A new analysis sets out how the full potential of small modular reactor (SMR) technology can be unlocked to address energy needs in the industrial sector. The report concludes that the market could thus represent a $0.5–1.5tn investment opportunity.
The study, entitled ‘A new nuclear world: how small modular reactors can power industry’, has been produced by LucidCatalyst on behalf of Urenco and with support from World Nuclear Association. It analysed the potential for SMRs to serve the energy needs of 11 key industrial sectors across North America and Europe which collectively represent more than 80% of total industrial energy demand. Concluding that SMRs are a strong technical match for the energy needs of these industries, the study notes that SMRs could supply up to approximately 15,000 TWh or 2,200 GW of their demand which is expected to reach 17,000 TWh by 2050.
The top five SMR accessible markets, representing more than 75% of the 700 GW opportunity, are synthetic aviation fuels (203 GW), coal plant repowering (110 GW), synthetic maritime fuels (90 GW), data centres (75 GW), and chemicals (55 GW). Sectors such as food & beverage (43 GW), iron & steel (33 GW), upstream oil & gas (33 GW), and district energy (33 GW) also represent sizable opportunities, with district energy being particularly relevant in Europe.
Data centres, chemicals, and coal repowering are expected to drive near-term demand, with synthetic aviation fuels representing the largest long-term opportunity. Without SMRs, these industrial sectors may face constrained growth or be forced to default to carbon-intensive alternatives due to the lack of clean, reliable energy.
Despite this large potential market, only 7 GW would be deployed by 2050 under current deployment trends. This is because the current nuclear delivery model, with custom-built projects, unpredictable costs, and decade-long timelines, cannot meet industrial business requirements. Industrial energy customers, says the study, need fixed-price contracts, rapid deployment, guaranteed delivery schedules, and proven operational performance. Even so, the report does point to several significant drivers that are opening up the industrial market to SMRs.
Forces shaping industrial energy risks
The report considers that industrial energy has transformed from a future concern to an immediate challenge. It states that three forces are converging:
Energy security and extreme price volatility:
The 2022–2023 European energy disruption exposed industrial operations’ vulnerability to extreme price volatility. Natural gas prices spiked from €20/MWh to over €200/MWh in some instances, an increase that rendered entire industries uneconomic overnight. BASF, the chemical giant that had operated continuously for over a century, permanently closed ammonia production facilities. Aluminium smelters across Europe, which require continuous power to prevent metal from solidifying in production lines, faced impossible choices and many never reopened. In total, European industrial production dropped by 12–21% in energy-intensive sectors, with much of this production permanently relocated to regions with lower energy costs. In North America, particularly in the US, hyperscalers are facing difficulties securing power to support their massive growth due to grid constraints and long connection queues.
Deteriorating reliability
The April 2025 Spain-Portugal blackout affected 50 million people and 15 GW of generation; 60% of demand vanished in 12 seconds. The immediate impacts were severe: five deaths from failed medical equipment and carbon monoxide poisoning from emergency generators, economic losses reaching €2–4bn, 116 trains stranded with 35,000 passengers, airports forced to close, and hospitals cancelling surgeries. Industrial facilities suffered equipment damage from sudden power loss, with some production lines requiring a week or more to restart.
Accelerating decarbonisation requirements
Carbon pricing and climate commitments are creating new competitive pressures for industrial operations. The EU’s Carbon Border Adjustment Mechanism, expanding carbon taxes, and customers’ Scope 3 emissions requirements have made environmental costs a direct factor in industrial competitiveness. Industries face the challenge of reducing emissions while competing against regions with lower-cost, high-carbon energy sources, requiring strategic approaches to maintain competitiveness while meeting decarbonisation goals. Industrial demand for clean, reliable, affordable energy creates a large market opportunity in North America and Europe, but only for solutions that can simultaneously deliver energy security with price stability, reliability, and decarbonisation.
Current alternatives fall short as variable renewables like wind and solar power cannot provide continuous high-temperature heat for industrial processes or a continuous supply of power for data centres. Battery storage is impractical for long-duration support of such energy-intensive operations. For example, modern aluminium smelters typically require between 500 – 1,000 MW of continuous power. Providing just four hours of backup at this scale with lithium-ion batteries would require roughly 500 – 1,000 Tesla Megapacks, at an estimated turnkey cost of US$0.7–1.5bn.
European markets remain exposed to price volatility of imported fossil fuels and face decarbonisation requirements, which makes energy sources like natural gas less feasible. In North America, and particularly in the US, while the considerations around cost and carbon are different, growing power demand, combined with limited grid access and increasing wait times for gas turbines up to seven years is pushing customers to diversify their firm capacity options towards nuclear power.
