Why SMRs will shape the future of nuclear debate2 November 2021
Small modular reactors are gaining the attention of governments and power providers across the world because of the optionality they offer. But the champions of the SMR will have to work hard to ensure its potential can be fully unlocked, as Daniel Garton, Richard Hill, Andrew McDougall, Kirsten Odynski, Dipen Sabharwal and Vit Stehlik explain
With COP26 now underway, focus is turning to Glasgow and whether heads of state, climate experts and campaigners can agree coordinated action to tackle climate change in what the UN has described as a “make or break year” in the fight against global warming.
According to reports, no nuclear groups have been awarded space in the so-called Green Zone at COP26 that allows different stakeholders to communicate their message to the conference and to the general public, promoting greater dialogue and awareness.
This prompted the director general of the World Nuclear Association, Sama Bilbao y León, to send an open letter to Alok Sharma MP, COP26’s president in August, urging the conference to treat nuclear energy fairly and to ensure that it is well represented alongside other low carbon energy sources.
It appears that the cost and scale of nuclear projects, along with major accidents at Three Mile Island, Chernobyl and Fukushima, continue to pose challenges for the industry. However, the arrival of the small modular reactor (SMR) is being billed by some as a potential solution to many of these issues, and one that can play a role in a cleaner future.
Small modular reactors, or SMRs, are at an early stage of development, but they already have some serious backers. US President Joe Biden has signalled that they have a role to play in the world’s biggest economy’s US$2 trillion investment in clean energy, while UK Prime Minister Boris Johnson has also said he will put money into the concept. Companies including EDF — the world’s biggest nuclear plant operator — and Rolls-Royce are also championing the SMR.
These small plants can provide reliable energy in the form of both electricity and heat to power a city of about 100,000 people. The heat can help lower the emissions from carbon-intensive industries such as steel and cement making, while the baseload power could complement renewables such as wind and solar power. The SMR offers a step change from the existing world of nuclear power.
The case for nuclear
The global power sector accounts for approximately one-third of global emissions, with the burning of fossil fuels still the dominant source. The role of renewable energy generation — amid dramatic falling costs — has risen exponentially in recent years, but the inability of solar and wind to deliver reliable baseload generation has meant that many countries still rely on fossil fuels to fulfil that role. Nuclear reactors generate virtually emission-free power, which means they can play a crucial role in global efforts to lower emissions and reach the Paris climate goals.
The pressure is on governments around the world to replace fossil-fuel power generation. Providing affordable and clean energy is one of 17 United Nations Sustainable Development Goals, and at least 80% of the world’s electricity must be low carbon by 2050 — by which point the world’s energy consumption is expected to have more than doubled — to have a realistic chance of keeping warming within 2°C of pre-industrial levels.
Nuclear plants have a small environmental footprint and keep the air clean. They require only a small amount of fuel compared to gas or coal, and take up a fraction of the space required for wind and solar farms.
A report published in August by one of the UN’s own bodies — the Economic Commission for Europe — reinforced the crucial role that nuclear power can play in the transition to a clean energy future.
What is an SMR?
SMRs are broadly defined as nuclear reactors with a capacity of less than 300MWe. This compares to current nuclear power plants, with capacity up to 1600MWe.
The attraction of building smaller plants, based on a set design, is clear. Plants can be built quickly and to a proven standard. Additional plants can be added as more power is required, and economies of scale can be achieved as they are built in numbers. The capital outlay also becomes manageable for smaller utilities, whereas at the moment only the biggest players can shoulder the burden and risk of the capital associated with developments.
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The smaller size and diversity of reactors can also mean they can be built in locations not traditionally suitable for nuclear power plants, or close to power-intensive industries or remote communities. This allows them to serve areas of the world that rival power solutions cannot reach, potentially replacing highly inefficient and polluting power sources such as diesel generators.
SMRs can also be deployed on old coal plant sites, providing employment and improving local acceptability. Taking advantage of existing infrastructure, including electrical switchyards and existing turbine generators, could reduce SMR construction costs and avoid the need to build new transmission lines.
Support is widespread
Governments have been quick to see the potential. After years of setbacks in the UK in developing the next generation of large nuclear power plants, Prime Minister Boris Johnson has promised funding and political support to develop the next generation of small and advanced reactors as part of his government’s Ten point plan for a green industrial revolution.
In the US, President Biden has set goals of achieving 100% carbon-free electricity production by 2035 and reducing net CO2 emissions to zero by no later than 2050. Biden’s energy platform specifically cites advanced nuclear as part of “critical clean energy technologies,” and his administration also plans to create an Advanced Research Projects Agency for climate that will have a specific focus on modular reactors.
Canada released its own SMR Action Plan in December, while nations such as Estonia and Poland are looking closely at the technology as it becomes more apparent that renewables will generate only a small portion of the clean energy the world will need by 2050.
Some of the biggest industrial companies and utilities have also gotten behind the technology. Reactor designs are being developed by companies including Rolls-Royce, NuScale Power and TerraPower (which includes Bill Gates as an investor). EDF said earlier this year that it sees a huge global market developing for small reactors over the next decade to replace fossil-fuel generators. According to the International Atomic Energy Agency, there are currently almost 70 different SMR technologies under development, a significant increase from just a couple of years ago.
Challenges remain, namely regulation
Regulation has always been a challenge in nuclear plant development, and that is likely to remain the case for SMRs.
Licensing risk has long been a difficult and controversial issue in nuclear power, and has had significant attention from policy makers, the public and environmentalists. If there is a widespread rollout of SMRs it will be unlikely to avoid this scrutiny. Given the required oversight at all levels of development, the prospect of delays, cost overruns and disputes remain, particularly in the initial rollout of new technologies.
The industry must also overcome many of the perceptions of previous generations. There is no guarantee that SMR producers will not face the same obstacles that have plagued developers of traditional nuclear power.
There is also the challenge of convincing industrial users — a customer that seems well suited for SMRs — that SMRs can compete with natural gas or proven renewables such as wind and solar.
The nature of SMRs mean they will have to be built close to the communities they serve, raising new challenges for public engagement, especially around the issue of waste.
Unlocking the SMR’s full potential
The SMR has widespread political support. The technology offers carbon-free power that is reliable, safe, and can be built and deployed without less cost and complexity than traditional nuclear power.
In a world where almost investment decisions will be measured against its climate impact and whether it is compatible with the Paris climate goals, the SMR offers a solution without many of the drawbacks that have hobbled its larger predecessors. But there are challenges to overcome and, as is always the case with nuclear power, this can be costly and protracted. The champions of the SMR will have to work with all stakeholders, from governments and investors to the wider public, to ensure its potential is fully unlocked.
About the authors
Daniel Garton, Richard Hill, Andrew McDougall QC, Kirsten Odynski, Dipen Sabharwal QC and Vit Stehlik are partners at law firm White & Case