduction Act.
Commercial deployment of SMRs faces significant hurdles, such as achieving economic competitiveness with renewables and fossil fuels. Early estimates for the levelized cost of energy (LCOE) from NuScale's SMRs range between $40/MWh and $65/MWh, comparable to natural gas and wind power. The World Nuclear Association noted in 2020 that the cost per kilowatt-hour of SMR-produced energy could be up to 30% higher than that of large-scale reactors, largely due to the loss of economies of scale (World Nuclear Association, 2020). Furthermore, SMRs face competition from rapidly falling costs of renewable energy and battery storage technologies.
The need for enriched fuel, specifically low-enriched uranium (LEU), is another concern for SMRs. The fuel required for fast reactors like TerraPower’s Natrium plant is known as high-assay low-enriched uranium (HALEU). Unfortunately, the primary producer is based in Russia, a nation currently under sanctions.
Despite recent DoE investment, the only domestic producer of HALEU, American Centrifuge Operating, LLC. is years away from scaling production That’s why TerraPower is working in partnership with GE Hitachi to develop a Natrium Fuel Facility in Wilmington, North Carolina, to improve the nuclear fuel supply chain. And Oklo is pursuing spent fuel recycling as a potential solution to the fuel supply chain.
Then there’s the regulatory uncertainty. SMRs also confront an arduous development and regulatory landscape. GE Hitachi claims there are over 72 SMRs that are ready to be deployed, but don’t yet have the regulations to support them. The process of getting regulatory approval, constructing, and commissioning can take over a decade. In the U.S., for instance, the NuScale SMR only received its technical design approval in 2020 after an application process that lasted more than 3 years.
Operational SMRs in the U.S are still a distant reality, mainly due to a lengthy regulatory process overseen by the Nuclear Regulatory Commission. Experts argue that the true test for the future of SMRs will not be in their initial construction but rather in the subsequent development of a "second, third, fifth, and hundredth reactor." Then and only then will the scalability and replication of these reactors face a clear and straightforward regulatory process.
According to data analysis, nuclear power generates only 3 tons of greenhouse gases per terawatt-hour (TWh) of electricity, less than wind and solar, and the fatality rate is estimated at 0.07 deaths per TWh, significantly lower than natural gas and coal power. The use of water is one of the key issues to resolve. Critics argue that the vast amounts of water nuclear power plants require could negatively impact nearby aquatic life and increase water scarcity in already water-impoverished areas.
In Europe, the debate over nuclear as a “green” fuel has sparked legal action and delayed the EU’s renewable deal. But amidst the European gas crisis of 2021, France backed off plans to close 14 nuclear plants and instead vowed to build more. It has since mounted a lobbying blitz to get the EU to invest more in nuclear too. Locking down a deal on the electricity market is a key priority for the EU Parliament, so this issue will need to be resolved soon.
And of course, the issue of nuclear waste remains the most contentious environmental issue concerning nuclear plants. SMRs, like their larger counterparts, produce long-lived radioactive waste. The U.S., for instance, still lacks a permanent disposal site for its nuclear waste, despite decades of research and billions of dollars spent
New concepts such as Oklo's spent nuclear fuel recycling facility, seek to transform nuclear waste fuel back into an energy resource. According to the company, 95% of used fuel is recyclable, and the energy content in today's spent fuel alone could power the entire country for the next 150 years.
Despite these hurdles, there's consensus on the need for nuclear power in a carbon-free grid. SMRs are seen as a potential alternative to traditional nuclear power that could be deployed in the near term, though they will need to address concerns regarding waste production.
Many countries have warmed to nuclear energy as an important part of a carbon-neutral future. Finland became the first country to adopt a fully pro-nuclear approach to clean energy. China, whose nuclear energy production is up 400% since 2011, plans to spend $440 billion on 150 new plants by 2035. The 200-gigawatt plan would produce enough power for more than 260 million people.
In the U.S., there are 54 commercial nuclear power plants across 28 states that produce about 19% of the electricity in the U.S. However, competition from cheaper power sources such as wind and solar (that continue to rapidly expand) means that nuclear's share of electricity generation is expected to remain flat. Earlier polls in the US showed mixed support, but President Biden’s Infrastructure bill included $6 billion to revitalize the industry, starting with the Diablo Canyon Power Plant. The UK also allocated £215 million of its £385 million Advanced Nuclear Fund specifically with the goal to develop domestic SMRs.
A recent IPCC report proposed four ways to limit global warming by 2100, and they all require a drastic increase in nuclear power. Moreover, there are economic limitations to both solar and wind, despite predicted gains. Projections now place global nuclear capacity to grow as high as 43% from 2020 to 2050 to 590 GWe, while optimistic scenarios claim it could reach as high as 873 GWe by 2050. As such, a diverse mix of energy generation will be needed to serve both baseload and peak load energy demand. It is estimated that SMRs will be an important part of the clean-energy mix until nuclear fusion energy reaches its breakeven point by 2040 ( ...assuming it ever does).
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