This convergence threatens industrial competitiveness and is driving a fundamental shift in decision-making around new infrastructure that will operate for decades. The report notes that these forces have thus created new imperatives for energy-intensive industries worldwide that will shape the price consumers are willing to pay for energy, directly impacting the SMR market. At the same time, with industrial energy infrastructure typically operating for 40–50 years, current decisions will shape competitiveness until 2070. Current infrastructure reaching end-of-life also requires replacement, while rapidly expanding sectors such as data centres and sustainable aviation fuels create additional demand for energy solutions that are secure, reliable, and low-carbon.
Markets and drivers shaping SMR deployment
SMR industrial markets are already showing early signs of activation, the report states, identifying more than 40 GW of SMR projects currently in the pipeline across North America and Europe. Although this pipeline does not represent the actual capacity to be deployed, it does provide an indication of market momentum for industrial applications and acts as an indicator for real-world market activity.
In the Western world, more than 60% of projects in the SMR pipeline are in North America, with the remainder in Europe. Notably, around 80% of SMR projects are being driven by non-traditional customers, primarily large industrial energy users, indicating a significant shift in the nuclear energy customer base. The leading sectors driving demand are data centres, the chemical industry, and coal repowering, followed by smaller growth in district energy, food and beverage, military applications, and oil and gas refining.
Around 50% of this pipeline or 20 GW corresponds to projects that are actively progressing and show strong development signals. These trends are consistent with the International Energy Agency’s (IEA) Stated Policies Scenario (STEPS) projections, which suggest around 19 GW of SMRs in advanced economies by 2050.
SMR deployment is influenced by both cost and price, but they are not the only factors. For instance, it can be heavily influenced by factors such as regulatory frameworks, availability of sites, access to capital, and a skilled workforce. SMR market development therefore requires coordinated progress across the following six critical market drivers:
Delivery innovation: Switching from the current approach of bespoke, one-off projects to standardised products deployed at scale. This is made possible by shifting from onsite construction to controlled factory environments, which are less prone to time and cost overruns and enable deployment at much larger scales. The product and manufacturing lines are designed concurrently leveraging design-for- manufacturing and assembly principles to achieve the necessary cost, speed, and scale requirements. This is the case for shipyards and mass manufacturing facilities which are being explored today by SMR vendors.
Regulatory evolution: Switching from current, lengthy site-by-site licensing to product-based licensing would facilitate series production. The shift from treating each nuclear plant as a unique project to certifying standardised products fundamentally changes the economics and timeline of deployment. This is the case in the maritime industry with type approval approaches.
Economic viability: Switching from expensive projects requiring massive government support to affordable products that can compete against fossil-based alternatives. The combination of cost reductions enabled by innovative delivery models – such as shipyard and mass manufacturing – together with market frameworks that appropriately value 24/7 reliability, energy security, and zero emissions, improves the competitiveness of nuclear power and maximises market access.
Site availability: Moving from a handful of sites to having hundreds of pre-qualified sites enables rapid scaling once other conditions are met. National site qualification programmes can identify and prepare locations suitable for standardised nuclear deployment, eliminating years from project timelines.
Capital access: Moving from a specialised nuclear financing framework to mainstream financing approaches maximises the access of private capital. Today, nuclear projects rely heavily on government-backed financing with limited involvement of the private sector. However, when nuclear projects become predictable, repeatable products rather than one-off megaprojects, the perceived risks (and therefore the cost of capital) can be significantly reduced, enabling access to the same capital markets that finance other industrial projects.
Developer ecosystem: Moving from a few integrated utilities with a limited pool of projects to a fully mature industrial ecosystem with project developers deploying standardised products across multiples sites and industries. A mature ecosystem includes not only reactor vendors but also integrated supply chains, skilled workforces, and experienced project developers who can align incentives, apply best project management practices, and improve performance by capitalising on the lessons learned from large order books leveraging the latest digital tools
By addressing these drivers systematically and simultaneously, nuclear power can meet industrial requirements and maximise market access. Improvements in these drivers determine the final shape of the supply funnel by influencing the number of projects starting each year, their probability of success, their durations, and the allowed deployment ramp rates and capacity constraints.
SMR market access scenarios
The analysis explores four supply scenarios which describe how improvements across the six market drivers can progressively enable SMRs to meet industrial requirements and serve larger markets. These supply scenarios are:
Current Scenario (7 GW by 2050): Reflects limited deployment based on current supply capabilities. With deployment below 1 GW/ year, custom-built projects with costs around $125/MWh cannot meet industrial business requirements, resulting in minimal market penetration.
Programmatic Scenario (120 GW by 2050): Achieves moderate growth through sustained government support and enhanced project management. While maintaining construction- based delivery, standardised designs and processes, and government financing support improve deployment to 5–10 GW/year. Although programmatic delivery can effectively reduce cost and schedule risk, the resulting cost ($90–125/ MWh) and schedule may not be competitive enough to enable substantial penetration of the industrial energy market, limiting broader market access.
