The great SMR race

Over the past several years, small modular reactors (SMRs) have gained tremendous attention and are reinvigorating the world of civil nuclear power. The SMR sector has emerged as an important new element of the global nuclear renaissance, and despite negative effects from the Fukushima disaster, the SMR market is one area that has not lost momentum. Some even argue that SMR technology is a game-changer that will fundamentally alter the nuclear power sector. While some SMR projects may be proposed as alternatives to the construction of large light water reactors (LWRs), it is more likely that the global reactor market will not be a 'zero-sum' game and that SMRs will create new opportunities for nuclear power rather than tapping into existing ones. Thus, the excitement with SMRs is the fact that they have multiple applications and deployment avenues not necessarily available to large LWRs.

Only a handful of projects for small reactor deployment currently exist, but many SMR designs are being proposed by both established as well as new, startup companies. The largest grouping of SMRs is of the pressurized water reactor (PWR) type and many of these are integral PWRs (that is PWRs with steam generators integrated inside the reactor pressure vessel). These designs are more likely to be deployed in the near future as they can draw from the experience accrued in the development and deployment of large reactors based on similar technologies. However, a number of SMR designs employing advanced technologies (such as high temperature reactors -- HTRs -- or liquid metal reactors -- LMRs) are being proposed around the world as they are viewed as having great potential to fulfill niche applications, such as off-grid sites, cogeneration for process heat or desalination, military applications, etc.

Fifteen contenders

The list of proposed SMR designs is extensive, but given the realities of today's market, less than 15 can be considered serious contenders for deployment in the coming two decades. Leading countries in the SMR sector are the US, Russia, South Korea, and China. Promising designs are also being developed in Argentina and Japan. Meanwhile, initiatives in France, Canada, South Africa, and India are also underway.

The US seems to have the most intense SMR industry at the moment. Although SMR development in the US has been led by private companies, more recently the government has increased its support. The Department of Energy (DOE) is advancing a host of programmes to work with industry in promoting successful deployment of SMRs for domestic use as well as exports, for example the SMR Advanced Concepts R&D Programme within the DOE's Office of Nuclear Energy.

Moreover, with the launch of the SMR Licensing Technical Support Program, SMRs can benefit from a significant source of government financial support set to total $452 million over five years (FY12-FY16), contingent on the US Congress appropriating the funds. In connection with the SMR Licensing Technical Support Program, in March 2012, the DOE issued a Funding Opportunity Announcement (FOA) for design certification and licence application support for up to two SMR reactor models. Although any vendor could officially file an application, the FOA's selection criteria effectively limited the participation to PWR designers, which ultimately represented the first strong market signal on the future direction of this emerging sector in the US. Four consortia submitted an application: one team led by B&W and Bechtel for the mPower design, a second one led by Fluor/NuScale Power for the NuScale design, a third one led by Westinghouse and Ameren for the W-SMR, and a final one led by SMR, LLC (Holtec International) for the SMR-160 reactor.

A second, and maybe more important, market signal on the current status of competition among SMR vendors in the US occurred in November 2012, when DOE communicated the selection of the B&W-Bechtel mPower consortium to receive funding.

The outlook is also quite good for the SMR sector in other countries, such as South Korea, China, Argentina, and Russia. In these countries, governments are helping to create a clear path for SMR deployment.

In South Korea, the Korea Atomic Energy Research Institute (KAERI) has developed the SMART design and is pursuing its deployment with strong support from industry partners, such as the government-owned Korea Electric Power Corporation (KEPCO) and private companies Doosan Heavy Industries, Daewoo, STX Heavy Industries, Samchang Co., and Iljin Energy. The SMART reactor obtained a licence in July 2012, and construction on the first-of-a-kind (FOAK) project may even start in 2013.

In China, construction for the HTR-PM demonstration project at Shidaowan, Shangdong Province officially began in December 2012 with completion scheduled for 2017. Moreover, China National Nuclear Corporation (CNNC) recently announced its own small PWR design, called the ACP-100, which has a good chance of being deployed at a site in Zhangzhou, Fujian Province in a few years.

