Small modular reactors: what are the barriers to deployment?26 April 2022
Could small modular reactors be a game changer in nuclear energy’s contribution to tackling climate change? Charles McCombie, Robert Budnitz, Noura Mansouri, H-Holger Rogner, Robert Schock and Adnan Shihab-Eldin examine the market, barriers to deployment and what is needed to overcome them
Today 10% of the world’s electricity (and 26% of its low-carbon electricity) is generated by nuclear power plants. The present and potential future contributions of nuclear power to combatting climate change have been documented and acknowledged by national governments in many countries.
Although the final communique from COP26 in Glasgow contains no mention of nuclear power — as with all earlier COP conferences — most scenarios looking to a low or net-zero carbon future include a important nuclear contribution. However, in existing nuclear power nations and in many potential newcomers, there is significant public scepticism or even opposition to more nuclear plants. What new developments might enhance public acceptability of the technology?
Today, over 60 new reactor designs are under development whose common feature is their small size.
These small modular reactors (SMRs), which typically have capacity of less than 300MWe per module, are based on a wide range of technologies, some of which have never been deployed commercially. Some SMR designs are in advanced stages of development, and the first few are being deployed.
However, whether SMRs will become an important part of worldwide energy supply is not yet known.
The challenges that must be addressed if SMRs are to become a game-changing scenario for nuclear energy globally are:
- A clear demonstration of the safety improvements and other benefits offered by SMRs
- A convincing case for competitive economics — both per kW installed and per kWh produced
- An improved international regulatory system enhancing licensing and oversight while building public and political support
- Credible spent fuel management strategies, including national deep geological repositories, multinational disposal options and options for ‘take back’ of spent nuclear fuel (SNF) by suppliers
- Demand for SMRs (producing electricity, process heat or hydrogen) that is large enough to support ‘production line’ factory fabrication
- Political, financial, regulatory, and organisational support from governments for first of a kind SMRs.
Improvements offered by SMRs
The principal technical challenge for any nuclear power reactor is to achieve a very strong safety performance, so that the likelihood of accidents is small and the consequences of an accident can be managed. The new SMR reactor concepts aim to achieve this through a design that is shown to be acceptable based on a combination of experimental evidence, analyses, test performance and operating experience with systems similar enough to provide assurance.
There is evidence, based on extensive experience with operating large reactors, that most of the SMRs will be significantly safer than existing reactors.
The general broad features enhancing safety are clear. The SMRs’ smaller size means there is much less waste heat to remove and much less radioactivity to manage during accident conditions. Advances in system configurations and control systems make the SMRs much easier to control.
Fewer (and in some cases no) operator actions are required for control. SMR designs typically use passive features to accomplish safety functions, so there are fewer active systems that might fail (and in some designs there are no active systems). In some SMRs, passive systems allow the reactor to achieve a safe shutdown state without active intervention by either hardware or operators. SMR designs take advantage of advanced technologies (better materials, more reliable equipment, advanced sensor technologies for monitoring plant status, artificial intelligence technologies).
Finally, SMRs will be more easily inspected and repaired because convenient inspection and repair are typically among the design criteria; and factory fabrication will provide better quality control, less variability between modules, and hence more predictable operating parameters.
What is more, emergency preparedness offsite will be less difficult because the potential accidents will have offsite impacts that are smaller and more localised.
Further advantages that can ease siting requirements are the smaller facility footprint and the lower radioactivity inventory. For some SMRs, there will be less complex and less costly spent-fuel and radioactive waste storage burdens. An important additional positive feature of SMRs is that, because of their modularity and versatility, they may be more easily integrated into energy systems based largely on renewable energy.
When considered together, the numerous different safety improvements and advantages should ease the public acceptance of these new SMRs in many places.
The economics of SMRs
SMRs are expected to have lower financial risk exposure and potentially cheaper generating costs than the large reactors currently dominating the marketplace.
Unit sizes of about one tenth to one quarter of the size of today’s reactors — in some cases even smaller — imply lower upfront capital commitments per reactor. But they need SMR-specific advantages to compensate for the economies of scale that led to reactors increasing to as large as 1600MWe.
SMRs will be largely manufactured in factories and delivered to the generation site, which should make on-time and on-cost plant completion the norm. Design simplicity should also keep construction costs and delivery schedules in check.
SMRs can be added incrementally to large grids to flexibly match the growth in electricity demand or, in the face of demand uncertainty, replace retiring nuclear and non-nuclear capacity. They can also be deployed in markets with small or less stable grids, and this can enhance their economic value.
Some SMR concepts are also designed to provide energy services other than electricity, including process and district heat, desalination or hydrogen, expanding the SMR market potential. The economics of SMRs are, to a large extent, shaped by these factors.
For SMRs to become game changers, they must be able to fully exploit technology learning offered by modularity and large numbers of plants manufactured in series in factories. Only then can the dynamics of investment cost ‘buy-down’ make SMRs competitive. This is ‘a chicken and egg’ issue, as most SMR designs are ‘first of a kind’.