Breakout Scenario (347 GW by 2050): Achieves scalable, predictable, and low-cost delivery through shipyard manufacturing. This scenario leverages existing reactor designs and existing world-class shipyard manufacturing capabilities. This combination of current capabilities and technologies enables near-term deployment of standardised power plant products that can meet business requirements and cost thresholds of industrial energy users. The low costs achieved ($60–90/MWh) enable serving 347 GW of industrial demand by 2050.
Transformation Scenario (700 GW by 2050): Full re-engineering of nuclear technology into a mass-manufactured product, representing approximately 2,300 reactors of 300 MW capacity, where the entire project delivery process is designed for manufacture and assembly (DfMA). This approach enables product-based licensing replacing site-by-site approvals; supply chains producing standardised. In addition, it supports development of components at scale; factory assembly lines delivering complete nuclear modules; deployment timelines measured in months, not years; and costs in the $40–60/MWh range that make nuclear energy competitive with natural gas.
A shift from Current to Programmatic would represent a significant achievement: a 16-fold increase in deployment from less than 30 reactors to nearly 400 reactors of 300 MW each. This comes through government support, improved project management, financing, and contracting structures.
The real opportunity, however, lies in manufacturing innovation which is key to unlocking the full potential of the SMR market. Improvements to current construction methods could achieve 120 GW by 2050. However, evolving to full mass manufacturing could enable nearly 700 GW deployment, representing a $0.5–1.5trn investment opportunity. This 700 GW of accessible SMR market represents nearly double the current global nuclear capacity and would expand nuclear capacity beyond the projected goal to triple conventional deployment by 2050.
The shift from Programmatic to Breakout represents the critical inflection point where shipyard delivery fundamentally transforms market access. The shift from Breakout to Transformation represents the difference between shipyard series production and true mass manufacturing; the difference of roughly a hundred to thousands of units per year globally. These two supply scenarios can be deployed in existing and planned industrial facilities, avoiding the need for extensive new transmission infrastructure.
North America is positioned to lead this transformation with supportive policies, regulatory modernisation, and active industrial demand already emerging from data centres and chemical facilities. In North America, for example, competing with low-cost, abundant natural gas will also require supportive policies and dramatic cost reductions through standardisation and manufacturing innovation.
While Europe’s higher energy prices create more favourable economics for SMRs, the regulatory differences between member states constrain large-scale deployment. Enabling standardised deployment will require improved regulatory coordination and mutual recognition of licensing approvals across member states, allowing the same reactor designs to be deployed without redundant approval processes.
The report notes that each country has at its disposal a variety of policy instruments to bridge the competitiveness gap between SMRs and fossil-based alternatives. These instruments can be designed to value nuclear power’s attributes, including low emissions, dispatchability, fuel diversity, and overall system value. Policies may aim either to reduce generation costs through, for example, targeted financing support, direct subsidies or tax credits. Policies may also aim to increase revenues through market reforms, capacity mechanisms, above-market PPAs, or carbon pricing, for instance. The “policy support price premium” on gas prices across announced pledges and net zero energy scenarios reflects the wide range of policy instruments that may be available to countries considering such policies.
The study is clear that the various scenarios are not sequential stages but parallel development pathways that could emerge simultaneously, depending on the pace of supply and demand improvements. This means it is possible to achieve maximum SMR market access starting today if mass manufacturing becomes a proven, licensable solution, supported by policies that properly value nuclear power. By modelling these scenarios quantitatively, we can assess the specific market impacts of different strategic approaches to SMR market development. The study also concludes that the convergence of artificial intelligence driving unprecedented energy demand and enabling new delivery models, alongside policy momentum and nuclear innovation creates a unique moment in energy history. Commenting on the study, Kirsty Gogan, Managing Partner of Lucid Catalyst, said in a statement: “We’re witnessing a transformation in how nuclear energy services can be delivered to industrial customers. The innovations in manufacturing, licensing, and siting that this study identifies as being critical for enabling scale are already emerging in the market. With the right policy support and industry coordination across six critical areas, small modular reactors can provide a net-zero solution for energy-intensive industries requiring highly reliable, competitive, and scalable, emissions-free heat and power.”
With nearly 700 GW representing almost a third of industrial energy needs, SMRs do offer the scale necessary to maintain industrial competitiveness while achieving climate goals. However, serving the 700 GW potential market will require the transformation of the nuclear delivery model from bespoke construction projects to programmatic construction or manufacturing-based delivery. This transformation increases the effective demand for, and the ability to supply, nuclear projects.
