Small Modular Reactors (SMRs) offer a compelling solution to the dual challenges of climate change mitigation and energy security. Their reduced size, enhanced safety features, and modular design make them suitable for a diverse range of applications, including district heating, industrial process heat, and maritime propulsion.
However, despite their potential, widespread adoption of SMRs faces several critical hindrances that limit their ability to contribute fully to a cleaner and more sustainable energy future. Despite already being the safest energy generation technology, constantly changing and regionally varying licensing protocols and safety requirements set for nuclear energy and nuclear plants set obstacles and challenges that force innovators and operators to reinvent the wheel for every nuclear project.
That said, international collaboration and increased dialogue between governments and companies can lead SMRs and nuclear energy as a whole to a future where societies can enjoy the benefits of responsible nuclear power much faster.
The challenge of standardisation
One of the most significant barriers to SMR deployment is the lack of standardisation between different countries. The regulatory and political landscape for nuclear energy varies significantly across jurisdictions, creating a complex and fragmented market. Each country has its own set of safety requirements, licensing procedures, and technical standards for nuclear power plants. This lack of harmonisation necessitates the customisation of designs and licensing strategies for each target market, a time-consuming and costly process that hinders the scalability and economic viability of SMR projects.
The lack of standardisation extends to the supply chain for SMR components and systems. Manufacturers must adapt their production processes and quality control procedures to meet the specific requirements of different countries. The fragmentation of the supply chain can lead to higher costs and longer lead times for SMR projects.
The absence of common standards has several critical implications for SMR deployment. First, it increases the complexity and cost of licensing and regulatory approvals. SMR developers need to navigate different regulatory frameworks, which can lead to delays and uncertainties in project timelines.
Second, the absence of uniform standards hinders the economies of scale that SMRs are designed to achieve. SMRs are intended to be mass-produced in factories, reducing costs through repetition and learning. However, the need to customise designs for different markets limits the potential for mass production and increases manufacturing costs.
Third, insufficient standardisation creates barriers to international collaboration and knowledge sharing. Different regulatory frameworks and technical standards make it difficult for countries to share experiences and lessons learned from SMR projects. This lack of collaboration can slow down innovation and hinder the development of a global SMR industry.
Delving deeper
Beyond standardisation, several other factors hinder the broad use of SMRs. These include first-of-a-kind (FOAK) risks, legacy legislation, economic competitiveness, public perception, and insurance and liability. According to the OECD Nuclear Energy Agency (NEA) SMR Dashboard, there are over 100 different SMR designs under development at the moment. FOAK SMR projects face higher costs and risks due to design changes, construction delays, and the need for extensive testing and verification. This can make it difficult to secure financing and compete in energy markets, especially given the long return on investment (ROI) period for nuclear projects. The higher risk premium associated with FOAK projects often necessitates a higher interest rate, significantly impacting the overall project cost. As experience accumulates and organisations learn to deploy the same design cost-effectively, nth-of-a-kind (NOAK) projects tend to attract cheaper capital.
Furthermore, outdated legislation based on older, larger reactor designs can hinder SMR deployment. For example, large emergency planning zones, designed for traditional reactors with higher radioactive inventories, may be unnecessarily restrictive for SMRs with their inherently smaller source terms and enhanced safety features. This necessitates updates to existing legal requirements to allow SMRs to be located closer to urban and industrial areas, maximising their potential for district heating and process heat applications.
Another obstacle has to do with the cost of fossil fuels compared to the cost of new technologies. The finite nature of oil suggests that its price is so high that finding and implementing alternatives would be more cost-effective, but that’s not the case. For example, in regions with abundant and cheap fossil fuels, SMRs may struggle to compete economically, especially when external costs associated with fossil fuel use are not fully accounted for. The heavily subsidised nature of the energy sector further complicates the economic landscape, making it challenging for SMRs to compete with established energy sources, especially when nuclear energy is often completely excluded from public financing initiatives.
Aside from economic aspects, there are also human factors that come into play. Public perception of nuclear energy, often influenced by historical events and misinformation, can create challenges for SMR acceptance and deployment. Despite the significantly improved safety record of modern nuclear technology and the stringent safety requirements imposed on SMR designs, public concerns about accidents and waste disposal persist.
While modern nuclear facilities are extremely safe with a vast array of contingency plans and safeguards, the risk potential still remains. Business and insurance walk hand in hand, and, in the field of nuclear energy, this duo results in some hefty premiums. Insurance costs for nuclear power plants, including SMRs, can be substantial due to the perceived risks associated with nuclear technology. The need for detailed risk assessments and the potential for catastrophic events, however unlikely, contribute to high insurance premiums. This can pose a significant financial burden on SMR projects and hinder their economic viability.
Opportunities for harmonisation and advancement
Despite the challenges, there are ongoing efforts to harmonise regulatory frameworks and technical standards for SMRs. International organisations, such as the International Atomic Energy Agency (IAEA) and the OECD NEA, are working to promote cooperation and knowledge sharing between countries.
With its long history of nuclear expertise and strong commitment to decarbonisation. VTT Technical Research Centre of Finland leads a project called ‘Ecosystem for Small Modular Reactor Solutions’, which aims to develop and demonstrate SMR technologies for district heating and other applications. This project explores the potential of SMRs to provide clean and reliable heat and electricity to Finnish communities, particularly in remote areas with limited access to the electricity grid.
The IAEA has developed a set of safety standards for SMRs, which provide a common framework for regulatory assessment and licensing. The NEA is also facilitating dialogue and collaboration between regulators and industry stakeholders to address the challenges of SMR deployment.
These efforts towards harmonisation are crucial for unlocking the full potential of SMRs. By creating a more standardised and predictable regulatory environment, countries can reduce the complexity and cost of SMR projects, promote economies of scale, create collaborative risk-sharing instruments, and accelerate the deployment of this promising technology.
Furthermore, advancements in SMR technology, such as the development of advanced reactor designs with enhanced safety features and passive cooling systems, can address some of the concerns related to safety and waste disposal.
Overcoming the barriers
While the lack of standardisation remains a significant hurdle, it is not the only factor hindering the broad use of SMRs. Addressing the challenges of FOAK risks, legacy legislation, economic competitiveness, public perception, and insurance costs will require a concerted effort from governments, industry, and research institutions.
By fostering international collaboration, promoting standardisation, investing in research and development, and engaging in transparent communication with the public, we can overcome these barriers and unlock the full potential of SMRs to contribute to a cleaner, more reliable, and sustainable energy future. The successful, scalable deployment of SMRs will require a multifaceted approach that addresses both technical and non-technical challenges, paving the way for a new era of nuclear energy that is safe, efficient, and accessible to a wider range of countries and communities.