To date, reliable overnight investment costs that could serve as the point of departure for technology learning assessments do not exist. Overnight investment cost (per installed kWe) and generating cost (per kWh) are expected initially to be higher than for large reactors — a deterrent to fast market penetration and deployment. For the first SMRs, the lower upfront capital requirements per module and easier financing schemes are unlikely to compensate for this disadvantage.
Access to upfront capital, and the costs of raising it for new energy facilities, are influenced by whether the technology chain is recognised as being sustainable over its full life cycle. Those that are judged to fulfil this criterion are included in a formal listing, or taxonomy, of acceptable energy sources. Solar and wind power are examples, but there has been debate about nuclear energy.
The economics of SMRs will also depend on the size of the market and the number of competitors trying to access it. While design diversification and competition among developers has its virtue (in bringing out the best technologies), it is an impediment to technology learning, cost reductions and market adoption. Without large market adoption of a specific design, production volumes may prove insufficient for mass production and to induce learning reductions.
The costs of SMR projects will also depend on the time required for licensing and implementation. While the estimated lead times from plant order to grid connection are generally about three years (almost halving that for large reactors), the uncertain timeframes associated with regulatory approval, licensing and stakeholder involvement to manage political and public opposition are unlikely to change until the enhanced safety features, performance in a system context in terms of energy security, and environmental benefits of SMRs are understood. Standardising regulation and licensing could reduce pre-construction lead times significantly.
Uncertainty remains the major risk factor for private sector sponsorship. Public climate policy that acknowledges and supports SMRs as ‘climate-benign’ technologies can mitigate these private investor risk concerns, whether the support is direct (government has an ownership stake) or indirectly (active policies).
A harmonised regulatory system
One of the key challenges facing SMRs is the need to secure design and operating licences within a reasonable time and at acceptable cost, both in vendor and user countries.
The licensing process for new reactor designs is typically slow and will likely be slower for new SMR designs, because regulators lack experience with these designs and because some of the new features may require time-consuming experimental evidence.
Because of the small power capacity of SMRs, the threshold for commercialisation will require securing orders for many reactors, so SMR vendors must secure licences from national regulators in many countries. National nuclear regulators have different national laws and approaches to licensing, leading to a time consuming and costly process that will delay deployment of even the most promising designs and may pose an insurmountable obstacle.
There have been numerous suggestions by various international organisations and by government and industry groups about how to overcome SMR licensing obstacles. Greater harmonisation or even standardisation of national regulations could be beneficial.
One approach that has not received sufficient attention is establishing a harmonised international regulatory system, specifically for SMRs, led by the International Atomic Energy Agency (IAEA), with support from and active participation of major national nuclear regulators around the world. This would speed up licensing in vendor and user countries. Such an initiative would not have ultimate licensing authority but it would be welcomed by the developers and vendors of new SMR designs as it could reduce the time and the resources needed to secure licensing worldwide.
The approach would involve an IAEA-led mechanism to review and approve a new design. Once a new SMR design has been approved or endorsed by such an international regulatory mechanism and licensed by a national regulatory authority, it would be more easily licensable in other countries.
The initiative could be a first step towards a more robust and empowered international regulatory and safety regime. It could pave the way to a mandatory international inspection regime, with responsibility and authority to review and endorse all new reactor designs, undertake periodic inspections of all operating reactors and publish findings to assure operators, governments and the public at large of the safety of nuclear power reactors worldwide.
Such a stronger international regulatory regime would complement, not substitute for, national safety and regulatory regimes, which would continue to have the primary responsibility. But it could give independent assurances to the public in any country or group of countries about the safety of the nuclear facilities in their own and neighbouring countries.
Spent fuel management
For any nuclear energy system to be accepted by politicians, regulators and the public, the developers must be able to show that there is a credible strategy leading to safe radioactive waste disposal.
For SMR designs based on current LWR technologies, the spent fuel may differ in detail (enrichment, dimensions, etc) but it can be managed as for existing large LWRs.
For other SMR concepts, based on liquid metal or gas cooled reactors, pebble bed reactors or molten salt reactors, there are no standardised methods at industrial scales for conditioning or packaging the spent fuel into a form suitable for disposal in a geological repository. Some of the SMR spent fuels have favourable characteristics, such as lower actinide concentrations or low thermal densities. In some cases, as for pebble bed fuel, the low thermal density is offset by the high specific volume of waste per unit of energy output.
All these technical challenges can certainly be solved, although it is not clear that this will always be feasible on the optimistic timescales often suggested.
The suitability of a geological repository for safe disposal of spent fuel is widely accepted and has been recently confirmed by analyses performed in the scope of studies in the European Union.
There are broader strategic spent fuel management questions that must be addressed if SMRs are to be widely introduced. How often must refuelling take place? Will this be done on site, or will the core be shipped to a central facility? If the factory-produced reactor module is returned to the supplier and the spent fuel conditioned there, will the supplier be able to arrange for disposal in their own country or in a multinational facility elsewhere?