In Argentina, civil works for the construction of a CAREM-25 prototype reactor at the Atucha site started in 2012, and the reactor is scheduled to be commissioned in 2016. The construction of a larger plant with >150 MWe capacity adopting the CAREM design is also envisioned for a site in Formosa Province.

In Russia, where numerous SMR designs have been developed, all the main initiatives remain mostly under state-owned Rosatom's umbrella. Over the past few years, the government has made major decisions in terms of which technologies to advance to the commercial stage. Much of the early effort has been put into the Akademik Lomonosov project with two floating KLT-40S reactors slated for completion in 2016. More recently, priority has also been given to the development of fast reactors with both an SVBR-100 pilot project and an experimental BREST-300 currently in their first stage of development. Design work for a VBER-300 project together with Kazatomprom is also ongoing, with deployment at the Aktau site in Kazakhstan still on the table.

Another interesting LMR design, the 4S (Super-Safe, Small and Simple) has been developed by Toshiba in Japan with the initial collaboration of the Central Research Institute of Electric Power Industry (CRIEPI). Until a few years ago, the 4S was on track to become one of the first SMRs to be deployed as significant licensing work was done with the US Nuclear Regulatory Commission (NRC) as part of a proposal to build a plant in the city of Galena, Alaska. Although this project is unlikely to become a reality at this point, the 4S reactor remains one of the most interesting SMR designs developed worldwide as Toshiba continues to look for new customers. One such place may be for oil sands production in Alberta, Canada.

Deployment prospects

A few trends are already becoming apparent regarding the commercialization approaches adopted by SMR vendors around the world. First, it is clear that in many cases, the most likely starting point is deployment in the vendor's domestic market, even if the eventual target market is for exports. In the US, vendors are aiming to develop a FOAK project before moving to serial production. At the same time, they are also strongly pursuing the support of US utilities for further deployment rather than export. This is because the SMR market potential in the US remains quite promising given the rapid retirement of ageing coal-fired stations and the possible impact of a future carbon tax that will impact the economics of all fossil fuels.

Although Russia has many applications at home for SMRs, Rosatom is clearly envisioning exports of multiple Russian SMR designs in the future. This is in line with a similar strategy adopted for the commercialization of large reactors and with the broader national goal of completing the country's transition to an innovation-driven economy.

Like Russia, China has significant potential to deploy SMRs in its domestic market; however, the country is expected to vigorously pursue the sale of its SMR designs abroad as this might represent a golden opportunity to finally become an exporter of nuclear technology. On the other hand, China might also be willing to consider the import of SMRs from other countries if the technology fills a unique need.

Finally, South Korea and Argentina are following similar export-oriented strategies because of the limited size of their domestic markets. The two countries plan to carry out FOAK projects within their borders but have also been extremely active in their international marketing efforts.

Among the countries that seem to be at a competitive advantage in the global SMR market, South Korea and Russia, in particular, may benefit from their experience in the sale of large reactors, while China and Argentina may suffer from a lack of a track record. Once US designs are available to the market, they will be able to leverage the significant 'Made in USA' brand. Russia, China, and the US are also better positioned to leverage their international leadership and relationships, even though the US has a more complex bureaucratic system for the export of its nuclear technologies that might affect the pace of sales.

An open race

The global race for SMR commercialization is still wide open. Although some countries, such as South Korea and Russia, seem to be at a slight competitive advantage, China and Argentina are also serious contenders and surprises may originate from other countries as well.

US vendors have only recently left the starting blocks, and the fact that their FOAK projects are unlikely to be completed until the beginning of the next decade may penalize them. Nonetheless, the US has multiple promising SMR designs, and these vendors can rely on a significant technological advantage due to their experience in large LWR design and construction.

Moreover, strong demand for SMRs is not likely to materialize for a few more years as many countries are still evaluating whether to introduce nuclear power or what kind of programme to carry out in the wake of Fukushima. In this regard, the events in Japan have also contributed to move safety to the top of the selection criteria for any new reactor technology. Thus, obtaining a 'gold standard' NRC licence might turn out to be more important than it would have been otherwise. Still, translating any individual advantage into SMR success will rest with each vendor team's efforts, and therefore a bit of luck and a lot of perseverance will ultimately determine which designs come out ahead.

This article is based on an Ux Consulting special report on the SMR Market Outlook, published in March 2013.