Today, the only country that has agreed to accept spent fuel returned from reactors abroad is Russia. Some other potential SMR supplier countries have policies or laws that currently would prevent their accepting returned spent fuel. However, if the user of a nuclear reactor could be relieved of the responsibility for spent fuel disposal, then the incentive for new nuclear nations to opt for SMRs would be enormously increased.
Potential market demand
The versatility of SMRs can eventually be a major driver for their widespread adoption. As with large nuclear plants, they can provide district heat as well as electricity. This could be particularly valuable for small SMRs in remote locations where fossil fuel is the only alternative source of baseload power. Some SMR designs can provide heat at higher temperatures than large LWRs and these may be used in specific industries, such as steelmaking, coal gasification, hydrogen production and petroleum refining. A further key application could be desalination.
Powering any of these critical industrial activities with an SMR, especially at a remote site, will present fewer challenges if a modular design is adopted based on a fabricated unit that can be returned to the factory. To realise this vision of distributed, localised implementation, they must be cost competitive and there must be enough sites with local acceptance.
The countries most suited for SMRs are existing or new nuclear power countries that:
- are persuaded by the passive safety features of the new SMR designs
- are attracted by the possibility to increase capacity in a stepwise approach that may ease funding requirements
- need to power off-grid communities.
SMRs may also be of particular interest to newcomer countries that:
- wish to start with a small nuclear energy programme
- cannot afford the upfront investment in a large reactor
- have a less robust or smaller national electricity grid.
Many countries have expressed public interest in implementation of SMRs. Some are potential suppliers; others are potential new users or have nuclear power programmes they are interested in expanding.
The open question is whether this total market volume is sufficient in the relatively near future to fill the order book of even one production line for SMRs.
Unless there is significant consolidation of the supplier base, it will be problematic for any SMR developer to prepare for factory production. Supplier numbers will be reduced by the technical characteristics of the SMRs but also by the ability of the developers to secure government or private financing. Picking winners is a hazardous undertaking for those investors, but unavoidable if SMRs are to enter into service in time and in enough numbers to make a significant contribution to mitigating climate change.
The role of governments in nuclear power policy
There are few different nuclear reactor designs in commercial operation today and all of them have received some form of governmental support to help them establish a market.
The threshold for introducing a new design has been high, so that today most reactors in operation around the world have evolved from the early light water reactor designs used on submarine propulsion units. Will the situation be different for SMRs? There are positive indications that the governments in countries aiming to be a supplier of SMRs are willing to help. In Russia and China this is done by the government providing all the resources for the SMR designs. Western countries have also provided direct financial support, for example in the USA and the UK, but primarily for the research work needed for the first of a kind designs.
The relatively low funding required by SMRs may make it possible for all the initial funding to be provided by the private sector. There are numerous small start-up companies in USA, UK, Canada, Norway, Argentina etc. and several of these are attracting private investors. Their ability to secure financing may also depend on whether nuclear is included in the taxonomy of clean and sustainable energy sources.
Individual countries can take this decision for domestic projects or projects sponsored abroad (this has been the case with Russia for example). But for global access to financial markets, the explicit recognition in multinational agreements of nuclear energy as sustainable is needed.
In the European Union it has been a very controversial issue because the taxonomy requires a ‘do no significant harm’ assessment on a lifecycle basis to qualify. Following an extensive positive report by the EU’s Joint Research Centre, the Commission of the European Union at the end of 2021 took the decision to include nuclear energy in the taxonomy, but this was in the face of continuing objections from a few Member States and it still has to be approved by the European Parliament.
What are the barriers to widespread adoption of small modular reactors?
The most significant barriers to the widespread adoption of SMRs are:
- Demonstrating that the designs being developed offer enhanced safety and that they can be built on time and with competitive capital costs per MW and production costs per kWh.
- Simplifying and harmonising the regulatory licensing process in both the vendors’ countries and potential user countries.
- Narrowing down the field of potential suppliers enough to ensure sufficient market demand to allow factory production methods to be employed.
What action is needed to overcome barriers to deployment of SMRs?
To overcome the barriers, it is necessary for governments, especially those of world leading economies to:
- recognise the role of nuclear energy in a just, reliable and clean energy transition
- support the acceleration, adoption and commercialisation of SMRs
- support the establishment of a harmonised international regulatory system, specifically for SMRs, led by the IAEA, as a first step towards the realisation of a robust and empowered international regulatory and safety regime.
If all challenges are met, then SMRs can justifiably be put forward as a game changer for nuclear energy that may enhance public and political acceptance.
About the authors
Charles McCombie, McCombie Consulting; Robert Budnitz, staff scientist (retired), Lawrence Berkeley National Laboratory; Noura Mansouri, Research Fellow, King Abdullah Petroleum Studies and Research Center; H-Holger Rogner, Emeritus Research Scholar, International Institute for Applied Systems Analysis; Robert Schock, Senior Fellow, Center for Global Security Research; Adnan Shihab-Eldinl; Senior Visiting Research Fellow, Oxford Institute for Energy Studies.